Leadership & Strategy
Tencent enters JV to boost offline presence
May 20, 2020
Chinese conglomerate Tencent has entered a joint venture with Yonghui Superstores and ParknShop, forming new grocery chain ParknShop Yonghui valued at US$170mn
Tencent’s 10% stake in the JV marks its continued interest in boosting its offline operations.
Fellow online giant and rival Alibaba, driven by its New Retail concept which blends the offline and online retail experience, has been rapidly enlarging its own footprint in the space with its Hema supermarkets.
China Money Network noted that Tencent invested $748.98mn in Yonghui last December for a 5% stake in the firm.
It added that, in Yonghui’s statement, it was announced that Tencent’s 10% stake in the JV will be bought by its investment and music app arm Tencent Mobility for $17.85mn.
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Yonghui’s equity contribution of $89.57mn will secure half of the JV.
SCMP added that the JV, comprised of over 70 stores, is aiming to become the biggest supermarket chain in Guangdong province, targeting 10bn yuan in annual sales.
It said that, in 2017, the combined revenue of ParknShop and Yonghui stores based in Guangdong was 4.1bn yuan.
“Tencent and Yonghui have been very close partners and have together explored opportunities in retail,” Tian Jiangzue, vice general manager of Tencent’s smart retail strategic cooperation department, said according to SCMP.
“We hope to work with any partner who’s strongly motivated to undergo digital transformation, to help the traditional and dynamic retail industry embrace technology.”
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