Chinese internet giant Tencent Holdings Ltd (0700.HK) said on Monday it would lead an $863 million investment in apparel platform Vipshop Holdings Ltd (VIPS.N), upping its rivalry in retail with Alibaba Group Holding Ltd (BABA.N).
Tencent will invest $604 million in exchange for a 7 percent stake in Vipshop, while e-commerce firm JD.com Inc (JD.O) will invest $259 million for a stake of 5.5 percent - rising from a previously undisclosed stake of roughly 2.5 percent - the two firms said in a statement.
The deal extends a recent push by Tencent into Alibaba’s home turf of retail, where the firm hopes to leverage its messaging service WeChat and its online payment systems to drive shopping demand.
Martin Lau, Tencent’s President, said the tie-up would bring Vipshop Tencent’s “audiences, marketing solutions, and payment support” to help tap China’s rising middle class. Tencent’s WeChat has nearly a billion users.
The looming retail battle reflects a wider, long-running stand-off between Tencent and Alibaba, who have made competing investments in areas as diverse as bike-sharing apps, food delivery and gaming.