The Chinese ecommerce market continues to be a whirlwind of
activity. The latest appears to come from Internet company, Tencent, creator of
WeChat and QQ messaging services, which announced a USD $195m investment in
China South City, a 9.9% stake with an option to raise its stake to 13% over
the next two years.
According to its website, China South City “is one of the
leading developers and operators of large-scale integrated logistics and trade
centers in China”. The company is an interesting one and could help Tencent
improve its position against its major competitor, Alibaba. Among its services
is e-commerce which, according to the company website, is to “provide trade
center shops the advantages of physical stores and virtual shops for both B2B
and B2C trading”. An e-commerce park with a total space of almost 2m sq. m has
been established in Shenzhen to support this service as well as one in Nanchang
that has over 1m sq. m. of space. Five more such parks are planned in Nanning,
Xian, Harbin, Zhengzhou and Hefei. These parks include such amenities as office
space, warehousing and logistics and business support facilities such as
banking, exhibition and conference space and more.
China South City also has a logistics services subsidiary
with such services as warehousing and freight forwarding. It also provides a
warehousing management service and arranges on-site third party delivery and
distribution services.
According to the press release, the two companies will collaborate
on:
- E-commerce: China South City will utilize Tencent’s Internet technology in its construction of the China South City e-commerce platform to serve small and medium enterprises and to help enterprises develop their own online transaction businesses.
- Outlet Services: Explore opportunities for co-operation with respect to online outlet services for branded goods by leveraging China South City’s resources with respect to physical outlet services for branded goods and Tencent’s e-commerce platform.
- Online and Offline Integration: Collaborate to develop China South City’s retail business to provide an integrated online and offline retail service experience through Tencent’s platform.
- Online Payment: Collaborate to provide Tencent’s online payment services to China South City’s tenants and customers.
- Warehousing and Logistics: Collaborate in the planning of joint warehousing facilities and logistics arrangements for e-commerce businesses
Martin Lau Chi Ping President of Tencent said “China South
City is implementing a differentiated strategy of transforming existing local
wholesale markets into modern large scale trade and logistics centers. We
recognize its unique business model and the results it has achieved. Chinese
small-to- medium sized enterprises have huge demand to expand their businesses
online. Cooperation with China South City enables us to jointly facilitate such
enterprises migrating online, utilizing China South City’s physical locations
and logistics capabilities, together with Tencent’s Internet user platforms and
technology capabilities."
Indeed, with this investment Tencent has moved fully into
ecommerce logistics. As it integrates its technology solutions into China South
City’s platforms, the possibility of it dabbling in additional logistics
technology solutions and linking these to its online payment system makes for
an interesting scenario in China’s ecommerce logistics market.
