---
title: "Behind Wanda's Sale of Core Assets: What Are Tencent, JD, and Alibaba Up To?"
description: "Since late 2017, Tencent has been venturing into offline physical commerce, first joining JD to invest in Yonghui, then partnering with Yonghui and Carrefour. This time, Tencent chose to invest in Wanda. On January 29, Wanda Commercial announced that Tencent, JD, Suning, Sunac, and other investors formed a consortium to invest 34 billion yuan to acquire about 14% of shares held by investors introduced during Wanda Commercial's Hong Kong H-share delisting. Once the deal is finalized, it will be one of the largest single strategic investments between global internet companies and physical commercial giants."
author: "王某"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-01-30"
language: "en"
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# Behind Wanda's Sale of Core Assets: What Are Tencent, JD, and Alibaba Up To?

> Since late 2017, Tencent has been venturing into offline physical commerce, first joining JD to invest in Yonghui, then partnering with Yonghui and Carrefour. This time, Tencent chose to invest in Wanda. On January 29, Wanda Commercial announced that Tencent, JD, Suning, Sunac, and other investors formed a consortium to invest 34 billion yuan to acquire about 14% of shares held by investors introduced during Wanda Commercial's Hong Kong H-share delisting. Once the deal is finalized, it will be one of the largest single strategic investments between global internet companies and physical commercial giants.

Since late 2017, Tencent has been venturing into offline physical commerce, first joining JD to invest in Yonghui, then partnering with Yonghui and Carrefour. This time, Tencent chose to invest in Wanda.
On January 29, Wanda Commercial announced that Tencent, JD, Suning, Sunac, and other investors formed a consortium to invest 34 billion yuan to acquire about 14% of shares held by investors introduced during Wanda Commercial's Hong Kong H-share delisting. Once the deal is finalized, it will be one of the largest single strategic investments between global internet companies and physical commercial giants.
I. Wanda
From the author's perspective, this cooperation, from Wanda's point of view, mainly has two reasons. One is the need for capital, hence monetizing quality assets. The other is the e-commerce business itself.
1. Capital
Judging from Wang Jianlin's speeches last year, there must be a money problem:
After the Bandar Malaysia project, Wanda was investigated by the CSRC for credit risk, and subsequently suffered a "stock and bond double kill."
Reports say that Wanda Commercial signed a bet-on agreement when it delisted: if it failed to list on the A-share market by August 31, 2018, Wanda would repurchase all shares and pay 12% and 10% interest to overseas and domestic investors, respectively.
For Wanda, if it cannot list on A-shares as scheduled, selling 14% of Wanda Commercial's shares can provide substantial financial support. Given Wanda's current operating conditions, the road to listing is indeed fraught with difficulties. At this time, selling shares to introduce third parties can effectively alleviate Wanda's capital problems.
Previously, Sunac acquired Wanda's hotel business, and now it continues to follow up. Wanda continues its practice of monetizing quality assets. Besides the hotel business, it was expected to monetize other similar businesses, such as film and television. Unexpectedly, this time it directly monetized its most premium and core asset: Wanda Plaza. Wang Jianlin had already revealed last year that he planned to develop about 1,000 Wanda Plazas in the next 10 years. He also mentioned cooperating with a certain company, and it turned out to be the group led by Tencent.
2. Introducing Online Traffic to Develop Borderless Retail
After this cooperation is reached, Tencent and JD will conduct comprehensive cooperation with Wanda Commercial in areas such as online operations, user data, mobile payment, consumer finance, warehousing and logistics, and cloud services. The three parties will jointly use intelligent technology to reconstruct costs, efficiency, and experience for offline retail, create value together, and form the largest borderless retail alliance in China.
Speaking of this, we must mention Wanda's attempts in e-commerce. On August 29, 2014, Tencent, Baidu, and Wanda jointly announced the establishment of Wanda E-commerce Company with a total investment of 5 billion yuan. Wanda held 70%, Tencent and Baidu each held 15%. The three parties declared plans to invest 20 billion yuan over five years to create the world's largest O2O e-commerce company. But it ended without results. Later, Wanda invested heavily to establish Wanda Online Technology, and after several changes in senior management, it remained lukewarm.
Although Wanda is selling its core assets this time, Wanda emphasizes that it is monetizing quality assets while opening its membership system, provided that control remains in its own hands.
At the same time, introducing native e-commerce companies like JD and Suning as shareholders not only allows professional entities to develop its e-commerce business but also monetizes its accumulated membership system. On the other hand, selling shares to introduce third-party e-commerce companies also strengthens Wanda's determination to do e-commerce.
II. Tencent
This time, the new retail alignment has exceeded everyone's expectations. From hypermarkets represented by RT-Mart to convenience chain Yonghui's investment in Sichuan Hongqi, and the corresponding shareholding paths of Tencent and JD, we can see that the borderless retail represented by Tencent and JD participates in a shareholding, decentralized manner to build the underlying system. Alibaba, on the other hand, shows a very strong centralized form, mainly through controlling stakes. The two directions are already very clear. As Wang Tian, founder of Better Life, said, "Alibaba's new retail is like an Apple system; you play along in its closed system. Tencent feels a bit like Android; everyone plays their own game in this system. That's the biggest difference between the two systems now."
Regardless of which side Better Life chooses after its trading suspension ends, the pattern of two camps led by Tencent and Alibaba has initially taken shape. At least in the near term, Alibaba will still focus on controlling stakes and centralization, while Tencent will focus on broad participation and empowering through traffic output.
In terms of capital, Tencent and JD's number of investments in 2018 will gradually surpass Alibaba's. Although Tencent has a complete payment and membership system, in terms of commercial genes, despite investing in a large number of offline retail companies, Tencent still has a long way to go to promote online-offline integration and achieve borderless retail.
Because the new retail model represented by Hema has already achieved continuous iteration and updates after more than two years of development, while Tencent still adopts a follow-and-defend approach. More critically, to date, Tencent has not yet had a format that truly benchmarks against Hema Fresh. Tencent urgently needs a new retail sample to benchmark against Alibaba's Hema Fresh. The author believes the most suitable sample is Yonghui's Super Species, and predicts that Tencent will further increase its investment in Yonghui in the future.
III. JD
JD has not had particularly impressive results recently. In the Double 11 e-commerce main battlefield, JD is in second place. In new retail, JD is also following Alibaba's pace. It seems that JD's genes do not include innovation capability; it focuses more on strategic investment. In the future, JD should continue to follow Tencent in so-called investment-based borderless retail.
But from JD's own perspective, it is unwilling to be just an investor. JD should not be exactly like Tencent; it will try hard to launch new projects, create its own self-operated model that can lead trends, and challenge brand-explosive projects like Hema. This is JD's core for 2018, fundamentally different from Tencent's underlying investment philosophy. Whether JD can transform its e-commerce genes into a representative borderless retail product should be its biggest challenge in 2018.
IV. Suning
Additionally, Suning unexpectedly appeared on Wanda's investment list. Suning Commerce's announcement shows it will invest 9.5 billion yuan to buy 3.91% of Wanda Commercial's shares. Where did Suning get so much money?
According to Suning Commerce's financial reports, its net profits for 2013, 2014, 2015, and 2016 were 372 million yuan, 861 million yuan, 873 million yuan, and 704 million yuan, respectively. That is, if relying solely on Suning's own profits, the 9.5 billion yuan acquisition would be equivalent to nearly ten years of its profits. Earlier, on December 12, Suning announced it had completed reducing its stake in Alibaba by 5.5 million shares, receiving about $940 million from the sale, with expected net profit of about 3.25 billion yuan. But this is still insufficient to support its investment in Wanda, which inevitably requires Alibaba's support.
As Alibaba is the second-largest shareholder of Suning Commerce, Suning's massive external investment must also be approved by Alibaba. For Alibaba, the offline traffic value of Wanda Plaza is enormous, and it certainly will not give up such a large traffic pool.
Summary
Wanda, for cash, has chosen to release its most premium core assets. Wanda, to avoid paying more tuition, found a new owner for its online technology subsidiary. Wanda, for transformation, is going all out without hesitation. Wanda, for status, is racing desperately toward 1,000 commercial plazas.
In 2018, everyone must first survive. That is the main theme this year.
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