Tencent also bought a stake in Yonghui Superstores Co Ltd, apparel retailers Vipshop Holdings Ltd and Heilan Home, mall operator Wanda Commercial, and this month snagged a strategic tie-up with grocer Bubugao.
In the other corner is Alibaba, which has invested even more heavily in Suning.com>, Intime Retail, Sanjiang Shopping Club, Lianhua Supermarket, Wanda Film and IKEA-like home
improvement store Easyhome.
Key to the battle is China’s nearly $13 trillion mobile payment market, where Alibaba and Tencent are going head-to-head. Alibaba took a 33 percent stake in its payment affiliate Ant Financial this month ahead of an expected mega IPO.
Ant operates China’s top mobile payment platform, Alipay, while Tencent’s payment system on its hugely popular Weixin chat app is catching up fast. Both firms are also making a big push in cloud computing and data.
“I think for payment (the retail push) is a very critical part because it’s almost a gateway,” said Yu. Brick-and-mortar stores in China account for about 85 percent of retail sales, creating a huge lure for tech giants.
“That’s the pot that Alibaba, JD.com and even Tencent want a slice of,” Yu added. “That’s the majority of the business where they can actually look for future growth.”
In return, the physical stores get access to payment systems, logistics networks and other services – not to mention the reams of data on consumers that the tech firms control.
Alibaba invested $486 million this month in a retail-focused big data firm, saying the deal meant it could better “help brick-and-mortar retailers succeed in the digital age.”