Support Skift’s Independent JournalismMake a Contribution Now
Tencent Holdings Ltd, China’s largest Internet firm by market value, has taken a minority stake in a local rating platform website, in a bid to use its online dominance in offline businesses.
The investment would give Tencent a 20 per cent stake in Shanghai-based dianping.com, the country’s most-recognised ratings and reviews site, according to a media briefing on Wednesday.
The tie-up is aimed at fostering the “leading online-to-offline ecosystem in China”, leveraging dianping’s high quality offline merchant network and Tencent’s social communications platforms such as WeChat and QQ, according to a statement from Tencent.
The partnership underscores the company’s “open platform strategy” by collaborating with vertical category leaders and promoting better services via mobile devices, said Martin Lau, president of Tencent.
“Mobile Internet has profoundly changed local life and the O2O (online-to-offline) market. Cooperating with Tencent will help us provide a better user-experience and merchant-service capability, accelerating our national expansion, especially in third-and fourth-tier cities,” said Zhang Tao, chief executive officer of dianping.com.
Founded in 2003, dianping positions its business model as a mixture of Yelp Inc and Groupon Inc, which offer both restaurant reviews and group-buying services, across 2,300 cities in China.
It boasts 90 million monthly active users and generated more than 30 million reviews by the end of 2013, according to company data.
The firm has sought to go public since 2007 after receiving US$4 million in venture capital from Google Inc. It has so far garnered private equity totaling $165 million.
“The platform has successfully tapped into the surging middle class because of a hunger for more word-of-mouth recommendations on restaurants and entertainment venues,” said Sun Mengzi, an analyst with IT consultancy Analysys International.
It ranke third among the country’s group-buying vendors, following meituan.com and juhuasuan.com, Sun noted.
The deal is poised to give Tencent, the country’s social networking and videogames superstar, more room to maneuver to integrate its 600 million users with the fast evolving payment functions embedded in its mobile chat app WeChat.
Users of WeChat can now access dianping’s group-buying services and merchant information on their handsets, paying with Tencent’s third-party payment tool Tenpay.
The purchase marks the latest wave of an industry-wide reshuffle as well-capitalized Internet companies snap up resources conducive to seamless online-to-offline deployment.
Tencent’s archrival Alibaba Group Holding Ltd announced a full takeover of digital mapping firm AutoNavi Software Co Ltd last week as location-based services become the next focal point for business expansion.
The head-to-head competition also extends into the taxi-hailing market, where the duo heavily subsidized drivers and riders who opt for different mobile payment tools for the transaction.
Group-buying sites perfectly combine location-based services and offline vendor information. Dianping was the only option for Tencent given Alibaba’s investment in meituan.com in 2011, said Zhao Nan, a professional blogger at TechWeb, an ICT information portal.
“Dianping is likely to ride to the rescue after Tencent-invested gaopeng.com, a similar daily deal site, failed to catch on,” said Zhao.
Dianping can also leverage Tencent’s extensive user-base to further penetrate the third- and fourth-tier cities and townships where huge business potential lies, said Zhao.
According to tuan800.com, a group-buying navigating website, the group-purchasing market expanded by 48.3 per cent last year in major cities including Beijing and Shanghai, while in lower-end cities, the rate was 93 per cent.
In a similar move, Alibaba launched mobile meal-order app taodiandian.com in 2013 to enable the ordering of restaurant dishes in advance of arrival, backed by navigation technology and mobile payment.
Its expansive business portfolio pushed up the value of shares of Hong Kong-traded Tencent by 121.07 per cent by Wednesday from a year ago. ___