Tencent makes retail push with Yonghui

China's tech titan Tencent plans to buy a stake in domestic supermarket operator Yonghui Superstores Co in its latest push in retailing.

JD.com-backed Yonghui said in a filing to the Shanghai Stock Exchange late Monday that Tencent affiliate Linzhi Tencent Technology is in talks to purchase the company's 5 percent share. The filing also stated Tencent plans to take a 15 percent stake of a supply chain and logistics unit of the supermarket chain via a capital increase.

The Beijing News cited a source close to Yonghui Superstores as saying JD is serving as a go-between in the deal between Tencent and Yonghui Superstores. This, the source said, is a means for Tencent and JD to compete with Alibaba in new retailing, which centers consumer experience and emphases online and offline integration.

A senior executive told Caixin that Super Species, a new retail unit of Yonghui Superstores, will be integrated with Tencent's social media platform WeChat upon the transaction’s completion, thus its payment and promotion channels could be expanded via WeChat Pay and other functions. Meanwhile, Tencent could be expected to extend its offline payment to contest with Alipay.

As JD's May filing to the US Securities and Exchange Commission showed, Tencent's wholly-owned company Huang River Investment Limited is the largest shareholder of JD, with a 18.1 percent stake.

Though Tencent was an indirect shareholder of Yonghui Superstores via JD's shareholding, the Beijing News analyzed that because Yonghui Superstores and JD are not well-matched in areas like data and supply chain management, Tencent's direct buying could break these business barriers.