Tencent talking with jd.com: reports

Tencent Holdings, China's largest Internet company by market value, is in talks with leading e-commerce firm jd.com about combining their e-commerce operations, media reported Thursday.

If successful, the deal will help Tencent challenge the dominant position of its main rival Alibaba Group in China's business-to-consumer (B2C) e-commerce market, analysts said.

Tencent and jd.com are considering options that include Tencent buying a 6 percent stake in jd.com in exchange for integrating its online shopping operations with jd.com, Bloomberg reported Thursday, citing a source who asked not to be identified.

Reuters also reported Thursday the possible merging of Tencent's e-commerce business with jd.com, citing an unnamed person familiar with the matter.

The two reports followed a report on Wednesday by the Guangzhou-based 21st Century Business Herald that said Tencent may take a stake in jd.com, citing a source from an investment bank.

Tencent could not be reached for comment by press time Thursday while jd.com refused to comment when contacted by the Global Times.

"Yesterday, I talked to a person from an investment bank in Hong Kong who said the news about the two company's possible partnership is true and the two companies will announce the deal soon," Lu Zhenwang, CEO of Shanghai Wanqing Commerce Consulting, told Global Times Thursday.

"Mobile online retail is Tencent's weakness. To compete with Alibaba, it needs online platforms such as jd.com and Dianping, from which consumers can shop and get information for food, entertainment and travel," Lu said, noting these could boost Tencent's mobile payment and mobile finance operations.

Tencent announced Wednesday it has bought a 20 percent stake in -Dianping, operator of China's leading restaurant review and business listing site. It also announced it would partner with leading online travel service provider Ctrip.com International Ld on mobile payment.

On January 30, jd.com filed to raise $1.5 billion in an IPO in the US which could be the largest by a Chinese Internet company.

Jd.com plans to announce the deal with Tencent before the shares sale, according to Bloomberg's report Thursday.

"It's worthwhile for Tencent to invest in jd.com, the only company in China which can rival Alibaba's B2C platform tmall.com. The partnership can also raise jd.com's valuation in its IPO in the US," Lu said.

Jd.com announced in December 2013 it was set to exceed the company's annual sales target of 100 billion yuan ($16.43 billion) for the first time, compared with 60 billion yuan in 2012.

China B2C market reached 162.4 billion yuan in the third quarter of 2013, up 50 percent year-on-year, data from Analysys International showed.

The country's B2C e-commerce sales may exceed $180 billion this year, according to New York-based market research firm eMarketer.

However, not all are optimistic about the possible partnership between Tencent and jd.com.

"The amount of Tencent's investment in jd.com could be as big as billions of dollars. But the prospect of jd.com turning profitable is still quite murky," Feng Lin, an analyst at the China E-Commerce Research Center, told the Global Times Thursday.

"Yixun.com, Tencent's existing online retail business, has become quite competitive since it was purchased. It will be a challenge for Tencent to balance the relations between yixun.com and jd.com," Feng said.

Yixun.com, an online shopping website founded in 2006 in Shanghai, was acquired by Tencent for 200 million yuan in 2012. It accounted for 2.1 percent of China's B2C market at the end of the third quarter of 2013, according to Analysys International.