With Stake In Restaurant Website, Tencent Holdings Scrambles To Lead China’s Online-to-Offline Investment Market

 
 
 

The major story in tech this week — Facebook’s purchase of WhatsApp — obscured a smaller one which, while more mundane, illustrates the curious ways social media continues to penetrate Chinese consumerism. Tencent Holdings Limited, which owns China’s version of WhatsApp—WeChat—bought a twenty percent stake in Dianping, a restaurant review site used in 2,300 cities across China, for an undisclosed amount, according to Reuters. In a press release, Tencent detailed plans to integrate Dianping’s warehouse of consumer reviews, restaurant reservation/ordering services, and group buying into their social messaging platform. As of August 2013 WeChat (known in Chinese as “Weixin”) users can make mobile payments on the same app via an online banking account.

For tech pundits in China, the move is polish on an already clear trend: Chinese Internet giants Tencent, Baidu and Alibaba are racing to claim territory in online-to-offline investment systems. With the Tencent deal, eaters at restaurants listed on Dianping across China will now need merely toggle from their group chat on WeChat to evaluate whether or not their hot pot is really authentic Sichuanese style, as the owner has assured them. A brief pause in conversation, and an order of frog stewed with garlic and lotus shoots is on the way.

Food and beverage is only one sphere in which tech giants are wrestling to guarantee dominance of their own online-to-offline system. Tourism, merchandise, and taxi driving are also in the crosshairs.

Tencent’s overall aim, according to Xinjing, is to build a “closed-circuit” in which the conglomerate transposes its expanding portfolio of Internet services onto agreements with “traditional ”forms of retail and purchasing, i.e. those that manifest as physical objects — like stores — in the real world. The company recently rolled out a map function (similar to GoogleMaps) and has entered agreements with two large retail/merchandise companies, Wangfujing and Wuhan Zhongshang, whose services includes import/export and real estate in addition to large-scale merchandise commerce. The map function will bring the knowledge of these various websites to bear on the street, informing and facilitating consumer transactions and directing online traffic to physical locations, all via one app on a mobile device.

Tencent’s “closed-circuit” concept is not lost on Alibaba. Xinjing reports that Alibaba plans to bridge its own newly developed food/beverage service, and online mall, Tmall, with Gaode, a data and navigation website that Alibaba acquired this month, into a loop that encompasses geographic location, product information, payment and delivery.

The different strengths of Alibaba and Tencent show that the concept of a “closed-circuit” is still an abstraction. Alibaba has long dominated ecommerce, and has a superior bank of market information to draw upon. But Tencent has a firm grip on mobile. As competition between the two deepens into online-offline commerce, we may start to get answers about whether there will be one, two or three “closed-circuits,” or whether a “closed-circuit” is even a viable metaphor to begin with.