(Yicai Global) June 30 — Chinese e-commerce giant JD.Com has renewed the strategic cooperation agreement with Chinese internet giant Tencent Holdings for three more years.
JD.Com will issue up to USD220 million worth of Class A ordinary shares to Tencent, which will continue to provide JD.Com with level-one and level-two access points on its WeChat platform and internet traffic support, the Beijing-based company said in a statement yesterday.
The pair will also cooperate in fields such as artificial intelligence, information security, communications, technology services, marketing and advertising, and membership services, JD.Com added.
JD.Com still relies on Tencent’s access points and needs Tencent’s support to keep user growth, Pan Helin, co-chair of Zhejiang University International Business School’s research center for the digital economy and financial innovation, told Yicai Global. For Tencent, with the continuous progress of interconnectivity between internet platforms and the end of monopolistic external user traffic, the cooperation with JD.Com can increase its business volume, he added.
The partnership between JD.Com and Tencent began in 2014, when they signed a five-year deal. In 2019, they renewed the strategic cooperation for three more years.
The renewal eased concerns about Tencent giving up JD.Com shares. In December last year, the Shenzhen-based firm unveiled a surprise plan to distribute 457.3 million JD.Com shares worth HKD127.7 billion (USD16.3 billion) among its investors in the form of a dividend. Tencent’s stake dropped to 2.3 percent from 17 percent after the transfer.
JD.Com [HKG: 9618] was trading up 1.3 percent at HKD254.60 (USD32.45) as of 10.30 a.m. today. Its New York-listed stock [NASDAQ: JD] closed 0.5 percent up at USD64.85 yesterday. Shares of Tencent [HKG: 0700] fell 1.3 percent to HKD360.20.
Editors: Xu Wei, Futura Costaglione