Two China Tech Firms Take on Alibaba’s Fashion Business

Tencent and invest $863 million into retail-focused Vipshop

Author: Rahul Chadha

December 20, 2017

Tencent, owner of popular messaging app WeChat, and ecommerce platform have fired another salvo in their battle against China’s online retail market leader.

This week, both companies announced they would collectively pour $863 million into apparel-focused ecommerce platform Vipshop as they seek to carve out a toehold against dominant Alibaba. (Tencent is also a major shareholder in

Vipshop already has a decent presence among consumers in China, but it’s not overwhelming. A Q2 2017 poll of internet users in the country by ProsperChina for Fung Group found that 5% of respondents named Vipshop as their preferred retail channel—online or otherwise—for buying clothing. That still put it behind two properties owned by Alibaba: Tmall (15%) and Taobao (11%), along with offline department stores (14%) and brands’ own retail channels (14%).

Tencent and hope to leverage their expertise in other digital areas to help Vipshop improve its standing as an online retailer. For example, Tencent will aid Vipshop in creating an interface with its mobile wallet Weixin Wallet (WeChat is called Weixin in China), a move designed to smooth the flow of traffic from WeChat to Vipshop.

In addition, said it would feature Vipshop’s storefront on its mobile app and help the service hit certain gross merchandise value (GMV) targets through other means.

However, Vipshop founder and CEO Eric Ya Shen said in a statement that his company would continue to operate independently.

Richard Liu, chairman and CEO of, noted in the statement that his company was likely to benefit from Vipshop’s strong brand appeal among certain consumer segments. “This partnership will further extend the strong inroads that we have made with female shoppers, and will expand the breadth and reach of our fashion business,” Liu said., in particular, has been expanding into various markets in Southeast Asia this year, paralleling similar moves made by Alibaba. For instance, in September 2017, formed an ecommerce joint venture with Thailand-based retailer Central Group.

eMarketer estimates retail ecommerce sales in China will hit $1.133 trillion this year, and will grow at double-digit rates annually through at least 2021.