If 2017 was something of an annus horribilis for Wang Jianlin (see WiC375), this year is turning out better for the founder of Wanda. As a leading sponsor of soccer’s World Cup, the Wanda brand has been broadcast around the globe over the past fortnight. And Wang has been sending subtler messages home designed to facilitate his political ties in Beijing.
At the opening ceremony for the tournament he chose six impoverished students from schools in Guizhou to act as flag bearers (all of the schools have been targeted with funds to promote soccer training). The choice of province was significant: when President Xi Jinping was re-elected at the Party Congress last year he represented, yes, Guizhou. In a none-too-coded fashion Wang was trumpeting his loyalty to Xi and likewise his support for the investment in the sort of grassroots football needed to make China a soccer superpower (which is supposedly another of Xi’s priorities).
Wang has also teamed up with Tencent’s Pony Ma to reignite his e-commerce and technology ambitions. Earlier this month, Wanda Commercial Management Group announced that it was setting up a new business venture with Tencent’s subsidiary, Gaopeng to develop smart retailing.
As publications including Mingtiandi have pointed out, this isn’t a new idea but more of a “rebooted retail romance” following a failed tie-up between the two. Indeed, as we wrote in WiC394, many commentators had already written off Wang’s dreams of a tech-based future following the failure of Wanda Network Technology, which shed the vast majority of its 6,000-odd staff at the end of 2017.
At the time it seemed to be the end for Wang’s ambitions and a dismal footnote to his confident assertions that Wanda Tech would generate Rmb10 billion ($1.56 billion) of profits by 2018 and IPO by 2020.
What might be different this time? Firstly, the venture has a different shareholding structure. Last time the venture called Ffan.com was part of the wider Wanda group. It was supposed to provide software infrastructure for retailers, including online shopping platforms and Big Data-based membership systems. Wanda held a dominant 70% stake compared to Tencent’s 15% and Baidu’s 15%.
The new venture is a standalone entity in which Wanda will own 51%, Tencent 42% and former Groupon China affiliate Gaopeng the remaining 7%. The CEO will be Gaopeng’s current boss Gao Xia and the chairman is Wanda Commercial chairman Qi Jie.
Analysts note that the more equitable share split gives Tencent more skin in the game. It also provides one degree of separation from Wang himself. As a Wanda insider told Sina Finance, the Wanda Tech “dream team” found it difficult to deal with him and his desire to direct the business.
If the two main shareholders can get it right this time, the potential for synergies are huge. Wanda had 235 shopping plazas at the end of 2017 and footfall of 3.19 billion during the course of the year. It wants to develop smart shopping centres using Tencent’s social media and payments platforms. Tencent hopes to monetise its huge online traffic, with an online-to-offline strategy it terms as ‘smart retail’ (Alibaba is doing something similar through its investments in department stores and other bricks-and-mortar outlets – though it calls it ‘new retail’).
The reincarnation of the partnership with Tencent gives Wanda another chance to boost returns from its shopping centres after the asset sales last year.
“For Wanda Plazas, the cooperation will bring in enormous online traffic through WeChat and other platforms, enabling them to undergo smart upgrades, build a robust membership system, and increase the company’s overall value,” it said in a statement.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.