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Case Study of Tencent’s E-Commerce Strategy

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Case study of Tencent’s E-commerce Strategy

Executive Summary
Tencent’s E-commerce strategy didn’t work well. The company’s core business is QQ which is an online instant messenger. All of tencent’s other business will be rolled out base upon the QQ. They want people who use QQ can also shop online easily. So they made the strategy according to that point.
They developed E-commerce websites which made no difference with Taobao and Tmall but didn’t make them to success. Why does this happen? What’s Tencent’s strategy?

Introduction
As Tencent announced to take 15% stake of JD.com[1], which is the largest online retailer of China, in March 2014, it also implicated the failure of Tencent’s previous e-commerce strategy. In the meantime, Tencent almost sold all of its own e-commerce business to JD, including Paipai marketplace(C2C) and QQwanggou(B2C), logistic assets and personnel, as well as part interest of 51Buy.com.This combination shows that Tencent has completely given up its own e-commerce business which were created by its own team in 2005.
On the one hand, Tencent is the fourth-largest Internet company in the world whose market value has reached about US$ 150 billion in 2014 which means it has sufficient cash stockpile. On the other hand, it’s a giant company which has developed diverse and abundant online business including IM, game, search engine, social network, video and portal. Without shortage of money or resources, it seems a little confused for Tencent’s choice to finally let go its own e-commerce business since it has been investing in e-commerce for nearly 9 years. Besides e-commerce is still one of the most promising markets of Internet in China. So why did Tencent make this choice? What is Tencent’s business strategy on E-commerce? Where does Tencent’s new opportunity lie in?

Tencent’s Core Competency and Business Model
In 1990s, Internet

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