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Chapter 529, page 0517: [Strategic Cooperation between Tencent and JD.com]

Tencent headquarters.

Zhang Xiaolong questioned, "I want to know, who exactly released the news about cooperating with Alipay?"

“It’s me,” Liu Zhiping said.

"What is the purpose?" Zhang Xiaolong pressed.

Liu Zhiping said, "We need to force JD.com to make concessions during negotiations."

Zhang Xiaolong stated, "I want to make my position clear here: I firmly disagree with allowing Zhangxun to integrate with Alipay!"

“I also object,” Lai Zhiming said.

Lai Zhiming is the general manager of Tencent's Tenpay, and Tenpay's current position is quite awkward.

At that time, Tenpay belonged to Tencent's MIG business group, sitting on the same table as departments such as mobile browsers, mobile security, and App Store. Therefore, it was only regarded as a tool by Tencent's top management, far from the prestigious status it would later attain.

With JD.com's deep cooperation with Chen Guiliang's Youpay, and Tencent's own e-commerce and mobile payment businesses failing to take off, Tencent Tenpay could only continue to be a payment tool for QQ and games.

Zhang Xiaolong said, "If you want Tenpay to cooperate with JD.com, you can invest in JD.com and make Tencent a shareholder of JD.com."

Liu Zhiping said, "JD.com raised $15 billion last year, so they are not short of money for the time being. We have been negotiating with JD.com since last year, but Chen Guiliang has been obstructing us and has been preventing JD.com from accepting Tenpay. This time, we announced our cooperation with Alibaba purely to put pressure on JD.com."

"Did you really negotiate with Alibaba?" Zhang Xiaolong asked.

Liu Zhiping said, "They've talked, but they're still talking. But I don't think they'll reach an agreement; the conditions Ma Jieke offered aren't satisfactory."

Zhang Xiaolong angrily retorted, "You haven't even reached an agreement, and you're already announcing the cooperation?"

Liu Zhiping laughed and said, "That's just unofficial news."

Chen Guiliang assumed this cooperation news was a joint effort by Alibaba and Tencent to counter ByteDance. Little did he know, it was merely a smokescreen used by Tencent to force JD.com to make concessions.

Lai Zhiming suddenly said, "JD.com can't possibly have a deep partnership with Tenpay. YiXun.com is still competing with JD.com. Unless, YiXun.com swaps shares with JD.com."

“I object!” Wu Xiaoguang immediately chimed in.

Wu Xiaoguang is the CEO of Tencent E-commerce Holdings, an independent entity not affiliated with any business group within Tencent. His position within Tencent even surpasses that of Tenpay and Zhangxun (i.e., WeChat in another dimension).

This company has a very large business, including QQ Shopping, Paipai.com, and YiXun.com, which are respectively positioned to compete with Alibaba and JD.com's platforms. In other words, it is competing with both Alibaba and JD.com simultaneously.

Wu Xiaoguang was the main driving force behind the collaboration between Tencent's e-commerce platform, Zhangxun, and Alipay. He didn't care about the fate of Zhangxun and Tenpay; he only wanted to expand Tencent's e-commerce business, and Zhangxun and Tenpay were merely tools in his scheme.

Wu Xiaoguang said, "I think we should still cooperate with Alipay. The biggest pain point for us in e-commerce is traffic and conversion. If Zhangxun can integrate Alipay, then our online shopping platform can complete transactions more smoothly within the Zhangxun ecosystem."

Lai Zhiming retorted sarcastically, "Then don't use Tenpay. Why not use your own payment system instead of your competitor's Alipay? What do you call that? Colluding with the enemy!"

Wu Xiaoguang said, "If Tenpay were so good, would I need to cooperate with competitors?"

“I support General Manager Lai’s decision to refuse to integrate Alipay into Zhangxun,” Zhang Xiaolong said.

Tencent has a reputation for fostering internal discord, and these three guys, who were not subordinate to each other, started arguing right there in the senior management meeting room.

Seeing that the argument was getting heated, Little Ma said, "Let's adjourn the meeting for now and resume it tomorrow. Martin (Liu Zhiping) will stay."

The others gradually left, leaving Liu Zhiping behind alone.

Tencent's current strategic development direction is somewhat confused and chaotic.

Zhangxun's user base is growing rapidly, but it doesn't yet know how to monetize it. It doesn't have a public WeChat account or mobile payment functionality.

Tenpay has a very mature payment system on computers, but it has never been able to take off in mobile payments, and even online shopping payments are not widely used.

Liu Zhiping said, "Tencent's core strategy for the past two years has been to develop e-commerce, but Taobao and JD.com's positions are becoming increasingly secure. Should we change our strategic thinking?"

Little Ma was hesitant. He had been considering this issue for a long time, but he could never really make up his mind.

Because e-commerce is so profitable, I really can't bear to give it up!
Liu Zhiping continued, "Instead of doing it ourselves, we should directly invest in JD.com. We can then port the Tenpay app, which has low usage, to the Zhangxun platform and rename it Zhangxun Payment. Through Zhangxun Payment, we can cooperate with JD.com to fully develop the Zhangxun ecosystem."

“But JD.com has been refusing to cooperate,” Pony Ma said.

Liu Zhiping said, "We're offering QQ Shopping, Paipai.com, and Yixun.com as dowry in exchange for JD.com's promise to let Tencent invest in us."

If Wu Xiaoguang, as the head of Tencent's e-commerce division, heard about this plan, he would probably be so angry that he would curse Liu Zhiping's ancestors for eighteen generations.

Tencent's e-commerce platform currently holds a position second only to core products like QQ, making it akin to a powerful regional governor.

Liu Zhiping's plan was tantamount to kidnapping his own regional governor and handing him over to the enemy state of Jingdong in exchange for Jingdong's deep cooperation—"We are ready to fight to the death, why does Your Majesty surrender first?"

Later, Tencent actually did just that!

But from Pony Ma and Liu Zhiping's perspective, if Wu Xiaoguang has been unable to make e-commerce work, why can't we choose to give up and directly invest in JD.com instead?

After seeing Liu Zhiping off, Little Ma smoked one cigarette after another in silence. He was finding it difficult to make a decision about this plan.

This means that Tencent will completely abandon its self-operated e-commerce business.

The following day, he spoke privately with the heads of each department and finally made the following arrangements:
First, Tenpay was moved from MIG (Mobile Business Group) to CDG (Corporate Development Group). This elevates Tenpay's departmental status, transforming it from a tool into one of Tencent's core development focuses.

Secondly, we should have Zhangxun and Tenpay cooperate, merging the Tenpay app into Zhangxun and renaming it Zhangxun Payment. Simultaneously, since Tenpay also supports QQ, we could create a QQ Wallet.

Immediately afterwards, Liu Zhiping began to re-engage with JD.com.

……

JD.com.

Liu Zhiping stated, "We exchanged $1.5 million in cash, plus 100% equity in QQ Shopping and Paipai.com, and 90% equity in Yixun.com, for an 18% stake in JD.com. In addition, Tenpay will engage in deep cooperation with JD.com."

Upon hearing this, Liu Qiangdong was completely stunned.

YiXun.com is a direct competitor of JD.com and has a significant influence in East China, even hindering JD.com's development in the region to some extent.

While QQ Shopping and Paipai.com were not particularly successful, they still had a large amount of user data and online store resources.

If this cooperation can be achieved, it will be a tremendous boost to JD.com!
Just half a month later, Chen Guiliang was invited to a JD.com board meeting, where Liu Qiangdong presented a preliminary due diligence report.

Apart from Chen Guiliang, the other directors were very pleased and almost unanimously supported the deal.

In this situation, Chen Guiliang could not object, and even if he did, it would be ineffective.

Chen Guiliang glanced at the preliminary due diligence report and tried to find fault, saying, "QQ Shopping and Paipai.com are overvalued. If we swap shares based on this valuation, it will seriously harm the interests of our existing shareholders."

Xu Xin, an investor in JD.com's Series A round, laughed and said, "Yes, the valuation still needs to be lowered a bit. But overall, I support it, as it will greatly benefit JD.com's future development."

Other directors also expressed their agreement to revaluate the company, but supported cooperating with Tencent.

Chen Guiliang asked, "Where are my Youpay and WeChat Pay accounts?"

Liu Qiangdong said, "We will continue to deepen our cooperation, and the original agreement will remain unchanged. However, JD.com and Tencent will also cooperate more deeply."

Chen Guiliang glanced at the other directors and found that they were all overjoyed.

He suddenly didn't want to talk anymore.

After the board meeting concluded, Liu Qiangdong asked Chen Guiliang to stay behind alone.

Dongzi, who never smokes, not only offered Chen Guiliang a cigarette but also lit one for himself: "Mr. Chen, I'm really sorry about this. But a company is a company, and an individual is an individual. As the head of JD.com, I really can't refuse Tencent's cooperation proposal."

What else could Chen Guiliang say?
Alipay and Youpay are engaged in a payment war, and Youpay has no choice but to cooperate deeply with JD.com. Now that Liu Qiangdong has essentially sold his daughter to two different companies, and other shareholders firmly support him, Chen Guiliang has no other options.

Fortunately, Chen Guiliang still had some trump cards up his sleeve.

And there's more than one trump card.

For the next period, JD.com and Tencent negotiated, while Chen Guiliang tried his best to find fault and create obstacles. Ultimately, Tencent paid more cash but received fewer shares in JD.com.

The announcement of the collaboration shocked the entire internet industry.

At the same time, ByteDance announced that WeChat has launched the red envelope function and the official account function, and that Discuz! has launched a beta version of its one-click app generation tool.

Chen Guiliang even personally posted on Weibo: "The sixth volume of 'Those Things of the Ming Dynasty' is currently being written. I have created a WeChat public account, and the chapters of the sixth volume will be updated for free on the public account. Ten lucky readers will be randomly selected from the comments of each chapter to receive WeChat red envelopes."

The launch of WeChat Red Packets, WeChat Official Accounts, and one-click app generation tools caught Tencent's Zhangxun off guard.

The real game-changer, the Spring Festival Gala red envelopes, haven't even been released yet. When they are released, they will surely solidify ByteDance's position in the market!

But this has already frustrated Tencent. Pony Ma even personally called Zhang Xiaolong, urging Zhangxun to quickly follow suit and launch its own red envelope and public account features.

Tencent headquarters.

Wu Xiaoguang, head of Tencent's e-commerce division, has caused trouble for who knows how many times.

Ma said, "The contract has already been signed, and this cannot be changed."

Wu Xiaoguang posted his resignation letter: "I'm here to resign! Also, my stock options must be cashed out in advance and converted into cash for me."

Little Ma remained silent.

Wu Xiaoguang became increasingly angry as he spoke: "How can you do things like this? You've already destroyed the bridge before we've even crossed the river!"

Pony Ma said, "Didn't I say? I'll give you another position; you'll still be the vice president of Tencent."

(End of this chapter)