Tencent E-commerce CEO On Strategy in 2013

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Wu Xiaoguang, one of the masterminds behind Tencent’s core product, the instant messaging software QQ, was appointed CEO of Tencent’s E-commerce Holdings in the company’s restructure back in May. Seven months later, Mr. Wu was interviewed by local media CBN, and he talked about his strategic views regarding his division in 2013.

The macroeconomic uncertainty and downward trend of 2012 has negatively affected investment decisions and consumer market in China. However, the  e-commerce biz was the exception to the rule, as it jump. “It is very likely that a new wave of e-commerce players from traditional industries will be the main driving force in the following year. Vertical integration between internet and offline business will surely be the way to go in the future.” said Mr. Wu.

The e-commerce biz arm under Mr. Wu’s charge is independent from other Tencent subsidiaries.  takes charge of is an independent subsidiary excluded from the six groups Tencent has now. Is there any strategic implication of this arrangement? Wu explained the strategic implication of this arrangement by summarizing the e-commerce arm’s development in the past six years:

“We have undergone three stages so far: the incubation stage was when Paipai was chosen as a seed business to incubate; the second one was the growing stage during which Chinese e-commerce was gradually mixed with social platform and integrated into the whole internet industry; we have just matured enough to enter the third stage, and the company has decided to let us take more responsibilities by being independent and create more values on our own.”

According to Mr. Wu, the independence could help his division to become more focused and enjoy more flexibility and initiatives on decision making. Currently, Tencent has set no hard goals for the e-commerce division, but the parent company does have the vision of building the division into a retailing platform. “We would never see ourselves as a retailer, instead we seek ways to share our user base and technological advantage with more partners. This is what Tencent’s open strategy is all about.”

Compared to the SNG (Social Networking Group) and IEG (Interactive Entertainment Group), the e-commerce biz has kept a low-profile, especially when most China ecomm players are having high profile fights.

But that’s not what interests Mr. Wu. “Self-operation plus an open platform for quality merchants is what we have been working one since we were spun off. The past year has seen newly integration and transformation of Tencent ecommerce. In 2013 we will stick to our strategy and try to have a turnover of RMB 200billion and earn ourselves a good reputation.”

At last Mr. Wu revealed plans on the hotly contested O2O business. He agreed that the O2O mode is very innovative and practical thanks to the drastic rise of the mobile internet industry. “The core philosophy we believed is to improve efficiency of traditional business mode by IT solutions. Also, we thought that the O2O mode depend on good cooperation with offline merchants. It surely is for the long run, and we need to educate and develop partners. We also need to experiment ourselves; we have tried and failed many times until Weixin membership card came along. Next year, we will definitely put more resources in this field.”