Tencent Has Taken A Stake in Dianping, China’s Yelp

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Dianping logo

The rumor that Tencent and Dianping were in talks about acquisition or investment has swirled for a while. TechNode learned from multiple sources that Tencent has already acquired a stake in Dianping and will announce it as soon as early this week.

It is rumored that Tencent has bought 20%-25% a stake at a valuation of USD1.8 – 2 billion.(Update: It’s 20% as the two companies announces on Feb. 19. Price isn’t disclosed. )

Around last October it was rumored that Baidu wanted to to buy the whole Dianping for about USD2 billion. In 2011 the company was valued at about USD1 billion in a over USD100 million round of funding. Since 2005, Dianping has received multiple rounds of funding from investors including Sequoia Capital China and Google China.

Edward Long (aka Long Wei), co-founder of Dianping, said they’d not sell the whole company and had no plan for IPO in the near future when asked about the acquisition rumor at our TechNode/TechCrunch conference last November. Zhang Tao, co-founder and CEO, said in last year that the company might launch IPO within five years.

Founded in April 2003, Dianping is in its eleventh year. It is now the most popular ratings & reviews service in China. As of the fourth quarter 2013, monthly active users were 90 million, with 75% page views from mobile. There are 8 million merchants and 30 million ratings/reviews on the platform. It covers 2300 cities in China and a dozen of countries.

Although it doesn’t have a major competitor in ratings & reviews, Dianping’s rivals are in group-buying and other lifestyle/local sectors. Since group-buying has become one of Dianping’s major revenue sources, Meituan and a couple of other group-buying services are direct competitors. Dianping claimed it became No.1 in terms of market share in the first- and second- tier cities as of the end of 2013. Meituan, however, claimed it had had 50% overall market share in late 2013 and managed to turn a profit at the year end.

Dianping also makes revenues from advertising and other services for business.

Not having been growing as fast as some other Chinese businesses like group-buying services, Dianping has big plans for acceleration this year. Previously Dianping only provided information, but now it has launched food delivery service and is building a hotel booking service. It also has spun off the business division for wedding-related information and will possibly come up with services.

It is expected Tencent will integrate Dianping’s content or services into its properties especially WeChat, the almighty mobile messaging app whose Official Account system enables traditional merchants to do CRM or even sell goods directly there. Tencent, who is notorious for developing/copying all kinds of web/mobile services, has its own ratings & reviews, group-buying, lifestyle/local services. But none of them is as successful as Tencent’s communication software and gaming.