Tencent to Invest at Least $1.6 Billion in China’s Qianhai

Tencent Holdings Ltd., Asia’s largest Internet company, set up e-commerce and Internet finance businesses in China’s Qianhai economic zone as it steps up the battle for users with Baidu Inc. and Alibaba Group Holding Ltd.

The company will invest at least 10 billion yuan ($1.6 billion) in the district of the southern city of Shenzhen, Jerry Huang, a director of investor relations at Tencent, said in an e-mail yesterday. Qianhai was created in 2010 as a testing ground for more liberal financial policies, including freer yuan usage and capital-account convertibility.

Alibaba, founded by billionaire Jack Ma, and Baidu are competing with Tencent to sell shopping services and online finance to China’s 591 million Internet users. The investment in Qianhai, a 15-square-kilometer (5.8 square mile) area near Hong Kong, could help Tencent venture into loans and expand e-commerce, said Jim Antos, an analyst at Mizuho Securities Asia Ltd. in Hong Kong.

“They’re following Jack Ma and Alibaba,” Antos said by phone yesterday. “If they could provide working capital finance to smaller companies, they’re going to get more usage of their site, the smaller company will be happy and they’re going to be happy.”

Tencent is waiting for more details about the financial policies coming out of Qianhai, Huang said in the e-mail. The companies in the zone have a registered capital of about 1.6 billion yuan, he said.

Billionaire Battle

Shares of Tencent rose for a fifth day, gaining 1.8 percent to HK$474.60 at the close of Hong Kong trading. The stock has surged 91 percent this year compared with a 3 percent rise in the city’s benchmark Hang Seng Index.

Alibaba, Baidu and Tencent are each led by billionaires.

Tencent Chairman Pony Ma is China’s fourth-richest man with a net worth of $11.9 billion, according to the Bloomberg Billionaires Index. Baidu Chairman Robin Li is the nation’s wealthiest with $13.2 billion while Jack Ma is worth $3.7 billion.

The microfinance unit of Alibaba, China’s largest e-commerce company, has extended in excess of 120 billion yuan to more than 500,000 small online businesses since starting three years ago, Teresa Li, a spokeswoman for Alibaba in Hong Kong, said in an Oct. 15 e-mail. The average size of the loans is about 30,000 yuan and the non-performing loan ratio is less than 1 percent, she said.

Chinese Internet companies are also creating online investment products that provide higher returns than the benchmark one-year savings rate in China.

Alibaba’s financial affiliate created Yu’E Bao, an online fund product that has attracted more than $16 billion from 30 million Chinese users by Nov. 14.

Baidu, owner of China’s largest Internet search engine, offered in October “Baifa,” an online money-market fund managed by China Asset Management Co. The product attracted more than 1 billion yuan of investment from more than 120,000 customers on its debut, according to Kaiser Kuo, a Beijing-based spokesman for Baidu.

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