Jan.24 (NBD) -- Social media giant Tencent Holdings Ltd. (Tencent), along with supermarket chain operator Yonghui Superstores Co., Ltd. (Yonghui), agreed to take a stake in Carrefour China, Carrefour said Tuesday. NBD later confirmed the matter with Carrefour China's media director Zhang Ying.

Yonghui also announced its investment in Carrefour SA with Tencent, hoping to achieve win-win results through collaboration on supply chain integration, new technology application and business enablement.

Rivals rush to deploy online retailing

Carrefour is one of the earliest foreign retailers entering China. In earlier days, most Chinese retailers are small grocery stores. Big supermarkets like Walmart and Carrefour were well received in China market. To customers, they were synonyms of "fashion" at that time. 

However, Carrefour China hasn't been doing well in past years. Its revenue and profits both started to drop around 2012.

Globally, Carrefour's net profit fell 24 percent to 746 million euros in 2016, pressured by declining sales in Asia and its home market of France. It lost 58 million euros in the Asian markets alone in the year. 

While its rivals Walmart and RT-Mart have been rushing to team with internet giants like JD and Alibaba, Carrefour is pressured to speed up its online retail efforts. 

Yu Simin, a retail analyst of the China E-commerce Research Center, told NBD online retail is a new sector for Carrefour. Without the help of internet giant, it has to start from scratch.

Thierry GARNIER, vice president of Carrefour's Asia Pacific region, once said that the company will not give up China market. As the second largest retailer worldwide and the first foreign retailer entering China, the company has made enormous efforts there. It will never exit China market.

SEC demands more information disclosure

According to Carrefour China's company filing, Tencent and Yonghui had signed a letter of interest, under which they will invest in Carrefour China. The deal will help make the best use of Carrefour's retail expertise, Tencent's excellent technology, and Yonghui's ample running experience. When the deal is closed, Carrefour will remain as the largest stakeholder of Carrefour China. 

When asked by NBD about the implementation of the smart retail project and follow-up cooperation, Zhang Ying declined to disclose more detailed information.

Yonghui announced Tuesday that it has entered into a letter of intent with Carrefour, but the investment is still under discussion, and they haven't reached consensus yet. The company also reminded investors of making rational investing decisions.

Later that day, Yonghui was asked by the Shanghai Stock Exchange (SSE) to disclose more information, which includes the amount of its investment in Carrefour China, equity ratio, cooperation model and contents, as well as many others.

The retailer's shares has suspended trading as of today.

Email: tanyuhan@nbd.com.cn