Cooperation will help both companies address strategic, structural weaknesses: experts
Dalian Wanda Group and China UnionPay held a strategic cooperation ceremony on Thursday where they announced plans for "omni-channel physical cloud services" that will link shopping at physical stores with online financial services and provide new consumption experiences for shoppers.
Experts said that the cooperation is necessary for both Dalian Wanda, which needs to strengthen its online business, and China UnionPay, which needs to broaden its market amid rising competition in the online payment sector.
According to a report China UnionPay sent to the Global Times on Thursday, under the cooperation the company will deploy many of its innovative financial applications, such as the Quick Pass payment, at all the property resources under Dalian Wanda including commercial centers, shopping malls, supermarkets, cinemas, hotels, theme parks and hospitals. Quick Pass carries out offline contactless payments for smartphones, facilitating the payment process.
The cooperation will also lead to some discounts and reward point exchanges, the report showed.
As a part of the cooperation, Shanghai Lianyin Venture Capital Co, a subordinate of China UnionPay, will invest in Wanda Internet Technology Group, the online finance arm of Dalian Wanda, by taking a stake in the company.
China UnionPay and Dalian Wanda signed the strategic cooperation deal in the first half of 2016, China UnionPay noted in its report.
Liu Dingding, an independent technology analyst, said that the cooperation will benefit both companies. For Dalian Wanda, the cooperation will push Dalian Wanda one step forward in its strategy to explore business opportunities in the online finance sector, Liu said.
The property giant set foot in the Internet sector about five years ago and has since made several moves, such as setting up e-commerce website wanhui.cn and spending more than 0 million to acquire online payment platform 99bill.com.
Some of those efforts have proved unsuccessful. For example, Dalian Wanda teamed up with Internet giants Baidu Inc and Tencent Holdings in 2014 to jointly build an online-to-offline e-commerce company. But the plan was abandoned in 2015.
Liu said that the integration of offline and online businesses is an "irreversible trend" and companies like Dalian Wanda must "walk down that road" no matter how many obstacles they meet.
Wang Jianlin, chairman of Dalian Wanda, has stressed since 2015 that Wanda must conduct the fourth business transition and shift its business focus from real estate to services, with four pillar industries: commerce, culture, Internet and finance.
Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, said that he was unsure about Dalian Wanda's chances for success. "The threshold of online payments is not very high, and that's why many companies, big and small, are all swarming into this area."
"However, the winners won't only be the big players. There will also be so-called 'grassroots' companies. I would say that Wanda lags behind companies like Alibaba in this sense," he noted.
Liu also said that China UnionPay has been under great pressure in recent years because of the rise of online payment firms, particularly Alipay. Therefore, it must seek cooperation with private companies, particularly those with ample resources like Dalian Wanda.
Dong noted that Alipay had stolen a lot of market share from China UnionPay. "Now the two companies seem to dominate different markets, as China UnionPay is used more by domestic financial institutions like banks, while Alipay is more prominent in daily activities. The threat from Alipay is pushing China UnionPay to upgrade as well as expand its business," Dong told the Global Times on Thursday.