Tencent has teamed up with ParknShop and Yonghui Superstores to create a new combined grocery chain ParknShop Yonghui.

The joint venture, valued at US$170 million, aims to help Shanghai-listed Yonghui expand its business outside of the southern province of Guangdong, as well as consolidating Yonghui and ParknShop’s businesses in the province.

Yonghui gains half of the joint venture with $89.6 million while ParknShop will hold a 40 per cent stake with cash and equity contributions amounting to $72 million, and Tencent will pay $18 million yuan for a 10 per cent stake.

Tencent spent $750 million to buy a 5 per cent stake in Yonghui last December, with ambitions to shake up the bricks-and-mortar shopping market and compete with rival Alibaba Group.

Yonghui operates more than 830 supermarkets in 24 provinces, 21 of them in Guangdong.

ParknShop, a member of the AS Watson Group, has more than 50 shops in the southern province.
This is the first time companies within the group have formed a joint venture with mainland Chinese firms.