Will the third time be the charm for Rakuten in China?

Rakuten first tried to make inroads into China in 2004, when it bought 20 per cent of Ctrip in its first substantial overseas investment, only to sell the stake in 2007. Even though the investment got Rakuten the right to appoint a director on Ctrip’s board, it was said that Ctrip rebuffed Rakuten’s participation in China’s travel industry via the investee company. Subsequently, Rakuten’s online hotel reservation subsidiary set up a Shanghai branch on its own to service the market directly.

In 2010, Rakuten formed an ecommerce joint venture with Baidu called ‘Lekutian’, but that JV collapsed just two years later. Explanation of the closure was brutal but clear: “[I]ntensified competition in the Chinese ecommerce industry” that caused Lekutian, which Rakuten owns a majority stake (51 per cent) of, to underperform. In the next year, Rakuten’s Vivi unit inked a different, non-retail, deal with Baidu to offer video streaming services subtitled in English and Chinese.

Fanli, focusing on rebate-based loyalty shopping, connects Chinese shoppers with discounts on third-party ecommerce stores, such as Taobao, JD and Ctrip. Rakuten’s North American discount stores, Ebates.cn and Extrabux, will benefit from the tie-up.

This latest launch, as it appears to analysts, is a result of how Rakuten has learned its lesson to not work with bigger companies but to target smaller, niche partners in China.