While Chinese Internet giants Alibaba Group and Tencent Group consider adding to their investments in U.S. based e-retailers, U.S. investment firms, including Sequoia Capital and IDG Capital Partners, are stepping up their stakes in e-commerce startups in China.

IDG, for example, has invested in 18 e-commerce startups in China, including children’s products e-retailer Beibei.com and eyeglass e-retailer Inmix, in the first half of this year, the company says.

Although IDG also invested in many companies in the online finance and online services fields, e-commerce is its largest industry for investing this year, accounting for 25% of its 73 investments. 

We regret that we didn’t invest in some e-commerce Chinese giants in the past, but we have enhanced our portfolios in the e-commerce industry,” Xie Wenzheng, IDG‘s investment manager, tells Internet Retailer.

The latest market trend getting IDG’s attention in China is social media e-commerce, called Weishang in China (meaning micro-commerce). As China’s Twitter-like social network Weibo and mobile messaging app WeChat have become extremely popular, some brands have recruited individuals to sell products to their personal friends on social media.

“In China, about 10 million people are working as sellers of Weishang. It’s a totally different business model compared with traditional online retailing. Weishang focuses on people’s connections and is not driven directly by the product itself. Also, selling to friends is much easier as trust is already there, Xie says.

IDG says it recently has invested in Chinese social media e-commerce service provider Qingcong Media. The startup’s major business is helping brands improve their sales from the Weishang channel. Qingcong offers one-stop Weishang services, such as designing social media campaigns and building a distribution channel based on social media. 

IDG says it has invested “several million U.S. dollars” in Qingcong Media in a Series A financing round.

“Some Chinese brands, such as cosmetics brands Kans, have topped 100 million yuan (about $16 million U.S.) per month in sales from Weishang,” Xie says. “I think China has a unique environment for social e-commerce growth. Chinese rely more on social media, especially because many Chinese [consumers] take public transportation every day, so they will spend more short periods on social media. Also, smartphones have become popular in China, and mobile social media apps such as WeChat have penetrated everywhere in China, even smaller cities or towns,” Xie says.        

According to Alibaba’s most recent quarterly report, more than 55% of sales in China were generated on mobile devices, while in the United States, only 30% of web sales come from mobile shoppers for the leading mobile retailers ranked in the newly released Internet Retailer 2016 Mobile 500 Guide.

IDG was one of the earliest U.S. venture capital firms to enter China and has invested in more than 300 Chinese companies, including Internet giant Tencent Group and smartphone make Xiaomi Inc., No.2 in the Internet Retailer 2015 China 500. But IDG missed out investing in some other e-commerce companies that have become big successes, such as Alibaba and JD.com. 

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