The CEOs of China's two leading online marketplaces sat down together at the Global Mobile Internet Conference (GMIC) 2015 in Beijing on Tuesday to announce their merger and future vision.

58.com, a Chinese online classifieds market, announced on April 17 that it has acquired a strategic stake in one of its biggest competitors, Ganji Inc. The two parties signed a memorandum of understanding in Beijing on March 14 and 58.com has agreed to acquire a 43.2 percent fully diluted stake in Ganji, including 34 million in stock shares and US$412.2 million in cash, according to the company's statement.

The two former rivals have now merged into one company, which is expected to be valued at as much as US$10 billion, according to a Financial Times report in early April. The two online companies provide a range of online advertising listings including job adverts, housing and used goods trading.

Yao Jinbo, founder of 58.com, said 20 hours before the statement that he was negotiating with seven or eight people including Yang Haoyong, the founder of Ganji.com, about the deal brokered by the investors of Ganji.com.

"The deal fell apart several times during the negotiation. Sometimes I wish I could have smashed some wine bottles," Yao laughed, "But we eventually cut the deal after 20 hours, later we had to admire ourselves."

"The merger was due to changes in the market. We both have done well in the past, and we both are making innovations in many new models. And we realized that if we continue fighting each other, we can only win today and lose tomorrow. We are rivals, but there are more rivals out there," Yang said.

"I felt that when we two signed the deal, everything switched," Yao said, "Now me and Haoyong stood at a relatively high position to look at this. The teams under us, especially the marketing teams from both sides, had been fighting against each other for a decade. Suddenly, we had to tell them we are not enemies any more, and we are brothers now."

Yao said the teams would continue to compete before they got used to the fact the two companies are one family.

"In the past, we would look at each others' sales, marketing and public relations campaigns once a week and think of how to respond to take a greater share of local markets from each other, " Yang remembered, agreeing that real collaboration and integration will take time. "Now we said we are brothers, not everyone can adapt to that immediately, except Yao and I. We have to suddenly shake hands and look forward, well, this takes time."

Yang added both parties have to avoid the previous cutthroat competition and price wars. "Since we are together now, benign competition will be a good trend for our company. We are excited because in the past, our fighting sometimes got out of control and we had no bottom line. Now we have a bottom line and we can do better in the market."

The two bosses said they will open the platforms of 58.com and Ganji.com to third party platforms for users to find local services. They said they also saw many opportunities in many new areas which have fewer rivals.

"We will both save hundreds of millions in marketing costs," Yang said, "I pay a lot of attention to the new businesses we initiated together and we have more money to invest in many new projects. Our start-up teams are happy about this: they get more money and more support from both sides. Although 58.com and Ganji.com cannot provide all the services people need for their lives, what we are doing is perfecting the whole ecology," Yang said.

Related

• China's online marketplace 58.com makes debut on NYSE
• Ganji receives $200m investment

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