Three months after Baidu’s announcement of its plan to set up a joint venture with the Japanese e-commerce operator Rakuten, the JV was formally founded in Beijing’s Tongzhou district last week.

Ren Xuyang, vice president for Baidu’s business expansion, told local media that the reason for choosing Tongzhou to locate its joint venture is because of the preferential policies offered by the local government. In February 2010, China’s international e-commerce demonstration base was launched in Tongzhou. At the same time, the Tongzhou government is working on trial measures for the development of e-commerce enterprises. The government not only provides support in tax and finance to e-commerce companies registered in the district, but also gives special awards for talent incentive.

Ren revealed that the basic structure of the joint venture has already been formed and the employees of the new company will be from the two companies. Its B2C online shopping mall is expected to be launched officially in July 2010.

On January 27, 2010, the Chinese search engine Baidu and the Japanese e-commerce website Rakuten announced plans to jointly set up a B2C online shopping mall, with Rakuten owning 51% and Baidu owning 49% of the new joint venture. The two parties will jointly invest USD50 million in the joint venture over three years. According to the agreement, the two parties will jointly form the board of directors of the joint venture and the major executives will be dispatched by the headquarters of Rakuten.