SHENZHEN, Aug. 29 -- Chinese property giant Dalian Wanda Group announced it will set up an e-commerce joint venture with two of the country's leading Internet firms, Baidu and Tencent, on Friday in a move to challenge market leader Alibaba.

The preliminary investment will be 5 billion yuan (819.67 million U.S. dollars), and total investment will reach 20 billion yuan in five years, said Wang Jianlin, chairman of Wanda, during the contract signing ceremony.

Wanda will hold a 70-percent stake in the joint venture, the name of which is still unknown. Baidu and Tencent will each hold 15 percent.

The e-commerce company will be registered in Hong Kong. After a test run this year, its online services will be formally launched next year.

Alibaba, the country's largest e-commerce company, is poised to launch what is potentially the world's largest ever technology IPO in the United States.

Wanda, the real estate giant, owns 94 Wanda Plazas and 60 luxury hotels in China.

Tencent, China's largest Internet company by market value and Baidu, China's largest search engine, have both made forays into China's online retail space in the past but neither have managed to crack Alibaba's hold over the country's growing e-commerce market.

Alibaba, which the Wall Street Journal called "a mix of Amazon, eBay and PayPal with a dash of Google," had a gross merchandise volume of 248 billion U.S. dollars in 2013 on its three major trading platforms, accounting for 78.5 percent of the country's online retail market, according to the latest report by Analysys International, a Chinese market information provider.

The alliance of the three most powerful private companies is widely seen as an approach to challenge Alibaba's dominant position in the e-commerce market.

"The online-offline integration is an inevitable trend for future business terminals and e-commerce companies," said Dong Ce, CEO of the joint venture.

Tencent's vast number of users is a cutting edge for the new venture. Wanda hopes these users will become customers at its shopping malls, movie theaters and hotels through this new e-commerce platform.

As of June 30, monthly active users on Tencent's QQ instant messaging service reached 829 million while its mobile social platform Wechat boasted 438 million active users.

The tie-up with the two IT giants will turn Wanda into the world's largest online-to-offline(O2O) platform, according to Dong.

Wanda will launch e-commerce services in all 107 Wanda Plazas, including those scheduled for opening, by the end of 2014. By 2015, all Wanda's plazas, hotels and resorts will be equipped with e-commerce services, said Dong, predicting the Wanda e-commerce membership will exceed 40 million this year and 100 million next year.

The O2O is a market Alibaba has yet to tap and is worth trillions of yuan, said Xue Shengwen, a senior researcher with CIConsulting, an industry research firm.

The alliance of the three giants will change the landscape of China's e-commerce market, said Xue.