Global EditionASIA 中文双语Français
Business
Home / Business / Technology

Tech duo in duel for supremacy

By HE WEI | China Daily | Updated: 2018-01-31 07:42
Share
Share - WeChat
A customer (right) buys groceries at a food market in Nanning, the Guangxi Zhuang autonomous region, on Dec 23, 2017. More and more customers are using mobile payment apps such as WeChat Pay or Alipay for everyday purchases. [PENG HUAN/FOR CHINA DAILY]

Alibaba, Tencent are targeting each other's strongholds in efforts to gain more market share and expand

China's two technology giants are growing more alike than they are different.

After all, Alibaba Group Holding Ltd and Tencent Holdings Ltd are both racing up the elite league of the world's most valuable companies. By placing a string of costly bets at home and abroad, both are extending tentacles into previously uncharted territory.

With their shares doubling in the past year, the pair have added a combined $450 billion in market capitalization, and contributed 45 percent of the rise in the MSCI China Index, according to Bloomberg's data.

While Alibaba was for years mainly known for its e-commerce business, and Tencent for its gaming products, the two companies have been increasingly entering each other's strongholds. Mobile payment, bike-sharing, retail and entertainment are just a few of the services both companies now offer.

Their founders, Jack Ma and Pony Ma, even share the same family name.

The two entrepreneurs, among the most luminary business figures in China, have not shied away from the inevitable head-to-head confrontation. During the 2017 Global Fortune Forum in Guangzhou, Guangdong province, the duo publicly admitted to respecting each other while having to butt heads across so many areas.

China, especially in the digital sphere, is moving to two credible "ecosystems"-Alibaba and Tencent-which are both trying to provide as wide a range of services as possible to customers, said Richard McKenzie, partner at global consultancy Oliver Wyman.

"As such, the competition we see today is just the beginning. They will do it in different ways and with different business models-certainly there will be more overlap and competition in the future," he said.

Indeed, it's tough to fathom just how pervasive mobile wallet Alipay or messenger app WeChat is for everyday life, until the fifth person asks to scan your QR code to pay for a cup of latte or to simply connect the two of you.

E-wallet solutions Alipay and WeChat Pay provide a consortium of services, from digital payment and ticket booking, to wealth management and civic services-so ubiquitous to Chinese that they verge on a way of life.

Nearly 94 percent of the yuan being digitally handled by Chinese go through the two platforms, according to consultancy iResearch.

Amid an escalating duel for supremacy throughout last year, they were engaged in a string of battles to encourage consumers to use their e-wallet solutions by dishing out a slew of incentives, such as cash rebates, free bus rides and even a chance to win gold.

And the battle is spilling beyond China's borders. Through acquisitions and partnerships with local payment networks and e-commerce vendors, both stand to offer cashless payment in 200 countries and regions.

"It's effectively a closed loop: You have demand generation, real transactions, payments data, real identity and can do credit scoring much better than in the West," said Li Chao, a senior fintech analyst at iResearch.

Instead of getting their own hands dirty amid this competition, the tech duo have a timeworn tradition of initiating proxy wars, usually through portfolio companies.

In the ride-hailing war, it was Alibaba-backed Kuaidi Dache versus Tencent's Didi Dache, which later merged after a series of cash-burning wars. In bike-sharing, Ofo's yellow bike fleets are bolstered by Alibaba and its affiliates, while Mobike stands in Tencent's camp.

"One difference is that Alibaba is more into owning everything, such as its indigenous online travel platform Fliggy and local services platform Koubei, while Tencent is more into partnership, with Tong Cheng and eLong in the travel sector and Meituan-Dianping in food delivery," said Wang Xiaofeng, a senior analyst at research and advisory firm Forrester.

The list goes on to include ticketing, video streaming, cloud computing and almost every realm of business life.

"Alibaba and Tencent have been the most successful in their execution of developing a leading position in one or two segments, expanding into additional areas leveraging your most popular properties to drive traffic, then weaving all properties together into a mutually reinforcing ecosystem," said Mark Natkin, founder and managing director of Marbridge Consulting Ltd.

McKenzie at Oliver Wyman said the core to such all-rounded confrontation is to vie for customer's time and share of attention, as both ecosystems have a goal of "offering everything" so customers never feel the need to leave the system.

Natkin said that both are working closely with policy planners in supporting official smart city and internet plus initiatives, which will only help further consolidate their dominance.

But according to Charlie Dai, principal analyst at Forrester, nobody is safe in the fast-changing Chinese market.

"Startups in emerging areas, such as computer vision, robots and the industrial internet of things, also have opportunities to take market share from both Tencent and Alibaba," Dai said.

Top
BACK TO THE TOP
English
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349
FOLLOW US
CLOSE