Make me your Homepage
left corner left corner
China Daily Website

WeChat vs Alibaba: Battle of the brands

Updated: 2014-03-11 08:57
By Mike Bastin ( China Daily)

Tencent Holdings Ltd's recent announcement that it will open up its WeChat brand to business vendors and allow online payment for products and services will certainly intensify the battle with archrival Alibaba Group Holding Ltd.

But is this really a race where the latest technology is key or is it a battle of the brand images?

WeChat's sudden, explosive emergence - launched only two years ago and already boasting more than 300 million regular users - onto the social networking scene, has led to the creation of an extremely emotionally powerful brand. "Fun", "excitement" and, above all, "friendship" and even "romance" are associated deeply with the WeChat brand and its brand experience.

Alibaba, in sharp contrast, has established dominance in China's e-commerce industry and online payment in particular but has developed little or no emotional brand image. The Alibaba "brand", while successful at the moment, relies basically on the perception of "competence" and "trust".

This gap in emotional association between the brands could prove decisive as WeChat continues with ambitious new products and new market expansion plans.

Any technological competitive advantage and trust gained from industry experience that Alibaba may hold at present is likely to be short-lived.

Sustainable competitive advantage can only be maintained with a powerful set of emotional associations in addition to the typical rational values that characterize the current Alibaba brand.

Economic history is replete with examples of the often-dramatic vicissitudes in brand fortunes where over-reliance on rational brand values is concerned. The Nokia Oyj brand capitulation provides a prime example.

This is not say that WeChat's attempted usurpation of the Alibaba brand will be plain sailing. Not at all. E-commerce is still dogged by security and privacy issues, especially where online payment is concerned. Here, the more serious, experienced, mature and rational Alibaba brand maintains a clear advantage over the younger WeChat brand.

However, WeChat's rapidly increasing international presence offers another source of sustainable competitive advantage. More than 100 million people regularly use WeChat from outside the Chinese mainland. Despite ambitious plans and recent announcements, the Alibaba brand has yet to make any significant international inroads in its quest to "go global".

WeChat's international expansion is bound to bring with an increased global brand awareness and a healthy measure of brand credibility.

But, above all, it is the WeChat brand image that results from social networking that will provide an enormous association opportunity.

Integrating the technology to allow online payments and other e-commerce applications with the current messaging service should not prove too difficult, but if brand integration is achieved at the same time, then WeChat and Tencent could even topple the mighty Alibaba.

For this to take place, it is clear that Tencent needs to "stretch" the emotional brand image that WeChat has established in the minds of its regular users and not attempt to develop a separate online payment product brand.

In future, the WeChat brand should also be positioned as an "umbrella" brand that stretches across further additions to the suite of applications offered by Tencent.

At a time when many Chinese companies are seeking to improve their competitiveness with more emotionally positioned brands both domestically and internationally, WeChat sets a perfect example of just how powerful and potentially sustainable a competitive advantage this set of values could provide.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer of marketing at Southampton Solent University's School of Business. The views do not necessarily reflect those of China Daily.