Alibaba Duels With Tencent for Online Dominance in China

By Lulu Yilun Chen - Aug 7, 2013 1:00 AM GMT+0800

Two of Chinas richest men are intensifying their rivalry over the worlds
biggest Internet market.
Jack Mas Alibaba Grou !olding "td.# the country$s largest e%commerce
comany# on Aug. & said it blocked Tencent !oldings "td. '())*s +eChat to
sellers. ,our days later# billionaire -ony Mas Tencent introduced online
ayment features to mainland China users of its +hatsA%like chat software.
Alibaba is headed for what may be the biggest initial share sale since
,acebook Inc.# while Tencent is Chinas biggest Internet comany# with more
than .)) million users for +eChat# which started in /)&&. 0oth have made
urchases and encroached on each others established markets in the battle
for dominance of the countrys online sending. Mc1insey 2 Co. estimates
China$s Internet retail will trile to 3.45 billion from /)&& to /)&5.
6Tencent is still in the land%grabbing hase#7 said 0illy "eung# an analyst at
8!0 8esearch Institute 9dn. in !ong 1ong. 6Theyre still trying to imrove
their market share for the e%commerce sace. :n the other hand# Alibaba is
trying to defend its territory.7
Tencent has surged 5& ercent this year# the most on !ong 1ongs benchmark
!ang 9eng Inde; and ushing its market value to almost 34) billion. Alibabas
valuation may be about 3&)5 billion should it ush forward with an I-:#
Goldman 9achs Grou Inc. 'G9* estimated in a July // reort.
Wealth Management
Tencent# meanwhile# has agreed to o<er online ayment services to &)
Chinese fund comanies# according to a July =ling with Chinas securities
regulator. It also tied u with 0ei>ing%based China Asset Management Co. this
month to o<er wealth management services to +eChat users.
Alibabas Ma has made other ac?uisitions. The e%commerce grou on May &)
announced the 3/4@ million urchase of /A ercent of 0ei>ing%based maing
comany AutoBavi !oldings "td.
Alibaba hasnt ket u with Tencents +eChat in mobile develoment# Ma said
in March# even though his comany started develoing its mobile business
three years ago.
More than A@ ercent of Chinas Internet users regularly access instant
messaging# making it the most oular online alication in the country#
followed by search engines with about A) ercent# according to data comiled
by 0loomberg.
Gaming Lead
About (C.5 ercent of 9ina +eibos @4.A million daily active users in March
accessed the service through mobile devices# according to an earnings call in
May.
9ina +eibo also began roviding secial designed ages for some Alibaba
sellers on Aug. 5 to romote their roducts on the microblog# according to a
>oint statement from the comanies.
Tencent will robably focus on using its advantage in gaming and develoing
related services on mobile latforms# while Alibaba will be more focused on e%
commerce# said Ale; +ang# a 0ei>ing%based analyst at Internet consulting
grou I8esearch.
Alibaba# which started as a business%to%business marketlace# has turned into
a more consumer%focused oeration getting most of its growth selling to
individuals across the worlds most oulous nation. To imrove deliveries# it
>oined with =ve comanies and other artners to found Cainiao Internet
Technology "td.# aiming to hel establish a network that can reach any lace
in China within /@ hours.