Although Alibaba and Tencent became a household name just a few years ago, I cannot seem to imagine a China where reading the news, making travel arrangements, ordering for dumplings and paying for vegetables could not have been an app away.
To the ordinary man, both of these apps are a survival kit and a means to convenient living in the mainland. Nevertheless, what he fails to see is how much rivalry has been hoarded between the two major giants as a result of a frenzied competition for the dominance of businesses and unwavering access to the wallets of shoppers.
Image: Tech in Asia
The Tencent Group that runs the Wechat app, last year, gained a net worth of $249bn as opposed to Alibaba’s $246bn net worth. This can be attributed to the popularity of the online gaming business and advertising. The Honour of Kings game run by the Tencent group has been ranked as the highest grossing mobile game in the world with 200 million registered users. It would have been a surprise for the establishment not to have made a fortune out of it especially after a 17 year old boy suffered a stroke from playing the game for 40 hours straight without a single break. Again, the Wechat app which seems to be the social media of Asia registered 890 million active users in 2016 alone. Aside from the benefits of the app’s wallet feature, it also possesses translation quality, trade texts, video and phone calls and voice message features that enhance communication standards. Indeed the Wechat app is a formidable force to reckon with, particularly when it could cause the sale of iPhone to drop from 13.6% to 9.6% within a year.
However, what Alibaba lacks in social media app and gaming ventures, it makes up for in e-commerce and start up business investments as well as international payment systems. Not only is Alibaba a major stakeholder in the shares of JD.com, it also spent $4.7bn on UCWeb (a Chinese browser company). About 760 million product listings in 2013 alone on Taobao should make you realize that a chunk of Alibaba’s revenue come from the online shopping site.
But what reason can vividly explain the rivalry that these two strongholds have against each other? Well, the Ministry of Industry and Information Technology released data to show that China’s mobile payments had totaled 81 trillion RMB as of October 2017. What this means to both companies is that, with 724 million mobile phone users in the month of June 2017 only, their mobile payment products can retain dominance in the industry . First off, these companies have targeted stores and retail outlets as they contribute to 85% of retail sales in China. Thus, store owners are left to choose between the products of the two tech giants, which is Alipay and Wechat Pay, for mobile transactions, so that instead of seeing stores requesting for either Wechat Pay or Alipay, their loyalty will result in them requesting payment from only one app. In return, the physical stores get access to payment systems, logistics networks and other services. In the quest to capture the retail market, Alibaba has already spent $486 million dollars this month on this initiative.
A quote from Shu Qi reads, “Having no competition is a bad thing. Competition makes you try to improve yourself all the time”. At the end of the day, this tension has caused Tencent to announce a partnership between WeChat and Silicon Valley startup Citcon to roll out a cashless payment service for Chinese travelers in the United States. Moreover, Wechat now offers cashless payment in 15 other countries like Singapore whilst Alipay offers the same service to 26 other countries. Alibaba Group Financial Service even announced a tie-up between Alipay and U.S. card processing service First Data, and offered $1.2 billion to acquire MoneyGram.
Eventually, these two giants will be too large to be contained in the mainland, thus, breaking into the global market as they have already started to jostle and conquer overseas markets.