Alibaba Financial Arm to Boost Apps as China Net Users Go Mobile

Alibaba Financial Arm to Boost Apps as China Net Users Go Mobile

Alibaba Group Holding Ltd.’s financial affiliate plans to add functions to its mobile apps as users in China increasingly access the Internet from smartphones and tablets. The financial arm of China’s biggest e-commerce company will also introduce fund products and promote a cloud-computing service, said Lucy Peng, chief executive officer of Alibaba Small & Micro Financial Services Group that includes the Paypal-like third party payment system Alipay.com Co.Billionaire Jack Ma, Alibaba’s founder, is driving an expansion into financial services by the company that runs an online marketplace for goods from frozen mackerel to acupuncture lasers to Boeing Co. 737s. Alibaba is considering moving toward a listing in the U.S. after Twitter Inc. goes public, and has been valued by investment banks at as much as $120 billion.

“In the past three years I’ve repeatedly split and merged sections for Alipay’s mobile business to search for a breakthrough in innovation,” said Peng in her first press briefing since being appointed in March as CEO of the affiliate. “What we want is to help users complete any money-related functions they want on the Internet.”

Alipay’s latest mobile version allows payments to be made on vending machines for when users can’t get a mobile-phone signal and will be open to third-party developers.

Leftover Treasure

Alibaba’s financial arm also offers a cloud computing service, known as Ju Baopen, to finance companies. It works with five banks and has signed cooperation deals with another 20.

Alipay began offering fund products from Tian Hong Asset Management Co. in June on a platform called Yu’E Bao, which translates to “leftover treasure.” Alipay users can put their money in Yu’E Bao, which invests in funds. There’s no minimum amount and customers can withdraw their cash anytime.

“We have to maintain the open nature of Internet companies, and we also need to have the safe and cautious nature of financial services,” said Peng.

Yu’E Bao attracted 2.5 million users with 5.7 billion yuan ($934 million) of investments by the end of June, Alipay said.

Zhejiang Alibaba E-commerce Co., the parent of Alipay, last week said it would pay 1.18 billion yuan to buy control of Tian Hong.

Shareholder Information

The new fund products will come from third parties, Peng said, declining to identify them.

Alibaba Small & Micro Financial Services Group is being restructured and its shareholder information will be disclosed “soon,” said Peng. She said the company is registered in China using the name Zhejiang Alibaba E-commerce Co. and declined to elaborate.

Peng said the company has five business units: domestic， international，shared platform，innovative financial business and financial management.

Alibaba Small and Micro Financial Services Group contained two loan companies as of July, as well as Alipay, which has more than 800 million registered accounts.

Peng is one of the co-founders of Alibaba, which was formed in 1999. She was CEO of Alipay from 2010 to 2013, and until this year was also Chief People Officer of Alibaba, a post she held for more than a decade.

She earned a degree in business administration from Zhejiang Gongshang University in 1994 and taught at Zhejiang University of Finance and Economics.

To contact Bloomberg News staff for this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

Alibaba Intensifies Its Finance Efforts

Internet Company Pursues Growth Beyond E-Commerce

PAUL MOZUR

Oct. 16, 2013 2:08 p.m. ET

HANGZHOU, China—Alibaba Group Holding Ltd.’s finance affiliate signaled Wednesday that it would continue its aggressive expansion, underscoring the Chinese Internet company’s ambitions to grow beyond e-commerce.

Executives with Alibaba Small and Micro Financial Services, which includes the Alipay online-payment unit, also played down any potential issues that company might have with China’s regulators as it seeks to expand its financial-products business.

Over the past year, Alibaba’s financial-services unit has taken a number of steps to expand. It has moved into insurance, broadened its loans to merchants on its e-commerce sites and introduced an easy way for shoppers to invest any excess funds from their Alipay accounts in financial products online.

All of those steps mean China’s largest e-commerce company by transactions is moving steadily toward becoming a full-service bank. That has led some analysts to worry that the rapid expansion by the private company into a sector dominated by state-run banks and conservative regulators could lead to problems as entrenched interests in the sector fight back against the competition.

At a news conference Wednesday at Alibaba’s headquarters outside the eastern Chinese city of Hangzhou, the company’s executives wouldn’t rule out the possibility of a future application for a banking license from China’s banking regulator. They added that the company hasn’t done so yet.

Simon Hu, the head of the company’s financial-innovation division, said Alibaba’s financial unit would expand its offerings in line with regulations, adding that the government has taken an open stance toward the securities and financial-services industries.

Addressing the financial unit’s practice of distributing loans to small businesses, Mr. Hu said: “It isn’t whether or not we’re allowed to provide financing to small firms, but whether or not we want to do it and whether or not we are able to.”

Alibaba’s financial division has provided loans to small and midsize companies for the past three years. It expects to have a loan book valued at about $2 billion by the end of this year.

The financial-services division also aims to expand its financial products by cooperating with financial institutions, according to Fan Zhiming, president of the company’s domestic business group.

“Before the end of the year, we will see many companies that offer financial products cooperating strongly with Alipay’s site,” he said.

Alibaba in September said it would team up with China Minsheng Banking Corp.600016.SH -1.82% to offer wealth-management products, credit-card operations and electronic banking. Minsheng is China’s 10th-largest bank and the biggest that isn’t state-controlled. The bank said it would open a store on Alibaba’s Taobao site to sell financial products and could link users’ accounts to Alipay accounts.

Alibaba Small and Micro Financial Services Chief Executive Lucy Peng played down the company’s potential challenges to banks, saying that it had helped to speed a number of online-banking products. She added that it cooperates with more than 100 banks and its financing is often linked to credit cards issued by those banks, bringing the banks a windfall from spending on Alibaba.

Alibaba ran into some regulatory difficulties in June, when China’s securities regulator said a new service it offered to allow users to invest directly in a money-market fund didn’t meet some of the country’s regulatory requirements. The service allows users with money stored online on Alipay, which allows users to make direct transactions online, to invest in a fund pegged to corporate debt and government bonds.

In response to China’s securities regulator, Alipay said the new service wouldn’t be suspended and that investors’ interests would be protected. The new service currently has 16 million users, Mr. Hu said Wednesday.