China’s ecommerce giants battle for dominance

December 21, 2013 Leave a comment

December 20, 2013 4:49 am

China’s ecommerce giants battle for dominance

By Simon Rabinovitch

With Alibaba making waves in China’s staid financial sector, banks have every reason to be worried. But there are signs that Alibaba itself is also worried – about Tencent, the company behind the popular WeChat messaging app that is now muscling into the financial space.The WeChat challenge is similar to the threat Instagram once posed to Facebook. While Alibaba has been the dominant ecommerce company on desktop computers, WeChat has made such big inroads on smartphones that it now has the ability to take a bite out of the mobile ecommerce market. “Alibaba’s dominance in the PC era cannot be fully carried over to the mobile era,” says Alex Wang, an analyst at internet consulting group iResearch.

Tencent is waging a multi-front war against Alibaba. In August, it launched a payment tool on WeChat, taking aim at Alipay, Alibaba’s lucrative online payment service. It has also tied its Yixun online shopping site to WeChat, trying to make it the mobile alternative to Alibaba’s ecommerce site Taobao.

Just this week Tencent invested in Howbuy, an online trading platform for mutual funds, in what could be a precursor to its launching an investment product like Alibaba’s Yu’E Bao.

Alibaba is fighting back. In August it announced that Taobao merchants would no longer be able to advertise QR codes, the digital barcodes, linked to external websites. Alibaba says this was done to prevent spam and fraud, but analysts believe the bigger concern was WeChat’s use of QR codes to power its payment platform, effectively taking transactions away from Taobao.

Earlier this month Alibaba also started charging PC users for Alipay transactions, but kept its payment services free on phones. With this move, it is trying to encourage its customers to shift to mobile and so prevent WeChat from gaining more ground.

There has been mudslinging, too. Alibaba and Tencent have accused each other of writing negative reports about the other company to sully their rival’s reputation.

Asked about the intensifying battle, both say they welcome it. “Competition will only serve to raise the bar in terms of user experience,” says Florence Shih, Alibaba spokeswoman.

Filed under TMT Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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