Tencent moves money online through Wechat
The battle between China’s Internet titans intensified as Tencent Holdings Ltd started allowing its WeChat users to make online payments on Monday, a move that taps into the lucrative e- commerce market, which is dominated by its archrival Alibaba Group Holding Ltd.
The WeChat platform, a mobile social networking application developed by Tencent, China’s largest Internet company by market capitalization, released its version 5.0 on Monday, in the product’s biggest update since it was launched in January 2011.
“Through WeChat, any person or any business can get all kinds of valuable services in a much more convenient way,” said Zhang Xiaolong, senior vice-president of Tencent, in an official company statement.
The new features of WeChat 5.0 include social games, scanner tools and most importantly payment integration, which is seen by many insiders as “the most aggressive function” of all.
The WeChat payment function can integrate bank accounts ( credit or debit card) with a customer’s WeChat account, which allows WeChat’s more than 300 million users to make purchases on several e-commerce platforms.
With the help of scanner tools, goods can be scanned using a product’s barcode, allowing the user to jump directly onto the e-commerce website selling the product and order it immediately.
Lu Zhenwang, an independent Internet expert and the chief executive officer of the Shanghai-based Wanqing Consultancy, said the latest version of WeChat has the potential to be a gamechanger in China’s mobile Internet world.
“Tencent, Alibaba and Baidu Inc, the top three Internet giants in China, each has a unique advantage in online business. Their territories are well-established and it is difficult to break into their counterparts’ territory.
“But there is no dominant player in the online-to-offline business sector in China at the moment. WeChat’s payment function is not based on the personal computer but on the mobile phone, which can largely combine online and offline business,” said Lu.
Lu added that the payment function has great potential to become Tencent’s new source of growth and a strong challenge to Alibaba, which accounts for more than 50 percent of China’s e- commerce market.
McKinsey & Co estimates China’s e-commerce market will triple to $ 395 billion from 2011 to 2015. Alibaba, the dominant player in this field, is heading toward what may be the biggest initial share offering since Facebook Inc.
Tencent’s move is seen as the latest counter-offensive against Alibaba, which said last Wednesday that it will block online sellers’ access to WeChat, citing security reasons.
Shoppers have instead been offered the option to log on to Alibaba’s Taobao marketplace using their accounts on Sina Weibo, the Chinese Twitterlike micro-blogging platform, starting on the same day that Tencent released its WeChat 5.0.
The move is seen as an attempt to help advertise the products of some online vendors on Sina Weibo and try to redirect potential shoppers from Sina Weibo to Taobao.
In April, Alibaba acquired an 18 percent stake in Sina Weibo for $ 586 million, further illustrating the collaboration between the two companies.
However, Alibaba’s move will merely steer some shoppers from Sina Weibo to Taobao, and it is not a breakthrough similar to what Tencent did with its WeChat 5.0, said Lu Jingyu, an analyst on the mobile Internet with iResearch Consulting Group.
“Our research found that two Tencent apps, WeChat and QQ, have taken up about one- sixth of the total time people spend on the mobile Internet. That’s far beyond what other Internet companies can reach,” Lu said.