Big news today about Sina and Alibaba, two of China’s most popular online services. Although the stories are not directly related, they demonstrate the speed at which the Chinese digital media universe is changing and maturing.
The first story, as reported by Reuters, deals with microblogging giant Sina Weibo. According to Reuters, Sina plans to launch its own online payment system at some point in April. The service will allow users to buy items through Sina’s media platform from vendors and merchants who will peddle their wares directly from their corporate or company Sina Weibo pages. Instead of linking customers to e-commerce companies like TaoBao to make their purchases, vendors would be able to sell directly to customers, potentially cutting into the usage and revenue of sites such as TaoBao and 360Buy.
The service will also compete with the Alibaba-affiliated Alipay system which is far and away the most popular e-payment system in China today. Despite the competition, it does not seem as though WeiboPay will not be the sole method of paying for items purchased on Sina Weibo. Hong Lizhou, general manager of Weibo’s marketing strategy told Reuters that the Sina-based purchasing system will also accept payments via Alipay and credit card.
It will be interesting to see if Weibo maintains customer choice in payment methods or if the company eventually moves to only accepting its propriety e-payment system. I personally think it could go either way: Both Sina Weibo and Alipay are market makers in their respective fields and thus there is no particularly strong incentive for users to abandon one payment system for another. This duopoly will be reinforced if WeiboPay expands into a true e-commerce payment system that can be used for purchases in the e-commerce universe at large, rather than remaining a system dedicated to purchases on Weibo. Given Sina’s size, this type of eventual expansion seems like a realistic possibility. On a related note, the WeiboPay system has the potential, if developed correctly, to be a big money maker for Sina. If even a third of real Sina users make use of the system and Sina charges a fee per transaction or per account, it could raise some serious revenue for use in research, online infrastructure building or acquisitions.
The second story of revolves around former Alibaba CEO Jack Ma. For those new to China’s e-commerce scene, Alibaba was founded in 1998 by Jack Ma and a group of associates and has grown to be one of China’s biggest e-commerce and internet-services companies. Ma stepped down earlier this year and took some time to wax philosophic about some of Alibaba’s recent struggles.
As TechinAsia reports, Ma recently commented (or admitted, depending on how you interpret his words) that Alibaba has failed to keep pace with emerging rivals like Tencent in the crucial mobile sector and in innovation at large.
Alibaba founder and former CEO Jack Ma. Photo Credit: World Economic Forum (www.weforum.org)/Photo by Natalie Behring
While WeChat may not seem like a conglomerate slayer, Tencent has plans to monetize the service and plans to move into the offline e-commerce sector. With WeChat’s huge (and rapidly growing) number of users, any service that Tencent rolls out could spread far and wide very quickly; if they choose to create an e-payment system, then Alipay and Weibopay may have to compete with a third major player in the Chinese e-payment universe. Also of note for those interested in Chinese e-commerce: Alibaba is featured this week (23 March 2013) cover of The Economist’s U.S. edition. I’m sure the magazine’s coverage of the company will be quite good and therefore worth a read.
These stories underscore how quickly the internet services world in China moves, changes and reinvents itself. As digital marketers, what are your thoughts? Will WeiboPay take off? Will Tencent create a similar system and call it “WeChatPay?” How will Alibaba get its groove back?
Sources: Reuters, TechinAsia, The Economist
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