The battle between Chinese giants Alibaba and Tencent is fierce enough to stretch over multiple industries. Alibaba is China’s largest e-commerce provider, and is accelerating towards one of the most highly-anticipated IPOs the worldwide market has seen in a century, which analysts project could raises $100 billion. Tencent, meanwhile, has a market cap of $122 billion and appears to have an edge over its rival in mobile. Here are the five major battlegrounds on which these two adversaries compete.
Alibaba’s flagship payment service Alipay holds nearly 50 percent of the third party, online payment market, according to the company. Meanwhile Tencent’s Tenpay has conquered just over 20 percent of that same space. In 2011, Alipay acquired Australian travel platform OnCard Payments so Alipay customers could purchase tickets from airlines OnCard listed; then, this past year, Alibaba became the 51 percent shareholder of fund supervisor Tianhong Asset Manager. In this arena, Alibaba has the distinct advantage of processing payments from its own e-commerce platforms, which dominate the Chinese market. Alibaba claims to serve 500,000 merchants, while Tenpay provides payment solutions to all 1.1 million users of QQ, its online portal for messaging, mail and more.
In many spheres Alibaba is the heavyweight champion to beat — but not in chat. Tencent’s monstrously popular chat app, WeChat, has accrued upwards of 300 million users since it launched in 2011. By contrast, Alibaba-backed Alizilia announced this past November that the company’s chat service, Laiwang, had racked up 10 million users since launch in September. This is one area where Alibaba has a huge amount of catching up to do.
In the e-commerce industry, Alibaba reigns undisputed king. The company is well known worldwide for its leading proprietary online shops like TaoBao, Tmall, Alibaba.com, and most recently made headlines when Alibaba Group drove $5.7 billion in sales on China’s Black Friday equivalent, Singles Day. This past summer Alibaba bought stakes in U.S.-based product shipper ShopRunner and travel portal Qyer. Among its acquisitions: Vendio and Auctivia, both eBay auction managers solutions. Alizila reports that in the business-to-consumer marketplace, Tmall trumps all other competitors with a 51.3 percent share as compared with the 6.8 percent slice ascribed to Tencent e-commerce. Tencent recently moved to ramp up its presence and capabilities in the online buying space with a massive, $195 million capital investment in logistics company China South City Holdings.
Next to chat, Tencent has made most impact on Chinese mobile gaming. The company has made smart investments in U.S. gaming ventures like Riot Games, Activision Wizard and Epic Games. Sales from online games generated 54 percent of Tencent’s total revenue in the third quarter of 2013. Tencent dominates the Chinese gaming market by delivering games through its immensely popular WeChat platform. Alibaba, finds itself way behind in this sector, but has already announced plans to take market share away from Tencent, by unveiling its own game platform. The Alibaba platform will allow game developers to keep 70 percent of revenue, a tactic designed to entice game developers away from Tencent. Alizilia reported in January that the mobile gaming market reached $11.2 billion RMB ($1.8 billion) this past year.
Alibaba combines search and its specialty, e-commerce, in eTao. The company also deployed Aliyun, a cloud-based mobile platform for search and other services. Neither company seems to have made much impact on the search landscape, as neither eTao and Aliyun, nor Tencent’s search offerings, hold a candle to Baidu’s stranglehold on the industry. In September, Tencent paid $448 million for a 36.5 percent stake in search engine Sogou. Following the deal, Tencent merged its search offering, Soso, with Sogou’s. More than 10 percent of users in China search with Sogou, while just over 1 percent use Soso; Alibaba’s service iResearch China reported in 2013 that the keyword advertising market could swell to 57.62 yuan ($9.51 billion).