Analyzing the Rising Market Dominance of Alibaba-Tencent in China
Through a Spectrum Internet Offers subscription plan, it becomes easy to analyze market trends in the Chinese consumers-sphere – and to speculate on the (now) evident dominance of the Alibaba-Tencent nexus
Note: All background research conducted for composing this piece has been retrieved through a Spectrum Internet Provider Offers subscription plan.
China’s rising geostrategic dominance in the 21st century in many ways also corresponds fittingly with the economic warfare being waged both within & outside its borders – one that features the constant duel of tech giants Alibaba and Tencent, as each vies for attaining a definitive stance of market dominance over the other. Both multi-billion dollar conglomerates, against the backdrop of the Chinese government’s efforts to clamp down on foreign spending and investments, are attempting to trespass in and assimilate chunks of the existing market territory of their rival – with Alibaba making sizeable forays into the brick ‘n’ mortal retail outlets business at home, and Tencent focusing on expanding its online product & service consumer numbers with incremental leaps to include international users.
Increases in Foreign Investments – and their Speculated Results
Tencent’s recent bout of investments in U.S social media & automaker giants Snap and Tesla, as well as the Swedish music service Spotify bear testament to this spending pattern; although the reasoning behind why Beijing allows these native Chinese tech behemoths to escalate their foreign spending endeavors might seem laced with double standards at first. But on closer inspection, the Chinese government’s relative flexibility towards these tech giants is made understandable – as they support the national vision of expanding Chinese technological innovation throughout the world. The communist party’s One Road One Belt initiative, which sees a redrawing of commercial trade routes in Asia and Europe (with the Chinese as the maintainers of this new-age economic route), is certainly projected to profit greatly from these expansionist ventures in the future.
These oversees investments have another motivation behind them – with this being to learn more about those industries whose operations and functioning is (for the most part) alien to the core business of the Chinese tech giants. The case of Tesla shares acquisition (cited above) is revealing on this front: Tencent wants to expand into the automobile industry, and may wish to learn how to incorporate its connectivity services into a newer generation of vehicles from the famed carmaker. Tesla, in turn, may want to tap into the bustling Chinese consumer space – in a move that may be seen as a dialectical, two-way outreach for mutual profits.
Digital Wallets – Faster Payments & Greater Expansion
At the same time, both are seeking to expand their digital wallet services onto the world stage; after already controlling over 90% of Chinese day-to-day payments through their mobile application modules. In order to achieve this end, Alibaba and Tencent are mapping the travelling trajectories and preferences of Chinese tourists, and are attempting to expand their payment services reach to these locations (which include destinations like Japan, Thailand, India and South Korea). Whatever the outcome of this gargantuan skirmish, one thing is fast becoming certain: the Chinese market may never be the same again.
Both Tencent and Alibaba hope to inoculate other economies with the Chinese model of retail spending; a practice (as alluded to previously) that is dominated by them at home. Instead of consumers using bank issued debit/credit cards and paper currency to engage in funds transfers and sales transactions, the tech giants hop that they will gradually choose to switch to their e-payment platforms. Through them, service users can not only engage in the traditional transacting cycles normally associated with paper money, but also claim loans.
The Backlash of Foreign Economies
But not all markets have been particularly receptive to these forceful excursions across the border. Banks in Singapore are fearful that Alibaba might take away their market share – by transplanting their financial devices with its own (above mentioned) e-payment instruments. The U.S government is even more concerned about Chinese investments making their way onto American shore, with the issue of the $1.2 billion acquisition of the Dallas-based money-transfer company MoneyGram (that has been frozen under investigation by the CFIUS) being a conspicuous exemplar of this case.
There might probably even be a political impetus behind this decision, since the CFIUS’s claim that Alibaba might have access to the confidential data of U.S customers falls short in the face of MoneyGram’s CEO’s assertions that his company only collects very basic semblances of information. Given the current Trump administration’s popular stance towards China, and its policy of favoring bilateral agreements over multilateral ones, as well as returning America towards a more isolationist international stance, the possibility of there being a more politically charged telos behind such investment-curbing attempts appears quite likely.
On the Probable Political Connection behind these Forced Impediments
In the past, relations between Tencent and Alibaba have mostly been congenial – when analyzed from above. Both companies have appeared to be the vanguards of Chinese pride and nationalism, with Jack Ma (the founder of Alibaba) and Ma Huateng (CEO of Tencent) enjoying key ceremonial positions in the National People’s Congress – China’s supreme legislative body. When approached to make equity purchases in a large number of McDonald’s outlets, Tencent’s CEO declined the offer; which he envisioned would lead to the entrenchment of the idea (both locally, and abroad) that both tech titans happened to be embroiled in competitive warfare with each other (even though this state of affairs was quite discernible on the subterranean level). This move, had it gone through, would have rivaled Alibaba’s investment portfolio with KFC.
But in the past few months, these restraining gloves seem to have come off – as evidenced by the domestic and foreign investment fortifications exhibited by these tech companies. Because of this turf war, small Chinese business owners are increasingly feeling the heat to choose between the two contenders, or risk becoming the collateral of their unceasing battles for tech supremacy. At the same time, local businesses (both in China and abroad) have the incentive of attracting large swaths of Chinese customers to their doors – who may only prefer to make use of Alipay or Tenpay (the e-payment services of both Alibaba and Tencent respectively) to make their purchases.
More Room for Growth
Several economic analysts speculate that Alibaba and Tencent’s e-payment services have the most to gain from expanding into the south East Asia region, where traditional banks are scarce, and a great bulk of the urban and rural populations are forced to store away their saved money in their houses. By offering these people the many conveniences that come with a digital form of payments and funds-storage, it is not only the individuals who will be equipped with newer transacting mechanisms that will benefit.
For more information on the imminent Chinese ascent in the economic and political realms, considering subscribing to a high-speed and reliable Internet service (made available through such deals as the Spectrum Customer Support in the U.S). Being informed in advance about the going state-of-affairs in the global market, as well the economic giants – be they individual companies or states – trying to gain their foothold over the sociopolitical realm can reap in great dividends for astute investors hailing from all parts of the world.