By Xinhua writer Wang Wen
HANGZHOU, Feb. 21 (Xinhua) -- In the war between Tencent and
Alibaba for China's emerging mobile payment market, cab-calling
services have become the slightly unexpected battlefield.
Smartphone apps Didi (Tencent) and KuaiDi (Alibaba) are
competing for the custom of those Chinese people who hail a cab
through their online services.
Didi announced on Tuesday that if passengers pay the taxi fare
via WeChat (Tencent), they will get a 12 yuan price subsidy. Hours
later, rival KuaiDi made a public promise to cut "always one yuan
more than our competitor" off the price, if the payment goes
In large cities like Beijing, a three kilometer taxi ride could
be free, as the starting fare is 13 yuan. In smaller cities where
starting fares are less, consumers may even profit.
As the competition gets more tigerish, the sustainability of the
price war has come into question and a more healthy development of
the mobile payment market sought.
Alipay currently leads mobile payments with nearly 300 million
registered users, 100 million of whom use mobile phones.
Last year, those users made 2.78 billion transactions, with an
aggregate turnover of 900 billion yuan, more than five times the 27
billion U.S. dollars posted by Paypal in the same period.
Neck and neck is Tencent's WeChat, China's largest social
networking app with more than 500 million users worldwide.
During Spring Festival holiday between Jan. 31 and Feb. 6,
WeChat users on the Chinese mainland distributed nearly 200 million
yuan of "lucky money" to one another through the platform. That
marketing maneuver has given Wechat an edge as users scramble to
cash in their gifts that have to link at least one cash card.
Describing the lucky money maneuver as a "surprise attack on
Pearl Harbor", Alibaba Chairman Ma Yun said, "It's a good thing
Spring Festival ends soon."
While the skirmishes escalate, researcher Yi Jingxue with
Analysys International sees "no clear profit model for cab-hailing
"The real emphasis of the rivalry should go beyond looking for
new users to cultivating user loyalty," said Yi.
"For mobile Internet products, network traffic means profits,
which is why the number of users is of ultimate importance," Yi
Outright war in the mobile Internet market does not seem
avoidable as consumers want to get connected all the time.
By the end of 2013, 500 million Chinese were accessing the
Internet via mobile phones, accounting for 81 percent of the
country's netizen population, figures from China Internet Network
Information Center showed.
"Most Chinese netizens are not satisfied in using the Internet
sitting down at a table. They want to use it anytime anywhere,"
said Hu Yanping, director of DCCI Data Center of China
"This is the reason why the two firms are promoting mobile
Internet products. Mobile Internet services will make people's
lives more comfortable and convenient," he said.
The two have different approaches.
Alipay wins users mainly through money transfers and credit card
debit payments. Tencent attracts mobile payment service users
through its mobile social-networking and game apps.
"It's too early to say which will top the mobile payment market
as two thirds of the market has not been developed yet," said
He said the winner will be judged on four areas essential to
profit. These are the number of registered users, user activity,
monthly mobile payment by the average user, and the number of
merchants that accept payment via phones.
Once fully developed, China's mobile payment market will be four
times as large as that of the e-commerce, Hu predicted.
Apart from cab-calling services, there is competition in
personal finance products, maps, meal-ordering, social-networking
apps, mobile gaming platforms as well as e-commerce.
Tencent announced on Wednesday that it had purchased a
20-percent stake in the country's lifestyle and group buying
Dianping's content, user base and offline retailer network will
be integrated with Tencent's social communications platforms, to
build an online-to-offline service, according to a joint
Alibaba, on the other hand, has completed its acquisition of
digital mapping and navigation firm AutoNavi for 1.39 billion U.S.
dollars, turning the latter into a fully-owned subsidiary.
AutoNavi will not only direct smartphone users of how to get to
places but also tell them about where their favorite services and
products can be found.
Tencent and Alibaba are also competing in personal finance.
Yu'E Bao, an online product launched by Alipay and Tian Hong
Asset Management Co., Ltd., has attracted 49 million users, who
have deposited over 400 million yuan in less than a year.
Tencent and China Asset Management launched online asset
management services in January. Users can deposit money and receive
as high as seven percent of the annualized seven-day interest.
Experts say the war between the two companies will have a major
impact on China's mobile Internet market and usher in an era of
rapid expansion, even though the industry is still in its
"The adoption of mobile payment is low and application scenarios
are limited. The players are very active, but the majority of
mobile payment services and products are still in the
pre-commercial phase," according to a Trends and Prospects of
Mobile Payment Industry in China 2012-2015 Report released by
Hu Yanping said the acquisitions by Tencent and Alibaba were
"only the first step."
"Companies will seek ways to integrate all mobile services to
make profits and even change people's lifestyle," said Hu.
But companies face certain issues and must find solutions.
Alipay's alliance with Hankyu Department Stores to offer
customers a mobile payment service was halted by Taiwan's Financial
Supervisory Commission for violating regulations on electronic
tickets last month.
Also, both Tencent and Alibaba have been reportedly involved in
user privacy leakages or illegal reselling of user information.
Enditem (Zhang Yao and Wang Lei contributed to the reporting from