Competition between Alibaba and Tencent heats up in Europe

Competition between Alibaba and Tencent heats up in Europe

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The two Chinese Internet large-scale conglomerates Tencent and Alibaba extend their global competition to Germany. Tencent, headquartered in the South China economic metropolis Shenzhen, will offer online payments via mobile phone from November onwards with the WeChat chat program for Chinese tourists in Germany. This was announced by the German partner Wirecard on Monday in Munich. Already since 2015, Tencents has been the strongest competitor to Alibaba, which had taken the pioneering role with the Alipay app.

According to a report from the state news agency Xinhua last year, the expenditure of Chinese tourists in Germany already amounted to 76 billion US dollars, further growth is expected. Wirecard estimated the average spending per Chinese traveler at 3000 euros. The focus is on luxury goods such as clothing, jewelry and watches, as well as cosmetics and household items from well-known brands.

Both companies are not concerned about German customers. “In Europe, Alipay is accepted by 10,000 retailers, including over 2000 in Germany,” said Yang Xinyun, spokesman for Alibaba financial subsidiary Ant Financial in Hong Kong. Alibaba also cooperates with Wirecard.

In China, the two corporations have a market power comparable to Google and Amazon. Tencent estimates the number of WeChat user accounts to be 938 million. Alipay has more than 400 million users. According to a UN study published in April, nearly three trillions of dollars were moved across both apps.

“Right now the problem is many Chinese travelers don’t have the right payment instruments. Shopping is a substantial part of the shopping journey. For every retailer targeting Chinese customers in the segment of luxury, of travel, of entertainment, this is a must-have payment option,” Markus Eichinger, executive vice president of global product strategy at Wirecard, told CNBC in an interview ahead of the launch.

Last month, Chinese Internet giant Alibaba invested additional $1 billion to acquire 83% stake of the company active in Southeast Asia, Lazada. Rocket received 276 million US dollars (243 million euros). “Lazada was a great success for us and underscores our ability to successfully build companies in growth markets,” said Rocket CEO Oliver Samwer.

“The e-commerce markets in the region are still relatively untapped, and we see a very positive upward trajectory ahead of us,” Daniel Zhang, CEO of Alibaba, said in a statement. “We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities.”

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I am a lecturer at the University of Economics in Bratislava, department of Banking and International Finance. I have a Ph.D. academic degree, my dissertation was focused on major markets. Commodities and stock markets are also the main focus of my research and publication activities. I have approximately 10 years of investing experiences. My investments mostly focus on small- to mid-cap companies of energy sector, financial and technology.

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