Internet & Tech

Route to success

Alibaba and Tencent fight over online maps and taxi bookings

TAIWAN/

“Hi, I’m Lin – where would you like me to take you?”

One of the biggest rebukes for John Woo’s historical epic Red Cliff was the choice of Lin Chi-ling to play the role of Xiao Qiao, wife of military general Zhou Yu. The complaint? That her voice was distracting, too high-pitched and squeaky.

So perhaps it was a little surprising that AutoNavi later tapped Lin as the voice for its mapping application.

AutoNavi is a Chinese service similar to Google Maps. When switched on, the voice of the Taiwanese actress is soon prominent. “Hi, I’m Lin Chi-ling,” it announces. “Are you stuck in a traffic jam again? Don’t worry, I’m here to relieve your stress…”

Jack Ma seems to be a fan too. Last year the Alibaba Group, which Ma runs, bought a 28% stake in AutoNavi and it announced last week that it plans to spend $1.11 billion to purchase the remaining shares.

Listed on Nasdaq, AutoNavi told Securities Times that the bid will be considered but that its board is yet to make a final decision about accepting the offer.

Over the past year e-commerce giant Alibaba has spent more than $2 billion taking stakes in smaller companies or buying them outright. Its purchases include social media sites (a stake in Sina Weibo) and asset management firms. Last month, Alibaba and a private equity firm set up by Ma also agreed to take a majority stake in Citic 21CN for $170 million, saying that it will build a pharmaceutical data business using the little-known information technology firm.

Still, the Financial Times reckons that there is “madness” to Ma’s method. “Alibaba is rushing to shore up areas of weakness ahead of a hotly anticipated initial public offering this year… Revenue growth has been slow because of competition and the fact that the company already controls 80% of the e-commerce market in China,” says the newspaper.

Mobile is the main reason for Alibaba’s purchase of AutoNavi, it seems. By taking control of the country’s most popular mobile mapping service – as of the third quarter last year, AutoNavi had 171 million users and a 31.3% share of the market – Alibaba will be able to challenge Baidu Maps. Equally it will bolster its efforts to challenge its major rival Tencent, which paid $448 million for a 36.5% stake in another Chinese mapmaker called Sogou last year.

Another important consideration: buying AutoNavi could help Alibaba tap into O2O commerce – or the online-to-offline audience.

Industry observers say that consumers will increasingly use smartphones to point them to nearby shops and services. Encouraging them to do so requires user-friendly maps (in the same way Apple has purchased a slew of mapping companies to try to challenge Google), with the further hope being that users will then make purchases on Alibaba’s mobile payment system Alipay Wallet.

But analysts question whether the deal will give Alibaba the boost in mobile that it needs to compete against Tencent’s hugely popular mobile messaging application WeChat.

“It is difficult for Alibaba to compete against WeChat. Just like Sina Weibo, which generated traffic for Taobao and TMall [Alibaba’s e-commerce sites], AutoNavi may help Alibaba grow top line revenues but when it comes to really giving the e-commerce firm substantive help in its mobile efforts, it doesn’t look very likely,” was the conclusion of Time Weekly.

The rivalry between Tencent and Alibaba is relentless.

This week two taxi booking apps called Didi Dache and Kuaidi Dache, backed by Tencent and Alibaba respectively, started a price war, says Oriental Morning Post.

On Tuesday Didi Dache, which is connected to Tencent’s WeChat, raised its subsidy for taxi fares from Rmb10 to Rmb20. That means passengers will get a discount of up to Rmb20 off the fare if they use the service, while cab drivers will get an additional cash reward of Rmb5 or more on the fare for each trip booked through the mobile app. The move came less than a day after Kuaidi Dache – linked to Alipay Wallet – offered rebates for users up to Rmb11.

Not to be outdone, by Tuesday night Kuaidi Dache was raising its rebate again, this time to Rmb13.

Again, it’s all about the battle for market share in the mobile world.

“The taxi-booking app is a critical piece in the two companies’ mobile strategy. Not only does it link to the mobile payment system, it also paves the way for their offline business. If the taxi software becomes a profitable business model, the companies can then extend into other areas like car rental and other hiring services. They can take orders online and deliver services offline,” Wang Jian from Analysys International explained to Time Weekly.

And in signs that another front is opening up in their battle, this week Tencent announced yet another acquisition. This time it is paying $500 million to acquire a 20% stake in Dianping, China’s most popular restaurant review website. The purchase will give Tencent access to its 100 million users.

Over to you, Jack.


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