Chinese Internet giant, Tencent, announced Friday that it will combine its disparate payment, financial and credit properties, currently dispersed across Tencent’s diverse businesses, into an independent business unit under its Corporate Development Group, one of Tencent’s seven core groups.
The new business structure marks Tencent’s headlong thrust into Internet-based finance and its preparation for a showdown with Ant Financial, Alibaba’s financial services wing and Tencent’s biggest rival.
“The mobile Internet has transitioned from a communication-centric phase into an infotainment-centric phase, during which Tencent has had notable accomplishments. We are now seeing great financial needs arising [from this transition], which is a very natural process,” Tencent’s President Liu Chiping was quoted as saying by Jiemian.com.
Alibaba’s standalone company, Ant Financial, which oversees the online payment system Alipay, online bank MYBank, and investment fund Yu’ebao, provides small loans and insurance to individuals and small businesses. Tencent also provides similar services but the public perception of Tencent’s presence in the financial sector is limited to its “products” rather than its role as a platform.
Yan Min, Tencent’s manager of financial applications, told Jiemian.com that Tencent seeks to revamp its business structure and become a marketplace that connects businesses and individuals.
WeChat Wallet, a mobile-payment system integrated into Tencent’s wildly popular social networking app WeChat, remains intact amid the overhaul and will not be handed over to the new unit. Analysts say that its exemption from the restructuring underlines the great autonomy WeChat enjoys inside Tencent.
Before the advent of WeChat Wallet, Tencent’s earlier online payment system Tenpay had been the underdog in a ten-year battle with Alibaba’s Alipay. Alipay counted 800 million users and 48.8% of the market as of Q3 2013, a significant lead on Tenpay’s 18.7% market share.
The “Hongbao” or red envelope campaign launched by WeChat in early 2014 was a game changer. Echoing the time-honored Chinese new year tradition, WeChat exposed its then 400 million users to the fun of inundating group chats with virtual red envelopes containing cash, which could be cashed out by linking a bank card with a WeChat account.
Within eight days during the holiday, more than eight million WeChat users participated in it, redeeming a total of 40 million red envelopes. It unnerved Alibaba so much that Chairman Jack Ma publically called out the stunt referring to it as a “Pearl Harbor Attack.”
The campaign helped win back lost territory for Tencent in online payments. WeChat now claims 600 million users and acts as a launchpad for Tencent’s new features and products.
Vice president Lai Zhiming told Tencent Tech News that the next step for the company’s newly formed financial arm will be to facilitate stock-trading. He said that the details will be unveiled through WeChat in the future.
(Featured Photo from Sznews.com)