Preface
In 1998, Ma Huateng, who graduated soon after, founded Tencent in Shenzhen.
In 1999, Jack Ma, who had quit his job as an English teacher, founded Alibaba in Hangzhou.
Since then, the two giants of the Chinese Internet world have been born, and they have been loving each other, both competing and cooperating with each other.
In the two decades of China’s Internet development, many famous Internet companies have faltered and ceased to be glorious, such as Baidu, which was once called “BAT” together with Tencent and Ali.
But Tencent and Ali, however, have been going hand in hand, becoming the twin constellations of the Chinese Internet community.
Ali’s dilemma: once famous with Tencent, but now it is gradually on the downside, difficult to confront with Tencent
Tencent
However, to date, Ali seems to be gradually following in the footsteps of Baidu, in all aspects of the wind, has become increasingly difficult to confront with Tencent.
Ali is gradually in the wind
Ali and Tencent, for many years, have been going hand in hand, although sometimes a slight gap between the two sides, but extremely small. However, to date, Ali is gradually taking the wind, more and more difficult to confront with Tencent.
Ali’s gradual downfall is mainly reflected in the business market value, the current state of competition and the negative impact of these three aspects.
First, in terms of market capitalization, Ali has become increasingly distant from Tencent.
Tencent was listed earlier, in 2004, Tencent was already listed in Hong Kong.
At that time, Richard Li, the second son of Li Ka-shing, the richest man in China, and chairman of Pacific Century Group, held 20% of Tencent’s shares and was considered a major shareholder of Tencent.
However, Richard Li later sold all of his shares in Tencent because he did not think highly of it. Today’s Tencent, has become a veritable “King of Hong Kong stocks”, Richard Li has long regretted.
And Ali’s listing is relatively late compared to Tencent.
Ali’s dilemma: once famous with Tencent, but now gradually in the wind, difficult to confront with Tencent
Alibaba
On September 19, 2014, founder Jack Ma rang the bell at the New York Stock Exchange, and Alibaba officially listed on the stock exchange, creating the largest IPO record in history with the stock code “BABA”.
On November 26 of the same year, Alibaba was listed in Hong Kong, with a total market capitalization of over 4 trillion yuan, making it the “new stock king” of Hong Kong stocks.
Back then, Ali’s market capitalization overwhelmed Tencent, running ahead of it and dominating it for a long time.
However, a news on December 24, 2020, soon broke this situation.
On December 24, 2020, Alibaba was investigated by the state for alleged monopoly of “two-for-one”.
Within a short period of time, Alibaba’s share price immediately plummeted in response, evaporating more than HK$430 billion in market value in one day. At the same time, Tencent’s share price rose along with the trend, and soon had HK$440 billion more than Alibaba.
To this day, Alibaba has never recovered, and there is already a significant gap between its business market capitalization and Tencent’s. As of March 7, 2021, Alibaba’s Hong Kong stock market capitalization is HK$4.91 trillion, while Tencent’s is HK$6.51 trillion.
Tencent has a full HK$1.6 trillion more market value than Alibaba, which translates to about 206.1 billion in U.S. dollars, equivalent to the market value of two Baidu.
Ali’s dilemma: once on par with Tencent, now it is gradually on the downside and difficult to confront Tencent
Tencent
The gap between the market value of Ali and Tencent is thus evident.
The second is the current state of competition, Ali has been deeply surrounded by Tencent’s younger brothers.
Ali and Tencent have started a war of confrontation in every aspect and in every field, and it has profoundly affected China.
For example, the 2014 taxi war between Fast and Drip, the 2016 bicycle war between Xiaohuangdian and Mobay, and the ongoing takeaway war between Meituan and Hungry, etc.
In the various areas of the war, Ali is often defeated, while Tencent is often a big win and return.
Since Tencent’s main business is social and games, Ali continues to want to invade Tencent’s social and gaming hinterland.
In the social field, Ali has continuously launched Lai Xiang, Nail, Alipay Circle, and also invested in Stranger and Weibo. But there has not been a product that can pose a substantial threat to Tencent’s social dominance.
In the field of games, Ali officially entered the game in 2016, the establishment of Ali game, through several years of efforts, although to achieve the fourth position in the country, but and Tencent game is still far away.
Therefore, Ali’s invasion of Tencent’s social and gaming hinterland has been unsuccessful.
However, Tencent’s invasion of Ali’s e-commerce hinterland can be considered quite effective.
In 2014, Tencent invested in the e-commerce giant Jingdong; in 2015, Tencent took a stake in the group buying juggernaut Meituan; and in 2016, Tencent supported the e-commerce upstart Pindo.
Ali’s dilemma: once on par with Tencent, but now gradually in the wind, it is difficult to confront with Tencent
Jingdong
These three companies are like three wolves, constantly besieging Ali’s main business of e-commerce, Ali the tiger nuisance. Ali was investigated for alleged monopoly because of “two choices”, also because of the competition with these three companies.
Nowadays, Ali has been deeply surrounded by Tencent’s minions; Tencent has been safe and sound, and Ali’s attack on it has not produced any substantial threat at all.
Ali and Tencent, it has been difficult to level the playing field, go hand in hand.
Finally, on the negative side, Ali has fallen into the whirlpool of public opinion.
First, on October 24, 2020, Jack Ma gave a heated speech on the Bund in Shanghai, which was later criticized by the state media by name, and then the listing of Ant Financial Services, which he led, was called off by the SSE.
Two months later, on December 24, 2020, Alibaba was once again thrust into the limelight by a heavyweight news report that it was being investigated by the state for alleged monopoly of “two-for-one”.
One after another, the negative news has pushed Jack Ma and Alibaba into the whirlpool of public opinion, and it is difficult to extricate themselves.
When people talk about Jack Ma and Ali, they talk about capitalists and monopolies, and there is a lot of online criticism of them.
Ali’s dilemma: once famous with Tencent, but now gradually in the wind, difficult to confront with Tencent
Jack Ma
Many people’s perception of Jack Ma and Ali has completely changed from a positive to a negative one. The impact of this on Alibaba can be considered serious and far-reaching.
On the contrary, Tencent, in addition to its game industry has been perennially abused, has always been four-fold stable.
Whether it’s Tencent’s magical operation of mistakenly injuring Lao Gan Ma, or the multi-year lawsuit entanglement between WeChat and Jitterbug, all of this negative news has not resulted in a major public relations disaster for Tencent, and has always been within manageable limits.
This shows that Tencent’s public relations and legal team is really not generally strong.
On the one hand, Ali is deeply involved in the negative impact of the difficulty to extricate themselves, on the other hand, Tencent has a long history of calm and steady. The two sides have been far from Tencent’s rivals.
Therefore, to date, Ali in the competition with Tencent, has been gradually in the wind, and it is difficult to be equal to Tencent, go hand in hand.
Why is Ali so
Ali, which once went hand in hand with Tencent, is now no longer a rival of Tencent and is hardly back to its former glory.
Why is it that Alibaba, which was so proud of its success, is now weak and gradually losing ground? I think, this can be analyzed from the main business attributes, investment strategy of these two aspects.
Ali’s dilemma: once famous with Tencent, but now gradually in the wind, it is difficult to confront with Tencent
Alibaba
First of all, the main business attributes, which almost determines the development direction of Tencent and Ali.
As we all know, Tencent’s main business is social and games. So, what are the properties and characteristics of these two main businesses?
Tencent is China’s rightful social hegemon, its QQ and WeChat have long been popular throughout the country. WeChat, in particular, has reached 1.2 billion monthly users as of 2020.
The biggest attribute and characteristic of social is that it is the starting point of Internet traffic. People always need to find something to do after using WeChat every day, and this is the time when Tencent can guide the flow of traffic in a purposeful way.
Therefore, Tencent has become China’s largest traffic landlord by relying on the advantages of its main social business, and traffic is readily available to it.
Tencent’s other main business, games, has the biggest attribute of profiteering and gold-sucking. Tencent has diverted its own social traffic to the game, and it can easily earn a lot of money.
In addition to its own game industry, Tencent has also diverted social traffic to its supported juniors to accelerate their development. For example, Jingdong and Jindo, both of which have first-class entrances on WeChat.
Ali’s dilemma: Once on par with Tencent, now it’s on the downside and hard to compete with Tencent
Pindoduo
Therefore, Tencent relies on the property advantage of the starting point of traffic, on the one hand, rely on their own game industry to make money, on the other hand, the traffic will be imported to their own shares of the crowd of small brothers, Tencent also developed better and better, more and more powerful.
And Ali’s main business is e-commerce, so what kind of attributes and characteristics does e-commerce have?
Ali is the king of e-commerce in China, and its Taobao and Tmall have become the two most commonly used online shopping software by Chinese people.
The biggest attribute and characteristic of e-commerce is that it is the end point of Internet traffic. Internet companies gather more traffic, its ultimate purpose is to realize, and e-commerce is a powerful channel to realize.
Therefore, what Ali lacks is not a real estate channel, but the traffic from all directions. This also leads to, Ali’s various investment, its ultimate purpose, or to their own e-commerce industry to increase enough traffic.
However, the Internet field, traffic is king. As long as there is traffic, there will be a variety of real estate channels. Compared to increasing traffic and cashing channels, obviously increasing traffic is more difficult.
So Ali choose the main business of e-commerce, obviously than Tencent’s social + game main business, the road seems more difficult to go. Ali in a long period of competition, gradually in the wind, it is also very normal.
Ali’s dilemma: once flush with Tencent, but now gradually in the wind, it is difficult to confront with Tencent
Alibaba
Next, Tencent’s investment strategy is more successful than Ali’s.
From Tencent’s many investment companies, we can see that Tencent is taking a win-win cooperation investment strategy.
For example, Jingdong, Meituan and Jindo, Tencent not only has a stake in these companies and provides them with development funds, but also opens its social traffic to them to support their development.
What’s more, Tencent never interferes with the “internal affairs” of these companies, allowing them to operate independently, and only needs to pay dividends to them on time.
Think about it, if you have a big brother who not only gives you money and people, but also does not interfere with your own strategies and decisions, would you welcome it very much? Would your company grow better?
Because of this, most of the companies invested by Tencent are doing better. The likes of Jingdong, Meituan and Jindo have all become serious threats to Ali’s main e-commerce business.
Ali’s investment strategy favors strong control, and in most cases, Ali prefers wholly owned acquisitions.
After many companies are acquired by Ali, Ali will replace the original founding team and send in its own full-fledged troops to manage them. Because of this, Ali can better control the company’s strategy as well as decision-making, and let these companies provide traffic for their own e-commerce main business.
Ali’s dilemma: once on par with Tencent, but now gradually on the downside, difficult to confront with Tencent
Internet traffic
But there are major drawbacks to doing so.
One is that the acquired company, has been completely unable to follow the founder’s plan to develop, seriously deviated from the normal development track. These companies are developing well, in fact, Ali does not care, just need them to provide Ali with a steady stream of traffic on the line.
The second is that Ali does so, giving itself a very bad perception and reputation in the investment community. Many of the founders of unicorn companies have refused to be acquired by Ali or to take a stake in them precisely because they don’t want their entrepreneurial efforts to be ruined by Ali.
For example, Wang Xing of Meituan is a good example. Wang Xing was dissatisfied with Ali’s approach before he switched to Tencent and became Ali’s sworn enemy.
If you are the founder of a company to be bought or acquired, I believe you will also be more welcome and favor Tencent it.
Therefore, Tencent and Ali in the investment strategy is different, but also to a large extent, affect the future development of both companies.
Ali’s dilemma: once on par with Tencent, now it is gradually on the downside, difficult to confront with Tencent
Tencent
Of course, Ali is gradually falling behind Tencent, and there are many reasons for this, so I won’t go into them here. Interested friends, you can add in the comments section.
Final Summary
Today’s Ali, has not returned to the glory of the year, in the competition with Tencent gradually in the wind. This is Ali’s predicament, but also to rethink the business model.
Predictably, if Ali can not actively transform and change in the subsequent development, it is likely to be with Tencent’s gap is getting bigger and bigger, and eventually will also be on the old road of Baidu, and Tencent seriously fall behind.
Friends, how do you see this? Welcome to express your own views and comments.
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