China's online giants Alibaba and Tencent go head to head

The rivalry between mainland internet giants Alibaba and Tencent is heating up and could lead to a shifting of tectonic plates in the world's largest internet market.

Each firm is looking to expand into each other's traditional business, with the latest move by Tencent to launch its first financial services product on WeChat, putting it in direct competition against Alibaba's Yu E Bao personal finance product.

"We've seen both companies increase investment in the territory dominated by the other," said Guosen Securities analyst Bill Fan. "Competition between them can be expected to be more intense in the next phase."

Alibaba launched its Laiwang smartphone messaging app at the end of 2012, with functions similar to WeChat. It remains little known. The company also bought an 18 per cent stake in Sina Weibo, the mainland's answer to Twitter, for US$586 million last year.