Jack Ma

Ma disrupts China's mobile internet market

With raw determination and a huge war chest, Alibaba's boss has swiftly built up the firm's capabilities through acquisitions and partnerships

PUBLISHED : Wednesday, 30 April, 2014, 1:31am
UPDATED : Wednesday, 30 April, 2014, 1:31am

It was only about 13 months ago when Jack Ma Yun, the executive chairman of Alibaba, made it seem that Tencent had a vast lead in developing a viable mobile internet strategy.

"Weixin is such a powerful platform," Ma said at a conference in March last year. He was referring to Tencent's popular social mobile-messaging service, known as WeChat outside the mainland.

Asked about Alibaba's own progress, Ma said: "We are working pretty hard [on our mobile strategy] and we have confidence, but we need some luck."

Ma, who started the e-commerce company with 17 other people inside his crowded flat in Hangzhou in 1999, apparently knows that fortune favours the bold.

So with raw determination, a year to execute its plan, a sharpened focus on acquisitions and partnerships, excellent negotiators and a big boatload of money, Alibaba has swiftly built up its mobile internet capabilities to rival those of Tencent, Asia's largest listed internet company.

The company's latest deal, unveiled on Monday, involved teaming up with Yunfeng Capital, a private equity firm co-founded by Ma, to acquire a significant interest in online video-sharing service Youku Tudou for US$1.22 billion.

Alicia Yap, the head of China internet research at Barclays, said in a report that the investment in online video "was a natural extension for Alibaba" to increase its penetration into social networking and "enhance overall user stickiness to its platform".

It followed the firm's recent efforts to "beef up its overall digital content strategy with mobile game operation, music and digital reading", Yap said.

On that same day, it was also reported that Alibaba and mobile browser provider UCWeb launched a new mobile search engine, ShenMa, under a joint venture they formed in July last year. The company has been an investor in UCWeb since 2009.

According to iResearch, UCWeb has the largest mobile browser market share on the mainland with a 66 per cent user penetration rate. That is ahead of Tencent's QQ, Baidu, Opera and Qihoo 360.

The UCWeb browser's current default search engine, however, is Baidu, the mainland's biggest Chinese-language internet search provider.

"There is potential future impact to Baidu's mobile search traffic source if UCWeb were to make ShenMa the default search on its browser," Yap said.

That would be a direct consequence of Alibaba's ambition to disrupt the mobile internet market on the mainland. Before its initial public offering in the United States, the firm has transformed its operations with deals worth about 40 billion yuan (HK$50 billion) since Ma stepped down as chief executive last year.