To the astonishment of many, Alibaba has stated that its two dominant e-commerce sites, Taobao and Tmall, will accept payments through Tencent’s WeChat Pay mobile application. From this year, WeChat Pay will also be supported by Alibaba’s platforms, which indicates a new stage of cooperation between the companies.
Before the integration of WeChat, several of Alibaba’s e-Commerce sites only accepted few payment methods with Alipay, an evident competitor to WeChat Pay owned by Alibaba’s affiliate, Ant Group. This announcement to integrate WeChat Pay is expected to take place later this month based on the information provided by this source.
Opening Up to Collaborations
The official of Alibaba noted this as follows: “Alibaba has always been willing to establish cooperation relationships with similar platforms and we have frequently explored with our counterparts.”
This step has been made as Alibaba looks to reinvigorate its China e-commerce segment, which has been hampered by China’s slowing domestic consumption and upstart entrants like JD. com and PDD-owner Temu. By accepting the WeChat Pay, Alibaba can expand its market share in less developed regions of China since more than 1. 3 billion WeChat Pay users reside dominantly in China.
Breaking Down Walled Gardens
It is not only a key strategic business decision for Alibaba to integrate WeChat Pay on its platforms but also serves the regulatory pressure that Beijing has been putting to Chinese technology firms. Authorities have been calling out these firms to remove the barriers, referred to as the walled garden that shields competitors’ products and services.
Alibaba group and Tencent are two leading internet companies in China who have created monopolies by providing an extensive range of services, mainly with their home-grown super apps. It got to a point where rivals could not allow each other access to their services as competing platforms. That was the case for many of the practices above, but in the past few years, big tech firms have transitioned as regulators came for their tricks.
A Shift in the Competitive Landscape
It is not a first that Alibaba’s platforms accept WeChat Pay. It was in the year 2021 that Tencent enabled users to connect to other applications in one-on-one messaging and allow users to access links to Alibaba’s Taobao, within the WeChat application. The same year some of Alibaba’s other applications started integrating the service with WeChat Pay.
Given below are the new dynamics in Chinese e-commerce: This change in competition is beneficial for both the organizations and the Chinese e-commerce industry. Alibaba and Tencent are not only satisfying the regulators’ demands through API connecting their platforms with other services but also enhancing consumer experience by offering them more options.
A New Era of Collaboration
The partnership in which WeChat Pay was introduced in most of Alibaba’s business platforms is a marker of the new age of partnership. It is clearly a pro-consumer move for offering them more choices to make their payment but at the same time those companies which are ready to join hands and take positive steps to soften the environment for others is a positive sign.
Given that Alibaba is now targeting acceleration of growth of its China e-commerce, the acceptance of WeChat Pay may be a decisive element that will attract more users and gain more market share. Alibaba currently interfaces with more than 1. 3 billion WeChat Pay users around the world which means it has huge potential to reach and grow in virgin markets of China.
Final Thought
Such approval as WeChat Pay on two giants, Taobao and Tmall, is a notable move toward opening up walled gardens which are quite typical in the Chinese tech market. It is possible to expect that with the increasing pressure from the regulators the companies will increase the openness and collaboration which may lead to functioning in partnership or with interoperability in the future with direct competitors.
As we progress to this realize this new era of collaboration between both Alibaba and Tencent, we must also appreciate the fact that the Chinese e-commerce business is also set to benefit directly from this development. These giants expose their platforms and join their forces and by doing so they provide the opportunity for fair competition, constant innovations and, most importantly, consumers’ benefits.
