The clash - and cash - of China's internet titans

Updated 2017-08-21 09:00:18 Xinhua

Jack Ma, the charismatic head of Alibaba, and Ma Huateng, CEO of Tencent, are locked in a tense race to become the richest person in China and Asia.

With market values of more than 300 billion U.S. dollars each, Alibaba and Tencent are now China's biggest companies, a stark contrast to just five years ago when no tech company even made the top 10.

Anyone seeking to decode the secrets behind the rise of the two stellar companies could do worse than just look around any Beijing subway carriage. Almost every passenger, young or old, white collar or construction worker, is very likely to have their eyes fixed on a smartphone screen.

And they are not just playing Tencent's popular game "Honor of Kings," or chatting with friends. They order groceries, transfer money, watch movies, read books, book holidays, or even manage their stock market portfolios.

As in many other areas of the economy, the scale and speed of the change in China's digital sector, the mobile internet in particular, is staggering.

Over 750 million Chinese, more than half the population, are now online, 96 percent of them via smartphone, according to the China Internet Network Information Center (CNNIC).

Mobile data traffic hit 9.4 billion gigabytes in 2016, more than ten times the amount in 2012. Data traffic by mobile phone in H1 this year was 8.9 billion gigabytes, more than double the same period last year.

This is perhaps the most dynamic mobile ecosystem in the world, and the epitome of "Chinese characteristics."


The aggregate value of China's digital economy rose to 22.6 trillion yuan (about 3.4 trillion U.S. dollars) in 2016 from 18.6 trillion yuan the previous year. That's over 30 percent of GDP, according the China Academy of Information and Communications Technology.

This change to GDP structure exemplifies how far China's economy has come. Innovation and entrepreneurship are at the center of a new cosmos. It is easier than ever to set up a business, not just in terms of administrative procedures and government approval, but through a plethora of novel financing vehicles for start-ups.

Behind policy documents and bold statements lies a world-class information infrastructure. Since 2015, internet speeds have risen relentlessly and data charges have fallen in tandem. There are now 888 million 4G users in China.

In January, a 100 billion yuan fund was established to support the internet sector and it was announced that 1.2 trillion yuan would be spent by 2018 on information infrastructure.


While companies that invest heavily in research and talent are reaping a fine e-harvest, ordinary people are sharing the bounty. Every day, life gets easier, faster and, very often, cheaper.

Ms. Sun from Beijing is a busy woman, but house-proud and concerned by stubborn kitchen stains and ice buildups in her freezer. Now, she has an app on her phone that brings professional cleaners to her door who solve her problems in no time at all. "It saves me time and energy," she said.

The mobile internet is breeding new professions and new industries with tailored services only a few taps away. The digitalized lifestyle is the real new normal: mobile payments, mobile entertainment, mobile socializing and even mobile "officing."

More than half a billion people now make mobile payments of some description, with 463 million using their phones to pay for ordinary daily purchases in shops and markets, according to CNNIC.

Over 270 million people are using apps simply to order meals, over 40 percent more than at the beginning of the year.

In 2016, over 157 trillion yuan changed hands via mobile payments, almost 50 percent more than in 2015, the People's Bank of China said.


As for-hire bikes flood city streets and cashless diners pay for meals by phone, the digital economy just keeps expanding, and foreign firms have noticed.

Apple is desperate for a bigger slice of the mobile payment market dominated by WeChat and Alipay. In July, Apple Pay launched its biggest marketing campaign since entering China, offering perks including up to 50 percent discounts on purchases for a week.

Total online retail sales reached 3.1 trillion yuan in H1, a third more than a year before and, while Chinese firms Alibaba and dominate, U.S. rival Amazon is making inroads.

In June, Amazon partnered with Migu, a China Mobile subsidiary with one of the country's largest mobile reading platforms, to create a new Kindle exclusively for Chinese readers.

On Black Friday last year, sales at Amazon China were double the previous year's. The number of cross-border shoppers using the site has risen 22-fold in just two years.

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