WeChat and Alipay’s overseas expansion proves difficult

Alipay and WeChat Pay dominated Chinese payments since their launches. The duopoly changed how Chinese people pay and shop on their mobile device. Over the last three years, the duopoly relationship stabilized with WeChat holding ~40% of market share.

 

Source: Analysys (1, 2, 3), Big data

Expand the battlefield to overseas market

Source: iiMedia Research, Sohu, Jianshu, Qianzhan, Baidu, Kuai Ke Ji, Sina

China has a population of 1.4 billion. According to Alipay’s December quarter 2018 financial report, there are 700 million Chinese Alipay users. Early 2018, Pony Ma, CEO of Tencent, announced that WeChat had hit the 1 billion user mark. As growth stagnates, both Alipay and WeChat must find growth overseas.

There were 140 million Chinese overseas travellers in 2018. Almost 10% of global travellers are Chinese. Chinese citizens in 2018 transacted about US$120 billion overseas. Alipay and WeChat are now in more than 54 and 49 countries respectively. They are waging a price war to attract users and merchants. For example, Alipay offers up to 50% off discount in some drugstores in Hong Kong; WeChat Pay, on the other hand, sends a customized red packet to the user who purchased in cooperated stores.

Overseas discount and services Alipay vs WeChat Pay

Apart from discounts and red packets, they are also providing tax rebate services for overseas Chinese travellers. WeChat helps the merchant to build mini-application to monetize their traffic by turning the offline traffic into online traffic.

Paris BHV mini-application in WeChat

In addition to organic growth, both Chinese giants have actively sought M&A and strategic partnerships in the region.

Alibaba fintech related overseas investment

Timeline		Country	Partner	Shareholding ratio	Approach of cooperation
Jan 2015	India		Paytm	40%	Invest + Tech support*
2015	Korea		K-Bank	N/A	Sponsor shareholder + Tech support
Nov 2015	Singapore		M-Daq	N/A	Invest
Nov 2016	Thailand		Ascend Money	20%	Invest + Tech support
Feb 2017	South Korea		Kakao Pay	20%	$200 million investment
Feb 2017	Philippines		Mynt	Major shareholder	Invest + Tech support
Mar 2017	Indonesia		Emtek	N/A	Joint-venture company
Mar 2017	Malaysia		Maybank/CIMB	N/A	Integrate
Apr 2017	Singapore		Hellopay	N/A	Merger (rename as “Alipay”)
2017	The U.S.		MoneyGram	N/A	(Failed)
2018	Pakistan		Daraz	100%	Acquire**
Mar 2018	Pakistan		Telenor Microfinance Bank	45%	Invest + Tech support
Apr 2018	Bangladesh		bKash	20%	Invest + Tech support
Jan 2019	Indonesia		Akulaku	N/A	Invest
Feb 2019	UK		WorldFirst	100%	Acquire

*Tech support means to apply Alipay’s technology to the e-wallets system to help improve the payment experience, etc.
**Acquire means to own 100% stake of the company.

Source: Reuters, Tech Crunch (1, 2, 3), Tech in Asia, CNBC, TechNode, The Edge Markets, e27, The Guardian, Tribune (1, 2), The Financial Express, PYMNTS, China Banking News

Tencent fintech related overseas investment

Source: Reuters (1,2, 3), CNBC (1, 2), Kr-Asia, Tech Crunch

Alipay and Wechat deployed various strategies to overseas market growth comprising investments, acquisitions and technical support. In fact, Alipay has successfully developed nine overseas e-wallets for local users in this way.

Alipay overseas e-wallet partner

Challenges ahead 

The battle between Tencent and Alibaba continues. In 2017, Alibaba invested in Mynt, the top mobile payment operator in the Philippines. Shortly after that, Tencent announced an investment in Voyager Innovations, the major rival of Mynt. Unlike the domestic market, the competition of overseas mobile payment market is far fiercer. There are around 40 e-wallets in Malaysia, 27 e-wallets in Singapore, about 37 e-wallets in Indonesia, 26 e-wallets in Vietnam, at least 17 e-wallets in the Philippines.

Early 2018, Alipay failed to acquire US-based MoneyGram because it failed to meet CFIUS (Committee on Foreign Investment in the U.S.) requirements. Nepal banned Alipay and WeChat Pay due to security concern. It is difficult for them to apply for local payment licenses.

The battle for payment domination between Alipay and WeChat Pay is now internationally. Some patterns that proved to be good in China do not work well overseas. They should be more innovative to get themselves adapt to the global market.

Observe, don’t react

Western society is dominated by control freaks, but control is overrated. Most people experience their best ideas when relaxed into a state of flow.

Instead of attempting to micromanage the world, step back and observe what happens without your interference. After all, disorder is beyond human control; it cannot be grasped.

Not just that, but life and the world are inherently disorderly and random, which makes any attempt at control futile. We might try to control other people, forcing them to do what we want, but attempts fail practically every time – all while wasting a great deal of effort.

In reality, the best way to get people to behave reasonably is to let them be naughty, crazy or free. Instead of attempting to guide their behavior to where you'd like it to be, simply watch and intervene only when they are a threat to themselves or others.

It's like raising sheep or cattle. If you give your herd a massive field to live in, they're much more likely to exist in peace and contentment. If you confine them to a packed pen, they'll be tempted to jump the fence.

So, in life, control holds us back, and the same is true in meditation. Oftentimes, when we meditate, we attempt to control our thoughts and prevent them from existing, which doesn't work at all.

Instead, you should wisely allow thoughts to come and go, observing them as they do so. Remember, your efforts to deter thought are not appropriate for Zen meditation. The only proper effort here is to return the mind and concentration to your breathing.

Authentic product - blinkist

Success in business comes from selling an authentic product.

If you bring up Starbucks in conversation, chances are pretty much everyone will know what you're talking about. You know Starbucks as a successful business, but have you ever wondered how it came to be?

The secret to Starbucks' success is, for founder Howard Schultz, no secret at all. Plain and simple, the success of Starbucks lies with the brand's authenticity, achieved by selling only the highest quality coffee.

Back in 1981, Starbucks was just a small retail store. It sold exclusively dark-roasted Italian style coffee, which may be ubiquitous today, but was still a novelty back then. By roasting the coffee dark, the coffee grows in strength, gains a more powerful aroma and has the distinct taste of authentic Italian coffee.

Starbucks never compromised its beans, and became known for its premium-quality, dark-roasted flavor profile that its founders were so passionate about. Because of those early business decisions, Starbucks had an undeniable feeling of authenticity about it since the start.

The company has held true to its authentic coffee profile, in tough times to the present day. In 1994, coffee prices shot to an all-time high on the world market, from $0.80 to $2.74 in a matter of days, after a frost that destroyed much of Brazil's coffee plants.

During this coffee crisis, a lot of shareholders promoted the purchase of cheaper beans, to keep the price of a cup of joe stable. But Starbucks was unwilling to compromise quality and continued to sell the highest quality coffee they could, instead reducing other costs to account for the higher price of beans. When the world coffee market recovered, Starbucks had an even stronger customer base because its quality remained consistently high.

Manager to employee ratio (adapted Blinkist)

Build organizations from the top down and keep an eye on manager-to-employee ratios.

As you move toward your goals, it's only a matter of time before problems arise. But there's no reason to panic or be deterred by these bumps in the road. Developing solutions for problems is how many companies improve. In other words, most problems will end up providing fuel for your machine.

However, if you hope to turn problems into advantages, you need to design your business so that problems get noticed and solutions get implemented as quickly as possible.

One of the best ways to build your organization is from the top down.

You can think of a good business structure as being the opposite of a building – your foundation is located at the top, which means that, first and foremost, you need to make sure you have great managers.

Every manager should be trustworthy and have high standards. If this isn't the case, their weaknesses and poor performance will eventually spread to their staff. On the other hand, managers who show their appreciation for excellent work, and have strong oversight and strict quality control, will lead teams of employees who rise to their level of great performance.

So that problems can be dealt with swiftly, each department should be given a certain amount of self-sufficiency and control over the resources they require. If bureaucracy is keeping departments from acting fast, your teams simply won't be able to do their job.

Finally, it's also wise to keep a balanced ratio of managers to staff. A good rule of thumb is not to exceed a ratio of ten to one.

The ideal ratio is closer to five employees for every manager, as this will give your managers the best chance of having meaningful relationships and mutual understanding with each employee. But rather than setting strict rules on team sizes, you'll get the best results by assessing each manager's capabilities and proceeding accordingly.

So now you have a basic idea of the principles the author has used to find amazing success. It's up to you to start putting them to use and turning your organization into a constantly evolving and constantly winning enterprise.