With its recent launch of Youa.com and BaiFuBao, Baidu has made an emphatic entrance into China's quickly growing e-commerce market, a territory dominated by incumbents, the Alibaba Group and (to a lesser extent) the Tencent Group.
The Alibaba Group includes:
- Alibaba.com, a Nasdaq-listed B2B e-commerce website
- Taobao.com, China's leading C2C and B2C e-commerce website, and
- Alipay, the Group's online payments processor.
The Tenpay Group includes:
- QQ and QQ.com, China's top instant messaging program and online digital community
- Paipai.com, the Group's B2C e-commerce sit, and
- Tenpay, the Group's online payments processor.
Baidu is following a similar model of binding an e-commerce website
with its own online payments provider, which is a telling sign for the
future of online commerce and online payments in China. Independent
third-party payment companies in China, many of which are struggling
with user signups and transaction volumes, are in trouble.
Payment companies that market themselves as being "independent" in markets such as the U.S. are often seen by consumers as an advantageous in terms of payment and information security. In China, where the e-commerce market is still at the infant stage of development, consumers relate well-known and famous brands with trust and by default offer a greater sense of trust to their like-branded payment providers. "Independent" payment companies in China are not well-known amongst consumers and have a harder time in gaining trust. If this trend contnues and Youa.com and BaiFuBao are successful, independent payment providers such as Yeepay, PayEase, and IPS may be forever shut out of the largest segments of the e-commerce market in China and relegated to providing services for only smaller e-commerce sites - a market that has yet to develop in China.
For more information about Alibaba and Tencent's e-commerce businesses in China, please refer to our following published market reports:
- Online Payment in China
- Company Profile: Alipay, Alibaba's Payment Arm
- Company Profile: Tenpay, Riding the QQ Freight Train
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