Alibaba and Tencent are the two biggest internet companies in China.
Alibaba’s core is in e-commerce. With their core business spanning e-commerce marketplace, B2B marketplace, new retail, logistics, finance, cloud, online marketing SaaS, entertainment, the center of all their efforts is their vision to enable everyone to do business. The data quality in the Alibaba ecosystem is superior as any data related to money is the most genuine data.
Tencent’s core is communication and entertainment. Wechat has ~1B MAU. It is a huge entrance for user traffic and creates an ecosystem around it. Capital + Traffic. Major income comes from gaming, but a lot of potential in social network as right now Wechat is very product focused — not trying to monetize in the short term. Besides the two core product lines, Tencent mainly invest and partner with other leaders in other fields.
Numbers & Financials
Alibaba
$250Bn revenue
- $214Bn Core e-commerce
- $24Bn B2B commerce
- $20Bn Media
- $12Bn Cloud
- $3.2Bn New Tech
Tencent
$238Bn revenue
- $97Bn Online Gaming
- $56Bn Social Network
- $40Bn Online Ads
- $43Bn Payment, cloud, and other
Q4
- $12.8Bn PC Games (13% growth)
- $16.9Bn Mobile Games (59% growth)
- $15.6Bn Social Network (45% growth)
- $12.3Bn Online Ads (49% growth)
- $4.1Bn Media Ads
- $8.2Bn Social and other Ads
- $14.8Bn other, including cloud and payment
The society, or individual human being, has only a few core demands. Explained by the Demand Pyramid (Maslow’s hierarchy of needs), people have demand for Physiological needs, Safety needs, Social belonging, Esteem, Self-actualization and Self-transcendence in that order.
Investment & International Expansion
Alibaba is a true strategic investor in the sense that most of their investments end up becoming part of their ecosystem. They use operational experience to improve their investments and absorb them to help their core business. Comparing to Tencent, they are the one who can really expand internationally.
Tencent’s investments in general are more similar to financial investors in the sense that they are basically utilizing the Wechat ecosystem to collect a “tax”. Their core is Capital + Traffic.
