Date
11 December 2017

Alibaba, Tencent poke each other’s core

It was not exactly tit for tat but it was probably the closest thing.

A day after Tencent (00700.HK) announced its purchase of a stake in online retail platform JD.com, the biggest e-commerce rival to number one player Alibaba, the latter’s founder, Jack Ma {馬雲}, fired his own salvo.

Down came ChinaVision Media Group (01060.HK), falling in Ma’s lap not a moment too soon. In a kind of roundabout way, the target company made the announcement of the deal in a regulatory filing Tuesday.

Alibaba paid HK$6.23 billion (US$802 million) for 60 percent of the maker of television programs and motion pictures.

What next?

Rumors have it that the group is considering the online video streaming business. That would not be far-fetched after Ma snapped up online music service provider Xiami.com in April. Now Alibaba is in everything from e-commerce, internet finance, music, mobile gaming, television and movies. 

Not a puny arsenal with which to invade Tencent territory.

The money ChinaVision Media raised from the deal will go into future investment and operating funds. Alibaba and ChinaVision will jointly explore online entertainment opportunities but no formal agreement to that effect has been signed.

Alibaba has a tendency to buy into a company and gobble it up lock, stock and barrel if things work out fine. That’s how it acquired Auto Navi.

However, with Tencent holding 3 percent of ChinaVision, a full takeover of the media company by Alibaba may be a tad tricky.

Just two years ago, there were few overlapping businesses between Alibaba and Tencent. The former focused on e-commerce, the latter on instant messaging apps Weixin and WeChat.

But as each has become a behemoth in their respective domains, they have begun to muscle in on each other’s territory in search of growth.

Sooner or later, things will come to a head.

– Contact the writer at [email protected]

RA

 

EJ Insight writer

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