Alibaba Group’s digital payments unit Ant Financial has been aggressively expanding its business outside mainland China.
It recently suffered a setback in the United States, where regulators shot down its US$1.2 billion bid to acquire MoneyGram International over national security concerns.
On Wednesday the operator of mobile payment platform Alipay announced it has taken a 20 percent stake in Hong Kong-based food and restaurant review website OpenRice with the aim of transforming it into a mobile payment platform.
Alibaba’s real goal, of course, is to pave the way for the more than 20,000 restaurants and food outlets in Hong Kong to accept Alipay as a payment method.
In a joint statement, the two companies pledged to work together to support the further development of the city’s dining industry.
Alipay will become a part of the OpenRice smartphone app. The website, aside from functioning as a food and restaurant guide, will launch several initiatives via its app, including electronic menu, remote queuing and online table reservation for diners and restaurants.
Already, OpenRice has been working with Alipay HK to sell coupons for selected restaurants through the latter’s mobile app. It reaches millions of Chinese consumers using the Alipay app, providing them with restaurant information and coupons to be used when they visit Hong Kong.
As such, it makes a lot of sense for Ant Financial to invest in OpenRice, which has gained a unique and dominant position in the market.
For OpenRice, the deal should help to maintain and strengthen its position in the market and keep potential rivals at bay.
It will also allow the website to tap into Alipay’s huge network in the mainland to attract more Chinese tourists to use OpenRice during their visits to Hong Kong.
It will encourage more local restaurants, especially those located in the tourist districts of Tsim Sha Tsui, Mong Kok and Causeway Bay, to join the OpenRice network. Being a part of the OpenRice-Alipay network would give these restaurants valuable exposure to the mainland market.
Established in 1999, OpenRice now lists 80,000 restaurants in Hong Kong and neighboring cities. Its 1.4 million citizen-reviewers have generated more than 850,000 reviews of food and restaurants in the region.
From Hong Kong, the website has expanded its operations to seven other countries and territories. As such, the deal will give Alipay a lucrative vehicle to expand its mobile payment services to other markets, including Taiwan, Japan, Indonesia, Malaysia, Singapore, Thailand and the Philippines.
OpenRice is seeking to further monetize its website by launching mobile commerce through Alipay and its own smartphone app.
Right now it is trying to sell dining coupons to local consumers, a business it picked up from the mainland, where it has been popular for a long time.
In Hong Kong, diners like to reserve tables for family gatherings and various occasions, but they prefer to choose the dishes to be served rather than buy coupons for the cheapest deals. They know that such “special offers”, except those from five-star establishments, would spell disaster to their dining experience.
Many diners who have availed themselves of these coupons and similar short-term promotions have complained about the less than satisfactory service they got from the restaurants involved.
During the promo period, the restaurants are almost always packed to the rafters, so those who hold the coupons have no recourse but to wait until the crowds have gone, which only happens when the validity of their coupons have expired.
Also because of the huge volume of diners, the quality of food and service suffers.
So such gimmicks often work to the disadvantage of the clients and also the restaurants, which end up with tarnished reputations as a result of the bad experiences of the diners.
Alibaba is aggressively pushing its Alipay mobile payment service in Hong Kong by forging various partnerships in different sectors of the city.
But it may be good for the e-commerce giant to gain a better understanding of the Hong Kong consumers and their lifestyle, rather than just export its highly successful mainland concept and expect Hong Kong people to embrace it.
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