How Two Chinese Companies Plan to Change E-Commerce
What would happen if Amazon took a 30% stake in Twitter? Last month, Alibaba, China’s biggest e-commerce firm, announced that it would take an 18% stake in Sina Weibo, a microblogging service, with the option of owning up to 30% of the company. The $586m deal could be the precursor to one of the biggest experiments in data mining and marketing.
Alibaba is China’s e-commerce juggernaut, handling more transactions than Amazon and eBay combined according to The Economist. The firm offers consumer-to-consumer and business-to-business trading platforms in addition to online shopping malls. Weibo, another titan in its own right, is China’s most popular social media outlet. The service offers its 503 million users the ability to make short status updates and tag other posts. Much like Twitter, Weibo has a large celebrity user base that attracts millions of followers each day.
But it’s a different kind of user that catches the eye of Jack Ma, Alibaba’s chairman. Millions of Chinese consumers use Weibo to discuss the latest fashions and trends, post reviews and previews, and offer advice to fellow shoppers. Ma hopes to combine the wealth of consumer information that Sina has mined since Weibo’s inception and integrate it with Alibaba’s already impressive amount of user data. Reuters reports that both firms expect to see advertising revenue increase by nearly $400 million.
Charles Chao, Sina’s chairman, is enthusiastic about the synergy that Alibaba and Weibo will have together:
“Weibo and Alibaba’s e-commerce platforms are natural partners. Together we provide a unique proposition not only to existing online merchants, but also to individuals or businesses, who wish to offer products and services on social networking platform to take advantage of the traffic shift toward social and mobile internet.”
For more information on Chinese financial news and social media, check out the following links:
Chinese financial news from Bloomberg
An infographic on Chinese consumers
You might also be interested in the following courses offered at Baruch:
IBS 3000 Innovation, Technology and the Global Enterprise
IBS 4200 Foreign Markets, Cultures, and Institutions