Thursday, February 18, 2016

Apple Pay Challenges Local Giants Alipay & WeChat in China

On February 18, Apple launched Apple Pay in the Chinese market, a head-on challenge to Tencent's WeChat and Alibaba's Alipay on its home turf. CEIBS Professor of Marketing Chiang Jeongwen looks at how both sides stack up in three key areas.

Global Reach - Alipay or Tenpay is a pure Chinese mobile payment system while Apple Pay is likely to be a global payment system.

Apps installation - Alibaba used the Taobao/T-Mall customer base to spread Alipay App installations while Tenpay was a pre-installed, add-on function through Tencent's popular social App, WeChat.  These practices worked for Alibaba and Tencent.  In contrast, it is conceivable for Apple to pre-install Apply Pay App on all its iOS devices like note or calendar and to leverage its iTunes/App Store customer base to encourage transactions via Apply Pay.

Banks/Financial Institutions/Merchants - Alibaba and Tencent were able to get financial institutions' and banks' collaboration in China and spent money to get POS (point of sale) devices installed in retail stores across China.  It will be difficult, if not impossible, for a foreign company like Apple to compete in China in these aspects despite its collaboration with UnionPay.

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