China IT Review

It’s about Alipay again .

Today, Alibaba announced that, the Alibaba Group will invest 5 Billion RMB to Alipay. This is a long-time-investment which will last for 5 years.

Notice that Alibaba Group is not the company named Alibaba.com Limited (HKG:1688), but the mother company of it. Alibaba Group is also the mother company of Taobao and Alipay. However, Alibaba Group has also invested Taobao 5 billion on 2008.

Nowadays, Alipay is the leading company in the 3rd payment service field, and holds nearly 50% market share. So I don’t think this huge investment is for Alipay to expand in China, but to speed up the internationalization process in the world. It’s opponent is now Paypal.

There’s one thing I still wonder: where’s comes the money? From the financial report, Alibaba.com Limited, the most profitable subsidiary of Alibaba Group, earns about 1 billion through a year. Whereas, Alibaba Group is to invest 5 Billion in 5 years. Where can Jack Ma get so much money from?

I wounder how many percent of Taobao’s users, would like begin their shopping from the mass category list on the homepage. But recently, I’ve found the category list is having something new. Here’s the screenshot:

As languages differs, I’d explain in brief. Taobao adds a Category named “Digital Entertainment” at the top of the category list. This new category contains links about hot Videos, different types of digital magazines, but nothing about goods.

When Taobao Video (Actually, it is based on joy.cn, which is a poor video company in China) came out, experts surprised. However, once take a look at other new services of Taobao, like DaTing(not dating), digital magazines, etc, they may not be surprise any longer. For one thing, as is the biggest trading platform in China, Taobao cannot get an explosion increase on its market share. For the other thing, it it hard to meet the expectations of investors if Taobao is just a trading platform.

For Taobao, free or not is no longer a problem. Taobao is profiting from multi types of advertisements. This made taobao became simmliar with Baidu (NSDQ:BIDU), and also make taobao became a media platform. The users and the traffic came with users, are the most valuable asset of the platform. This explains why Taobao is introducing new products which are not firmly related with ‘trading’. Taobao also advertises on TV, which is proved effective. The alexa rank of Taobao is now higher than two of the three largest portal website in China: Sohu and NetEase.

Where to IPO, is a new problem for Taobao. It cannot be HongKong: Alibaba(HKG:1688) is a bad sample, it IPOs at HKD 14 and after 2 years raised to HKD 18. NSDQ is a better choice, but EBay, Taobao’s sample, is going down these years. Taobao needs to make some difference to claim it’s not another EBay.

BTW, the noun “Media Platform” is not clearly defined yet.