logo-alhambra-interAlhambra International has a good expertise of digital economy and chooses to focus on Chinese market and especially on Alibaba, Baidu and Tencent which are three main players in the Chinese digital world. These key players have special business models which are different from the western companies and especially from the GAFA.

The most popular company among them should be Alibaba. People from all ages know it and use it. Alibaba is divice, it can be considered as a combination of C2C, B2C, B2B, group buying, online payment, logistics, and online advertisement, and it masters in all of the business when other companies can only do well in some of it. Just like its vision, to make it easy to do business anywhere, Alibaba tries to build up a company that can serve millions of small businesses, which exactly complies with the reality of the chinese market. The big companies are already stand stablely, but small companies are odd and diversified in the huge retail market, so Alibaba has given them a platform to be connected, to help them spend thier business and to present them to the world. They have built an ecosystem to help merchants and customers find each other and conduct business on their terms in ways that best serve their unique needs.

Instead of making money, they focus on solving the problems to make their customers happy. One of the key success factor is that they focus on customers’ needs ; as Jacky Ma said, they prefer to make their customer happy than make their boss happy. Moreover, Alibaba has solved three main problems encountered in the world of e-commerce :

  1. Issue of communication between buyers and sellers: Alitalk.

Like Messenger, customers can communicate with sellers about the price or any question they have during the shopping, which improves the efficiency for both side and keeps evident to prevent business disputes in the future.

  1. Issue of cash flow payment in e-commerce platform: Alipay.

Users can bring their card with the Alipay account and put money into it, so they can pay directly through the account or through the card but with less process. And it also  supports the inter-bank transfer without any fee, users can receive the money in 2 hours, even to the foreign bank account, it can transfer according to the current exchange rate. It has lots of functions in one application, basicly people can pay everything via it, including water bill, air ticket, telephone charge and so on. It also works like a society, people can add their family and friends to the address list. Then, parents can give their child pocket money, and people don’t need to worry about the borrowing issue, the application will automatically warn their friend to pay the money back, and will deduct money at the deal date.

  1. Issue of buyer’s credit and product quality: Immediate evaluation system.

Taobao (Alibaba’s website) advocates to make buyers and sellers based on mutual integrity mechanism to guarantee the interests of both sides. The credit rating classified as “good”, “neutral”, “bad ” three types. At the same time, buyers can also evaluate the logistics company, the delivery speed, the goods and description of the goods by using 1-5 star in an anonymous way, and buyers can choose “not evaluate”, “partly evaluate” or “all evaluate”, ratings of the seller will get displayed in online shops. This rating will affect the order of the merchandise in the search list and purchasing will.

Alibaba has tried its best to bring convenience to its customers, with the  application, people don’t need to bring their wallet, meanwhile, getting more discount on the bill or credits for their account. In order to achieve the transaction safety, it use real-name system in every account. It has changed people’s habit of shopping and selling , buyers can buy everything online with free and quick delivery, and sellers can open stores online with just a little deposit money, and the other services are all free, but it is a different situation, if they want to promote more on the front page.

Regarding Baidu, a searching engine,  it has similar services and products as Google, but with 82 market share in China while Google has only 10. One of the reasons is that it relatively has a better comprehension of the chinese culture and its local language. It has optimized the searching technology to meet the needs, particularly with the chinese language which is complicated and the words usually having multiple meaning, so it has launched special search algorithm to achieve relevance of the content. More importantly, it has a completely compatibility with chinese laws and censorship, however Google insists with the freedom of the speech and information, which makes them lose the support of the chinese government, so the growth is limited and has been blocked in the end.

The business of Tencent is mainly focused on the chinese market, especially Wechat, which have 93 market share among smartphone owners in first-tier cities in China. Utility is one of the key success factors.

  • Firstly, it’s a chating application as Messenger and Whatsapp, user can send picture, video and sound message by internet.
  • Secondly, it’s a social network like Facebook, it has a sector called friend circle, users can share their feelings and what they think might interesting others, and it can just be seen by the friends that you accept, which is different from Twitter.
  • Moreover, it has built cooperation with many companies, users can subscribe their interested account and service, for example, they can add an account that provides line up service, which means they needn’t to wait in line for the restaurant, they only need to click a button, then their mobile phone will alert them 10 minutes before their turn. You can also help to call a taxi, pay the bill and… also make the reservation for the doctor, Indeed like Messenger or Whatsapp, they can also do communication or share information with friends and network.
  • And with the acquisition of a majority stake in Clash of Clans developer Supercell from Japanese telecoms giant SoftBank, Tencent will be able to expand its footprint in the gaming market especially in the mobile space.

In conclusion, the success of Alibaba, Baidu and Tencent are all from deeply understanding the chinese culture, the local market and local knowledge. To penetrate a new market, it will not work if the companies just copy other models, they should send people there to do analysis and consideration, providing enough time and patience. Not only they should leverage existing advantages to new market, but they also should provide further service to bring the convenience by thinking on the user’s standpoint. It is the unique business model that makes the competitors unable to beat the company.

Yuqing QUAN & Pierre MAURIN

Alhambra International