Jack Ma’s New Chieftain Lays Out His Plan to Fend Off TencentJune 28, 2020
Billionaire Jack Ma’s newest chieftain is accelerating Alipay’s evolution into an online mall for everything from loans and travel services to food delivery, in a bid to claw back shoppers lost to Tencent Holdings Ltd.
Ant Group Chief Executive Simon Hu is aggressively pitching digital payment and cloud offerings to the local arms of KFC Holding Co. and Marriott International Inc., expanding the firm’s focus from banks and fund managers on its ubiquitous app.
The Alibaba Group Holding Ltd. affiliate’s strategy is two-pronged. It halts Tencent and food delivery giant Meituan Dianping’s run-away success in attracting local merchants to their platforms, eroding Ant’s dominance of China’s $29 trillion mobile payments space. It also diversifies Ant’s business into less-sensitive areas after the firm drew regulatory scrutiny for its blistering expansion in financial services with in-house products.
“We want to help digitize the services industry,” said Hu in his first interview with foreign media since taking on the CEO role in December. “We’ve been pursuing the strategy to evolve Ant into a tech company, with an open-platform strategy for many years.”
Hu wants users to think of Alipay not as a niche provider of financial services and the payments gateway for the world’s biggest e-commerce platform, but as the go-to app for a wide array of needs from groceries to wealth management, and hotel booking to loan applications. He aims to simultaneously peddle technology solutions like artificial intelligence, blockchain and risk control to the businesses that use the platform.
His goal is for more than 80% of Ant’s revenue to come from local merchants and finance firms in five years, up from about half at the end of 2019. The contribution from proprietary services, such as Ant’s own money market fund and loans, would shrink as a result.
“We want to share the technology and resources we’ve developed as an online financial platform with more companies in finance, local services, public services and other countries,” he said. The shift doesn’t hinder any initial public offering plans and the company is still open to listing, he said, declining to provide a time frame.
To mark the transformation, Ant changed its registered name to Ant Group Co. from Ant Financial Services Group at the end of May. Alibaba owns a 33% stake in Ant.
The focus on everyday consumer services puts Ant in the unusual position of underdog, despite its reach into the spending patterns of 900 million users. While Alipay still controls more than half of all mobile transactions in China, it’s been late to so-called mini programs, an innovation championed by Tencent three years ago.
The lite apps have allowed the gaming and social media giant to host more than a million service providers in its WeChat environment, with 400 million users a day tapping in to rent bicycles, order food, pick cinema seats and even buy apartments…