What Brands Need to Know About Alibaba vs. Tencent

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Alibaba Tmall 2017 double 11 11.11 Singles Day

When pundits talk about the impossibility of competing against Amazon, the conversation rarely includes China’s e-commerce giants, but it should—and not just because Alibaba is responsible for the biggest annual global shopping day on the planet, the 11.11 “Singles Day” event.

Speaking at New York’s recent Advertising Week, WPP head Martin Sorrell impressed on attendees the size, power and potential of China’s tech conglomerates, with Alibaba and its rival Tencent ready and abl to eat many businesses for lunch. “Alibaba and Tencent are the ones you really have to watch out for,” he warned, adding, “they are going to win.”

And it’s not just e-commerce portals like Alibaba’s Tmall that brands should be paying attention to, even though it’s a powerful platform for fashion and other brands. Sorrell was impressed during a visit to Tencent’s headquarters in China with the nearly one billion monthly active users of its social media app WeChat and the billions of dollars it’s seeing just in gaming revenue.

All of that user data makes Alibaba and Tencent global powerhouses, able to process nearly unimaginable levels of user data. But it’s about more than reaching China or learning about Alipay vs. WeChat Pay.

Sorrell’s statements about Tencent and Alibaba’s competitiveness were more about developing markets like India, where Alibaba is competing with Amazon for opportunities such as the online grocery business. Alibaba operates in 200 countries and is beginning a charm campaign to woo more Western brands via its Gateway events.

In June, Alibaba put on a giant “Gateway 17” show in Detroit aimed at attracting smaller and mid-sized American brands and businesses to its platform, and it’s held similar events in Australia to woo more sellers and businesses.

The web giant also held a Gateway event in Canada in September, where none other than Canadian Prime Minister Justin Trudeau addressed attendees and promoted Alibaba as a chance for small businesses to enter the China market. Alibaba just expanded its Alipay mobile payments platform to Canada.

At and beyond the Gateway events, Alibaba founder Jack Ma has also been very high profile, talking more like a head of state or diplomat than a tech CEO about the future of commerce and the need for greater cooperation and trust.

But like Amazon, Alibaba isn’t just about selling cheap things via the internet; it’s also a data company. A very big data company—and one that’s not restricted to China. In September, Alibaba began hunting for a second European location for a data center. Indeed, Alibaba’s cloud computing business is growing fast and predicted to be 15% of the tech giant’s business within five years.

Meanwhile, at that same Advertising Week event, Tencent was touting its capabilities and celebrating itself as “the only Chinese internet company invited to this world-class marketing celebration.”

In a press release about attending the event, Tencent touted its ability to reach 98% of Chinese citizens. But Tencent also highlighted its social media reach, consisting of “an increasingly mature content ecosystem spanning more than seven major segments including gaming, film/TV series, sports, music, news, novels and anime.” These include its media heavyweights WeChat, QQ, Tencent Video and Tencent News.

Tencent’s takeaway to attendees: If you want to talk to China, you’re wasting your time if you’re not going through us—although Jack Ma would argue the same.

Not taking a backseat to Ma, Tencent’s S.Y. Lau, chairman of Tencent Advertising, has been making the rounds to promote his properties—boosting investments in payments and content—and vision of where commerce and business are headed, appearing at P&G’s Signal 2017 event and the 2017 Cannes Lions Festival in June among other events:

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