Mobile Payment is the key
- Domestic Competition. Tight competition for payments within China is pushing Alibaba and Tencent to explore overseas expansion.
- Financial Services. Both companies currently rely on Chinese tourists and business travelers. In future, the easiest entry access is via local joint ventures offering financial services such as micro-loans, which they are now pursuing.
- Target Markets. India and Southeast Asia are two target markets. The U.S. is of strategic interest but domestic political opposition will slow entry.
- Joint Ventures. Due to political and corporate opposition both firms are looking at JVs for market entry.
- Offshore Capital Transfers a Potential Roadblock. The PBOC and SAFE continue to block offshore capital movement but smaller JVs and investments are likely to be approved.
For full report, contact Orient Capital Research: andrew @collierchina.com