Please refer to Case Study 5 Alibaba versus Tencent: The Battle for Chinas M-Commerce Space on page 335 and answer the following questions:

1. Critically analyze the factors that led to Alibaba sustaining its leadership position in the Chinese e-commerce market.
2. Discuss the rationale behind Ma establishing Taobao.com. What are the factors that led to Taobaos success as compared to eBay in the Chinese online auctions market? With Baidus entry into the e-commerce market, discuss the challenges that Alibaba faces with regard to sustaining its position in the growing e-commerce market in China.
3. Critically examine Alibabas business model. Do you think it is sustainable? After having captured the Chinese e-commerce market, what steps should Alibaba take to expand globally?

Based on your reading of the case identify the main issues of the case and answer the questions in your own words. To better understand the case, you may also research the Internet, journals, and library reference materials and provide an up to date analysis.

I strongly suggest you spend some time and watch the videos about Alibaba before attempting to compose your case study.

Protect Links Insert PART 3: Comprehensive Cases AMITY RESEARCH CENTERS Case 5 Alibaba versus Tencent: The Battle for China's M-Commerce Space HEADER BANGALORE Abstract: Mobile e-commerce or m-commerce was growing fast "The penguin (Tencent's corporate mascot) has walked out in China. By 2018, China was anticipated to rank is the second largest m-commerce market in the world. The rising m-commerce of the Antaretie. They are trying to adapt to hof weather and to force the world to adapt to their preferred conditions market had lured many Internet players, including Chinese web giants Tencent and Alibaba. Tencent, which started off as an too. It is time for Ali to hit out, either on the offensive or the defensive. instant messaging platform in 1998, had gradually grown into -JACK MA a leading Internet service portal in the country. Alibaba, which Founder, Alibaba -began its business in 1999 as an online B2B model, gradually adopted B2C and C2C business models and was ranked as the "The wind is blowing against Alibaba and the biggest risk leading player in the Chinese e-commerce market. Since October is coming from the mobile sector.... Fims are all lining 2013, both Alibaba and Tencent had been involved in various -the school of Tencent or the school of Alibabxand the frenzied acquisitions to outpace cach other in the online markets camps are forming "4 particularly in the m-commerce segment. The rivalry was more -ZHANG CHENHAO visible in 2014 particularly with the taxi-calling apps Didi Dache Executive Director Gold Sand Capital backed by Tencent and Kuadi Dache of Alibaba. The quick shift Tencent, one of the most successful Internet players in the in consumers' behavior from desktop to mobile devices, coupled country, was introduced by Huateng Ma in 1998, and Alibaba, with the development of mobile Internet further intensified the the key player in the Chinese c-commerce market, was founded competition between the Internet giants in the country. In 2014, by Jack Ma (Ma) in 1999. Alibaba, which started its busi- Tencent launched a mobile payment platform, and more than 200 ness as an online B2B model, had gradually adopted B2C million users signed up for the service within 15 days. In an effort and C2C business models and was known as the leading to stave off competition, Alibaba also adopted several strategies. e-commerce portal in China. Alibaba had launched online busi- Against this background, it remained to be seen who, ultimately, ness platforms such as Taobao, Tmall, group buying platform would win the battle in China's m-commerce space. Juhuasuan and Aliexpress, and so on.? Tencent had also intro- duced a varicty of social platforms, including QQ, WeChat, QQ Pedagogical Objectives games, Qzone, and so on. The case study helps to understand and analyze: The Chinese m-commerce market was growing at a faster The m-commerce market in China. rate. In 2014 out of 618 million Internet users, around 80 The rivalry between Alibaba and Tencent in China's percent were accessing the web on mobile phones, 85 percent m-commerce market. were interested in buying various products through Internet- The impact of rivalry in reviving the country's enabled mobile handsets." Besides, China was anticipated m-commerce market. to rank as the second largest mobile commerce (m-com- merce) market in the world after the United States-by 2018.12 Case Study The rising m-commerce market coupled with the quick shift "In China shopping is a social activity. You want to tell in consumers' preferences toward mobile shopping and the friends about it, recommend is-it's a onartphone activity, and whoever owns that organizational ability also has a Jiying Chen and hihai Xu, "Digital Warfare," http://www.newschinamag hold over how a person shops."! .com/magazine/digital-warfare, April 2014 -FRANK LAVIN "As Criant U.S. IPO Neurs, Alibaba's China E-commerce Crown Slips, op. cit. CEO, Export Now? Gold Sand Capital was one of the popular e-commerce investment advisory This case was written by Dr. Suchitra Mohanty, Amity Research Centers Head. Kim Gittleson, "Tencent and Alibaba Battle for Internet Dominance in quarters, Bangalore. It is intended to be used as the basis for class discussion China." http://www.bbc.comews/business-26540666, March 18, 2014 rather than to illustrate either effective or ineffective handling of a management Company Overview." http:/ews.alibaba.com specialuboutalibaba situation. The case was compiled from published sources. aligroup/index.html 2014, Amity Research Centers Headquarters, Bangalore About Tencent," http://www.tencent.com/en-us/abouttencent.shtml No part of this publication may be copied, sorod, transmitted, reproduced, or IDC: Mobile E-Commerce to Become the focus of Competition in distributed in any form or medium whatsoever without the permission of the Chinese E-Commerce Market." http://www.ide.congedo jspcontinerid puCN24764014 March 25, 2014 Adam Jourdan, "As Giant U.S. IPO Neurs. Alibaba's Chin E.commerce Tencent and Alibabu Battle for Internet Dominance in China." op. cit. Crown Slips."http://www.reuters.com/article/2014/03/17/us-china.com IDC: Mobile E-Commerce to Become the focus of Competition in Chinese merce-idUSRREA2G04220140317, March 17, 2014 E-Commerce Market." op. cit. PExport Now odlered a group of interelated online services to the customers Michelle livans, "China's M-Commerce Market to Triple by 2018."http:// the facilitated export and sales of various items on the web. 2014, Amity blog.euromonitor.com/20140chinus.de-commerce-market to-triple-by.2018 html, January 3, 2014 Research Centers HQ, Bangalore. All rights reserved. firms. copyright owner. 35 (336/501) ) W 2 Create Sign Audio & Video Protect Links Insert EXHIBITI China: Growth of M-Commerce $90,000 SO $70,000 14.85 $78,180 BI INTELLIGENCE S60,000 1149 $50,000 US Dollars in Million $10,000 8.06 S.16.880 $30,000 4.386 S2,000 $24.240 S10,000 1.55 S8.900 0.5% 0 $1,550 2010 2011 2012 2013 2014 2015 Mobile Commerce Mobile Commerce AS A S Ecommerce Source: John Heggestuen, "China's Smartphone Explosion: The Top Opportunities in the World's Largest Mobile Market." http://www.businessinsider.in/Chinas-Smartphone-Explosion-The-Top-Opportunities.In The Worlds-Largest-Mobile-Market/articleshow/24649669.cms. October 30, 2013. development of mobile Intemet further attracted many internet to the United States. Within five years (2014-2018), the size of players toward the Chinese m-commerce market." the m-commerce market was forecasted to increase by more In 2014. Tencent launched a mobile payment platform, than three times in the country. According to the projections of and more than 200 million users signed up for the service within Euromonitor International, the size of the m-commerce market 15 days. Analysts highlighted that for both Tencent and Alibaba, would touch $134.3 billion in the United States and $123.8 a big challenge was how to design a strong mobile business billion in China by 2018. Besides, China had the largest num- strategy to stay competitive in the mobile Internet business seg ber of mobile subscribers as well as smartphone users in the ment in the country. Against this background, the case study world, which further provided remarkable opportunity for m- tried to unravel the strategic battle between Alibaba and Tencent commerce in the Asian country" (Exhibit II). to gain the top slot in the Chinese m-commerce market. In 2013. IDC estimated that more than 360 million smartphones were purchased by Chinese consumers. Accord- M-Commerce in China: An Overview ing to the China Internet Network Center (CNNIC), as of June 2013, around 78.5 percent of the Chinese netizens had M-commerce, or mobile e-commerce, referred to the payment surfed the Intemet through their handsets, which was compara- transactions for the purchase of various goods and services by a tively higher than the people who visited the web on desktops mobile handset.' The size of the m-commerce market in China (69.5%) and laptops (46.9%). Moreover, the rapid develop was projected to reach $78,380 million in 2014 from $344 ments in 3G network with 300 million 3G subscribers, the million in 201016 (Exhibit I). By 2018," China was anticipated widely accessible Wi-Fi spots in the country, along with the to be the second biggest m-commerce market in the world next reasonably priced handsets acted as a fuel for the growth of m-commerce in China. "Mobile purchasing aligns with the IN "Charles Clover, Chinese Internet: Mobile Wurs," het www.ft.com/ cms/2/56 160-186E-11e3-916-00144feabdc2wTeNHS. March 19, 2014 HiTencent and Alibaba Battle for Internet Dominance in China." op. cit. China's M-Commerce Market to Triple by 2018." op. cit. John Heggestuen, "China's Smartphone Explosion: The Top Opportunities in the World's Largest Mobile Market." http://www.businessinsider in China Smartphone-Explosion-The-Top-Opportunities.InThe-Worlds largest Mobile Market/articleshow/24909669.cms, October 30, 2013 China's M-Commerce Market to Triple by 2018." op. cit. Julia Q. Zhu, "China's E-Commerce Goes Mobile in 2014. http://www echinasia.com/china-ecommerce-poes.mobile-2014 December 30, 2013 International Data Corporation, founded in 1964, was one of the popular market research firms that specialized in information technology Rounded in 1997, CNNIC was an administrative agency for Intenetaris China's E-Commerce Claes Mobile in 2014." op. cit. 336 (337/501) w P 2 FON