Depth report

　　

The US "Fortune" magazine website recently published an in-depth report on China's two major Internet giants-Alibaba and Tencent. Both Alibaba's Jack Ma and Tencent's Ma Huateng have established giants that can dominate China's digital ecosystem. Now that the two sides enter each other's fields, the competition is becoming increasingly fierce. Is this world enough for the two of them to do their best?

    The market value of both companies is hovering near the trillion-dollar level. Both companies have dominance in China's fast-growing digital field: Tencent rules gaming and messaging platforms, while Alibaba's strength in e-commerce is untouched. Whether at home or abroad, Tencent and Alibaba play active investor roles.

    Nowadays, Chinese technology giants Tencent and Alibaba have recently launched cross-border remittance services, allowing Indonesian and Filipino helpers working in Hong Kong to send money back home in a cheaper and easier way. This is the first step for the two companies to move towards global cross-border remittance business, with the total annual cross-border remittance reaching US$600 billion. These measures will also help the two companies promote the highly successful WeChat Pay and Alipay mobile payments overseas. Southeast Asia has a total of 600 million residents and the population continues to grow. Most of them lack financial institution accounts. Therefore, they have become a strategic battlefield for technology giants in Asia and the United States.

    Ant Financial, a subsidiary of Alibaba, called the Hong Kong Remittance Program, “This is a place to start and an important step to accelerate our global promotion of currency inclusiveness.” Tencent’s WeChat Pay is ubiquitous in China, but its Tourism destinations outside China are still seeking development. Although a Tencent spokesperson allowed WeChat Pay to be open to "all possibilities," he was more cautious about the goals of Hong Kong's remittance service.

    However, cross-border remittances are much more difficult than it seems. This is why both companies are cooperating with Hong Kong-based fintech startup EMQ, which has regulatory approvals and financial institution partnerships in Southeast Asia and other places. Max Liu, CEO of EMQ, said that EMQ is Tencent's pipeline and distribution. He declined to disclose any relationship with Ant Financial, but it is reported that Ant Financial is increasing its partnership with EMQ.

    Reuters interviewed six Filipino and Indonesian domestic helpers in Hong Kong. They mentioned that it takes time to convince their families that they can receive remittances via mobile phones. WeChat remittance is currently not associated with a mobile wallet, and the recipient decides to collect funds at a bank or pawn shop, just as they traditionally use Moneygram and Western Union services. For remitters, a brand-new service provider may be a revelation. More importantly, WeChat and Alipay have not charged fees at least so far. And both companies hope that current users can promote more users to use.

    According to government data, Filipinos and Indonesians make up most of the 370,000 domestic helpers in Hong Kong. These two countries are also important recipients of cross-border remittances in the world. According to World Bank data, the Philippines received US$32.8 billion in overseas remittances in 2017, while Indonesia received US$9 billion in overseas remittances. Among them, a total of US$16.9 billion in overseas remittances passed through Hong Kong. It is estimated that in 2018 low- and middle-income countries will receive US$485 billion in cross-border remittances.

    Currently, both WeChat Pay and Alipay Pay are committed to gaining recognition. WeChat Pay went into operation in Hong Kong last year, working with EMQ and other partners, including the famous Philippine pawnshop chains Cebuana and Palawan. Ant Financial was launched through its Alipay Hong Kong branch, based on blockchain software, and started to transfer funds between Hong Kong and the Philippines at the end of June last year. Unlike WeChat cross-border remittances, it allows real-time transfers between Alipay's Hong Kong account and the Philippines mobile payment service Gcash. Ant Financial owns part of Gcash and is operated by the telecommunications company Globe Telecom.

    According to sources, the Hong Kong initiative is not the only move by Alipay in cross-border remittances. In September of this year, a job advertisement for Ant Financial's Malaysia office listed the responsibilities of cross-border remittances. Alibaba has established joint ventures in seven markets for local digital payment services, which operate independently under the brand name of partnerships, including Indonesia and Malaysia. Analysts said that the cross-border remittance model of Alipay and Gcash in Hong Kong is likely to be replicated in different markets. In June of this year, Ant Financial raised US$14 billion specifically for global business growth.

    EMQ's network shows the development direction of Tencent and Alibaba. The company has obtained regulatory approvals in Vietnam, Cambodia, India, Singapore, China and Japan, which will enable customers to rapidly expand their business. The startup is expanding to the Middle East and has established a partnership with Chinese financial technology startup QFPay. Its payment terminals are used by Alipay and WeChat Pay in mainland China.

    Alibaba and Tencent face a lot of competition in cross-border remittances, not to mention technology and financial services companies that aim to participate more widely in payments. Yogesh Sangle, the head of Moneygram Asia, said that it is difficult for any company to compare with Moneygram's global partner network in 200 countries. Companies also have their own technological initiatives: Moneygram started cooperating with Gcash in February, and WeChat Pay is cooperating with WesternUnion to provide services for Chinese students.

Alibaba: Blockchain cross-border remittance only takes 3 seconds

    Jack Ma once said that the blockchain should not be a technology that makes a fortune overnight, but should solve social problems, data privacy security, sustainable development, and green issues. Therefore, Alibaba adheres to this concept, focusing on Ant Financial, which is the first to be applied to various life scenarios.

    On June 25, Ant Financial announced that the world's first blockchain-based electronic wallet cross-border remittance service was launched in Hong Kong. Users of the Hong Kong version of Alipay AlipayHK can use blockchain technology to send money directly to the Philippine wallet Gcash. At the press conference, Grace, a Filipino who has worked in Hong Kong for 22 years, was fortunate to be the first to try. The entire remittance process took only 3 seconds, compared to 10 minutes and several days in the past.

    In addition to cross-border remittances, Ant Financial's blockchain technology has also been successfully applied in many life scenarios such as food safety traceability, product authenticity protection, and authenticity protection of housing rental listings.