Alibaba takes on Baidu

13 September 2011

BEIJING: Alibaba, one of China's biggest internet companies, is seeking to put pressure both on Baidu, the country's leading search engine, and state-owned enterprises in a variety of industries.

Last year, Alibaba launched its eTao search engine, even though Baidu currently takes a huge 75.9% of category revenues, per Analysys International. Jack Ma, Alibaba's CEO, suggested the need for competition in this area was growing.

"People ask why I got involved in search engines," he said, according to the Wall Street Journal. "The reason is not to let Baidu sleep soundly. If Baidu sleeps well, then internet users in China cannot sleep well."

"Making life difficult for companies with established positions is what we most want to do," he added. "When I hear the word competition I get very excited."

Ma also reported Alibaba will try and reshape sectors, such as logistics, that are dominated by state-owned enterprises, a group which led a recent ranking of China's biggest firms by revenue.

Alibaba's main assets include an eponymous online business-to-business trading platform, Taobao, a consumer-facing ecommerce site with over 370m users, and AliPay, the electronic payments tool.

Indeed, AliPay shows how internet companies might be able to directly impact industries like the financial services sector, a field containing several sizeable state-owned players.

"What we can do is shake them a little bit to make them feel pressure so they have to change," said Ma. "If banks don't change, we will change banks."

The telecoms category, where China Mobile is easily the number one network provider, followed by China Telecom and China Unicom, is another example of Alibaba's disruptive potential.

Among the areas where Alibaba is attempting to make inroads is mobile devices, with plans to launch a variant of its Aliyun operating system in English, as well as rolling out a tablet based on this software.

"In the era of mobile internet, we can provide customised services with very low cost," Wang Jian, chief architect of Alibaba Group, said. "You will be able to provide services at any time to all the people. You will not be limited by traditional ways."

Back in its core sphere of competence, Ma revealed Alibaba is hoping to generate transactions to a value of RMB1tr ($157bn; 115bn; £99bn) through Taobao next year, with Credit Suisse estimating this figure stood at RMB396bn in 2010.

Data sourced from Wall Street Journal, Reuters, AP, PCWorld, Bloomberg; additional content by Warc staff