(CBN - Global) May 8 -- Alibaba Group Holding Ltd.'s [NYSE:BABA] will close the Taobao outlets of fund companies because the Chinese e-commerce giant has developed its own wealth management products and app.
Fund companies have said they will stop accepting subscriptions through Taobao between May 16 and 18 after just three years operating on the Alibaba marketplace. Fund purchases via direct sales platforms through Alibaba's mobile payment system Alipay will also be halted. Fund companies have operated online stores on Taobao since 2012.
Mr. Xiong Xiong, general manager of the business division at Alibaba financial affiliate Ant Financial Services Group, has said that its Ant Fortune wealth management app will focus next on developing its own fund business. According to its official website, Ant Fortune is a "one-stop wealth management platform" where investors can "access information and purchase funds, fixed deposits, and stocks."
"Since Alibaba has given all of its financial business to Ant Financial and set up Ant Fortune, there is an overlap in the businesses of Taobao and Ant Fortune," said an e-commerce director at an investment fund.
"Previously, Alibaba supported direct sales by fund companies, and there was no conflict of interest," said an employee at the e-commerce department of another fund company. "Alibaba now has its own sales platform and demands a share of subscription, redemption and management fees. So it is natural for Alibaba to close such Taobao stores. They are direct sales platforms for fund companies, while Ant Fortune is a sales agent platform. They have totally different systems."
"Sales have been tepid at Taobao stores in recent years. Shutting them down will not have a big impact on fund companies, though it could affect those with pretty good sales at Taobao stores, such as Fullgoal Fund," said an employee from the Internet finance department of another fund house. In the last week, transactions of Fullgoal CSI National Defense Industry Index Structured Fund totaled CNY340,000 (USD252,000), and transactions of Fullgoal CSI New Energy Vehicles Index Structured Fund reached CNY436,100, data from Fullgoal Fund's Taobao outlet shows.
The fund industry lost CNY379.2 billion in the first quarter of this year on sharp volatility in the stock market, compared with a profit of CNY550.016 billion in the first quarter of last year, results from the funds show.