(Yicai Global) Feb. 5 -- Following Ant Financial Services Group by Alibaba Group Holding Ltd., Tencent Holdings Ltd. also obtained fund sales license early this year through its wholly-owned subsidiary Tengan Information Technology (Shenzhen) Co., further expanding its financial territory. The move will further intensify competition among the tech giants operating in the sector.
Now the question is how Tencent will capture market share from Ant Financial, which has started earlier and enjoys larger user base. The public concern also centers around whether the fund distribution market will be swallowed by Alibaba and Tencent after the tech giant's entry.
"Tencent is not good at e-business, but it is good at service and long-term user penetration. We spend much time on sustained user education," said Yan Min, deputy general manager of Tencent payment foundation platform and financial application line and head of financial platform. What Tenpay will do in 2018 is to first increase quality user number, and then to provide high value added services to head users by intelligent investment consultation and also deploy offline business, Yan told in a meeting with media representatives.
Tencent has previously deployed in payment, banking, financing, insurance, securities trading, small loan and credit, and with the third-party fund sales license now, Tencent now owns the largest number of licenses and businesses among China's tech giants, including Alibaba, Baidu Inc., and JD.Com.
Acquisition of this license means one more channel for Tencent, but the question is how Tencent can persuade investors to buy funds via Tencent channel. If it can solve this puzzle, Tencent is set for a proper market share. If not, things will be different, Wang Qunhang, senior researcher at China Galaxy Securities Fund Research Center, told Yicai Global.
Finance has become an indispensable link in business deployment by internet heavyweights. Except Tencent, the other three companies have divested themselves of financial arms. Ant Financial has been independent from Alibaba and only recently has Alibaba announced purchase of 33 percent of the equity in it in a move to stabilize its equity structure to pave way for possible IPO. There is persistent media speculation about independent IPO of Ant Financial, JD Financial and Baidu Financial.
Will Tencent do the same? Yan Min doesn't think so. Tencent will not engage in finance just for the sake of doing finance business, nor will it offload it as an independent business, Yan suggested. Tencent has been making efforts to adapt itself to the regulatory supervision. "Finance business wins in the long term, not by running it fast."