Chinese IT Giants in Korea
As Chinese Internet giants Tencent and Alibaba are vying with each other to dominate the Korean market, there is growing concern that they are eating away the market share of local companies.
According to industry sources on July 22, Tencent and Alibaba are fiercely competing with each other to increase their share in the Korean mobile gaming market. In particular, Alibaba, a latecomer in this race, is reportedly working to buy local game developers.
Tencent got a head start. The Chinese Internet firm is already exerting its influence on the Korean IT industry with investment in Kakao and an ownership stake in CJ E&M Netmarble, which is the largest mobile gaming company in the nation.
Tencent is continually seeking to dominate the market. In June, the firm invited a large number of people working at Korean mobile gaming companies to a seminar on mobile games hosted by Tencent and the Small and Medium Business Administration. An industry source said, “It may not be an overstatement to say that Tencent is sweeping mobile games with big potential for sales into its basket.”
Alibaba is also trying hard to counter Tencent's growing dominance with the establishment of a local branch and its plan to buy local firms.
The Chinese leading e-commerce company is said to be negotiating with two or three Korean mobile game developers for an M&A deal. Experts are saying that Alibaba is pursuing a strategy similar to Tencent's large-scale investment in CJ E&M Netmarble. Alibaba is continuing its offensive to dominate the market by forging partnerships with major players in the local mobile gaming market such as PATI Games.
In the e-commerce area, Alibaba is increasing its market share using a competitive advantage in the business.
On July 21, the Chinese firm launched its drive to attract Korean retailers interested in starting an online store on its global shopping platform Tmall Global, in partnership with SimpleX Internet, a Korean e-business solution provider. Alibaba's CFO Maggie Wu visited Korea, promising the company's full support.
Tencent, on the other hand, signed an agreement last April with Danal, a Korean online payment service provider, for payment services between the two countries. The firm is securing its customer base for local online shopping malls.
An industry source remarked, “A partnership between Korean companies and Tencent or Alibaba is perhaps inevitable.” The source added, “As the two Chinese firms are fiercely fighting with each other to increase their share in the local market, local companies are increasingly depending on Tencent or Alibaba.”