Daily Management Review

Tencent and Alibaba are fighting over investors


Two IT giants of China - Tencent and Alibaba – are directly or indirectly dominating several sectors of the Chinese economy at once, dividing spheres of influence in half. These sectors are an online retail, electronic payments, social networks, taxi services, entertainment market. Now their rivalry will affect the banks of China: from now on they have to choose with which of the two corporations they will work and in whom of them to invest.

Olaf Kosinsky
Olaf Kosinsky
Tencent and Alibaba’s rivalry has spread to the sphere of investment banking. The corporations are asking their partner investors not to invest in the competitor's projects. According to the Financial Times, referring to several sources, in the course of a recent investment round the financial arm of Alibaba Ant Financial forced banks to sign an agreement "on non-admission of competitive actions." From now, those investors who agreed to invest in Ant Financial will not be able to invest in Tencent and Baidu’s projects.

"Such agreements are not uncommon in the US," a banker told to the FT said. "If you invest in Coca-Cola, you cannot be an investor in Pepsi." This is a normal practice for the whole world. But companies should be able to pay commissions - when you are trying to restrict companies that conduct small IPOs, this becomes a problem."

According to another source, the technological giants "value loyalty" and do not want to partner with bankers who work for a competitor - simply because one day the situation may turn so that your current partner will work against you.

Alibaba and Tencent compete with each other in several markets. If they do not face each other directly in any market, they most likely compete indirectly by investing billions of dollars in various projects. Moreover, these two giants are behind most of the upcoming IPOs of China. However, there is an exception to any rule: nothing has prevented irreconcilable rivals from investing, for example, in IPO Foxconn Industrial Internet - one of Apple's major partners in the production of the iPhone.

source: ft.com