baidu forms strategic partnership with paypal … microsoft word - baidu forms strategic partnership...

1 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

August2,2017

Baidu Forms Strategic Partnership with PayPal Targeting Overseas Payment Market

1) PayPalannouncedthatithasformedastrategicpartnershipwithBaidu,whichwillallowPayPal’sglobalmerchantstoacceptpaymentsfromBaiduWalletusers.

2) ThestrategicmoveshouldhelpBaiduWalletbetterpositionitselfintheoverseaspaymentmarket.Intermsofmobilepaymentdevelopment,BaidulagsbehindinthedomesticmarketwhereAlibabaGroupaffiliateAntFinancialandTencentdominate.

3) ThepartnershipwithBaidushouldfurtherincreasePayPal’sappealtoglobalmerchants.PayPalalreadypartneredwithUnionPaylastyeartoallowglobalmerchantstoacceptpaymentsfromChinesecustomers.

BaiduFormsStrategicPartnershipwithPayPaltoTapOverseasMobilePaymentMarketThestrategicpartnershipbetweenPayPalandBaiduwillenableroughly17millionPayPalmerchantstoacceptpaymentfromBaiduWalletusersbeforetheendof2017.ThatmeansChineseconsumerscanpayusingtheirBaiduWalletandPayPalatmerchantsoutsideofChina.GiventhemultitudeofoptionsChineseconsumershavetobuyfromPayPalmerchantsintheUS,thepartnershipwilleventuallyexpandPayPal'sentireglobalmerchantbaseoutsideofChinaanddrivedemandincross-bordertradeoverthePayPalplatform.

OurTake:ThePartnershipCouldBenefitBaiduMoreThanPayPalPartneringwithPayPalontechnologyandproductinnovationshouldenhancethecross-borderconsumerexperienceforBaiduWalletusers.Weviewthisstrategicmoveaspositive,asitwillallowBaiduWallettocatchupwiththeleadersinthedomesticmarket,Tencent’sWeChatPayandAntFinancial’sAlipay.The100millionmonthlyactiveusers(MAU)ofBaiduWalletonlyaccountedfor0.36%ofChina’smobilepaymentmarketbytransactionvolumeinthefirstquarterof2017.

AsPayPalhadalreadypartneredwithUnionPaylastyeartoallowglobalmerchantstoacceptpaymentsfromChinesecustomers,thisnewpartnershipshouldfurtherincreasePayPal’sappealtoglobalmerchantsandbroadentherelevanceofPayPal’splatform.

2 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

August2,2017

Catch-UpTimeforBaiduWallet,BothDomesticallyandOverseasBaiduWallettrailsbehindTencent’sWeChatPayandAntFinancial’sAlipay,bothathomeandoverseas.

TheDomesticMarketBaiduhadamere0.36%oftheChinesemobilepaymentmarketinthefirstquarterof2017,clearlybehindtheleaders—Alipaywith53.7%andWeChatPaywith39.51%—accordingtomarketresearchfirmAnalysys.OwingtothelargeuserbaseoftheWeChatandQQmessagingplatforms,ChineseconsumersfrequentlyuseWeChatPayforawidearrayofdailypayments,rangingfromride-hailingservicestoshopping.Alipay,ontheotherhand,isthekeypaymentmethodforChina’slargeste-commerceplatformTaobao.BothWeChatPayandAlipayarebackedbysolidplatforms,whileBaiduWalletstilllagsfarbehind.

Figure1.MarketShareoftheChinaMobilePaymentMarketin1Q17,byTransactionVolume

Source:Analysys/FGRT

OverseasMarketIntermsofoverseasexpansion,BaiduisalsolaggingbehindAntFinancialandTencent.

AntFinancial:TheAlibabaGroupaffiliatehasalreadypurchasedanumberofpaymentfirmsglobally,asshowninthechartbelow.AntFinancial’sglobalizationstrategyistoprovideChinesetouristswiththesameseamlesspaymentexperiencethattheyalreadyhaveinthedomesticmarket.

Source:antfin.com

Alipay53.70%

WeChatPay39.51%

BaiduWallet0.36%

Alipay WeChatPay

1qianbao lianlianpay

UPayWallet YeePay

KuaiQian BaiduWallet

Others

3 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

August2,2017

Figure2.OverseasInvestmentActivitiesofAntFinancial

Date Target Market BusinessofTargetCompany Activity

Jan2015 Paytm India Electronicpaymentande-commerce

Investmentandtechnologyexchange

Nov2015 M-Daq Singapore Forexproducts Investment

Nov2016 AscendMoney Thailand Electronicpayment Investmentand

technologyexchangeFeb2017 KakaoPay Korea Electronicpayment Investment

Feb2017 Mynt Philippines Electronicpaymentandmobileloan

Investmentandtechnologyexchange

Mar2017 Emtek Indonesia Media Jointventure

Mar2017MaybankandCIMBBank

Malaysia Banking IntroducedAlipayinMalaysia

Apr2017 Hellopay Singapore Electronicpayment Merger

Apr2017 Moneygram US Electronicpayment Acquisition

Source:Techcrunch/Crunchbase/iresearch/TechinAsia/FGRT

Tencent:WeChatPayhasalsoformedseveralpartnershipswithglobalpaymentfirms.Tencenthasinvestedin:Hike,amessagingplatform;Flipkart,aleadinge-commercewebsiteinIndia;andpartneredwithCitconintheUStoenablemerchantstoacceptpaymentsfromChinesetravelers.Mostrecently,TencentappliedforaMalaysianpaymentslicenseearlierinJuly.

Source:tencent.com

4 DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

August2,2017

DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.com

SimicChanSeniorResearchAssociate

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