Career

The storied rivalry between Alibaba and Tencent continues to rage across digital technologies and apps throughout China. The digital transformation set into motion by Jack Ma and Pony Ma, the founders and spiritual forces behind the two e-commerce juggernauts, is accelerated by an intense competition to win China's middle class. The stakes are high. China's middle class is expected to increase from 430 to 780 million by the mid-2020s, a population largely represented by urban residents who are tech-savvy and conditioned to shopping online for everything from cosmetics to electronics.1 An Emerging Centralized Cybersphere   There was a time when Alibaba and Tencent kept their distance from each other. Alibaba focused on driving e-commerce through its mega-popular site Taobao, and Tencent dedicated its energy to WeChat, which has more than 1 billion active users.2 However, as China's population — like the rest of the world — became increasingly and inextricably integrated into the digital realm, the once comfortable boundaries separating the two empires began shrinking. Middle-class consumers desired ways to centralize the fragmented aspects of their digital lives — from banking, e-wallets and financial services to travel itineraries, online shopping accounts and communication platforms. Today, Chinese consumers have to decide which brand of internet bests serves their particular needs: the Alibaba incarnation or the Tencent one. The decision is critical to both businesses. After all, once a consumer commits to an online banking, shopping and communications environment, loyalty remains high due to the inconvenience of switching accounts and changing contact information. For Alibaba and Tencent, first-time adoption is key. Ultimately, individual consumers will determine which version best streamlines the sprawling tentacles of the internet. Two Powers, Two Divergent Cultures & Strategies   The internal cultures and strategies of each company are as different as the personalities of their founders. Alibaba still embodies the sensibility of the outspoken Jack Ma, who has returned to his teaching roots and more philanthropic work; Alibaba seeks to acquire more influence by purchasing significant, controlling stakes in affiliates to complement its well-known e-commerce companies, such as Fliggy, Tmall, Hema Grocery and the popular online payment services provider Ant Financial. Tencent, however, pursues a broader approach by securing minority stakes in a wide range of businesses that offer varying degrees of alignment with its flagship, WeChat, the objective being to establish relationships that will open doors for its technologies.3 Both strategies are ultimately designed to engage China's middle class, which increasingly expects high-quality products offering reliability, convenience and personality. Empowered with armies of cute cartoon mascots and sophisticated marketing strategies, the Alibaba vs. Tencent rivalry has changed the digital marketing landscape in China. While each company differentiates itself from the other through internal cultures, strategic planning and divergent brand identities, they have the Chinese middle-class marketplace in common — and this shared interest has led Alibaba and Tencent deep into Chinese traditions, culture and spending behaviors. Customs & Traditions: The Digital Gateway to China's Middle Class   The Game-Changing Red Envelope Hongbao Campaign   In 2014, WeChat launched the Red Envelope campaign, which quickly became a powerful example of how harmoniously new technologies can assimilate into human dynamics. The initiative capitalized on the centuries-old Chinese tradition of offering red envelopes containing cash to family and friends on holidays, such as New Years and other celebrated occasions. The campaign was perfectly timed for a middle class in China that had unprecedented wealth, spending power and a growing obsession for digital technologies and devices. China, a nation renowned for celebrating its heritage and ancient traditions, fully embraced digital transformation into its culture and consciousness. Alibaba, in response, launched its own Red Envelope campaigns that, like the WeChat campaigns, featured virtual money that could be distributed to individuals or groups — facilitating transactions among friends and family members at home, as well as colleagues at the workplace. The shift from cash offerings to digital currency was swift and revolutionary. Today, both brands are using cutting-edge technologies, like AI, to gamify payments and customs tied to this historic tradition. Together, Alibaba and Tencent have forever influenced how Chinese families and communities experience Hongbao — a cultural inflection point for the cybersphere and the real world. The Battle for Single's Day   As Alibaba and Tencent compete for China's middle class, cultural traditions beyond Hongbao have become effective consumer engagement opportunities. Single's Day, 11 November, China's most popular shopping day, is celebrated by both young Chinese singles and those in meaningful relationships. (The date 11/11 looks like four single people.) The holiday, which began in 1993, has exploded into the world's most lucrative online shopping event largely due to Alibaba's ability to leverage the holiday, beginning in 2009. In 2017, Alibaba's Single's Day sales garnered a record-setting $25.3 billion.4 Though Single's Day has been mostly ignored by luxury brands that craft their images around exclusivity and quality, high-end fashion brands and luxury products are now embracing the holiday by selling discounted merchandise through their WeChat mini-stores on 11/11. WeChat's reach provides these upscale brands with a powerful platform to advertise their products and sell to customers.5 Though Single's Day still belongs to Alibaba, WeChat will certainly explore ways to gain prominence in the world's most profitable 24 hours. As Alibaba and Tencent compete for future fortunes in profits, both empires know success means winning the hearts and minds of China's growing middle class. As middle classes in countries around the world continue to expand and strengthen their purchasing power, Alibaba and Tencent demonstrate that the key to creating unprecedented growth opportunities is understanding the power of people. Game on. 1Babones, Salvatore. "China's Middle Class Is Pulling Up the Ladder Behind Itself." Foreign Policy, 1 Feb. 2018, https://foreignpolicy.com/2018/02/01/chinas-middle-class-is-pulling-up-the-ladder-behind-itself/ 2Hollander, Rayna. "WeChat Has Hit 1 Billion Monthly Active Users." Business Insider, 6 Mar. 2018, https://www.businessinsider.com/wechat-has-hit-1-billion-monthly-active-users-2018-3. 3Lashinsky, Adam. "Alibaba v. Tencent: The Battle for Supremacy in China." https://fortune.com/longform/alibaba-tencent-china-internet/. 4Lashinsky, Adam. "Alibaba v. Tencent: The Battle for Supremacy in China." https://fortune.com/longform/alibaba-tencent-china-internet/ 5Pan, Yiling. "4 Takeaways for Luxury Brands from China's 2017 Singles Day Bonanza." Jing Daily, 14 Nov. 2017, https://jingdaily.com/4-takeaways-2017-singles-day-bonanza/

Sophia Powe | 09 May 2019
tiles1
Career

The ongoing evolution of the global economy is a reflection of powerful changes occurring within the human population. Economies once historically sidelined by political headwinds, poor infrastructure and underutilized workforces are using digital technologies and access to interconnected resources to build unprecedented wealth and influence. But growth economies are doing more than catching up with traditional markets. They're now leading profound changes in the future of work and throughout the global economy. India has surpassed the U.S. and Japan as the leader in artificial intelligence (AI) and robotic process automation (RPA) technologies;1 Latin America's once stalled economy expects stable growth throughout 2019;2 and the purchasing power of China's middle class has forever changed e-commerce and how consumers find, purchase and acquire products and services.3 Business leaders, understandably, can feel overwhelmed by the pace and scope of modern change and what it means for their organizations and workforce dynamics. These three leadership qualities can guide them to success in an uncertain future. 1. Demonstrate Emotional Intelligence & Soft Skills   "I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel." — Maya Angelou Leaders must be truthful to their own feelings while acknowledging the feelings of others. The era of lifetime employment and guaranteed pension plans is ending in many regions, which means employees around the world harbor fears about job security and long-term financial well-being. Moreover, Mercer's 2018 Global Talent Trends report shows that employees are increasingly searching for roles that allow them to work with purpose, putting additional pressure on leaders to connect with their workforce on a deeper level. Business leaders who internalize this reality and take meaningful steps to curtail their employees' anxieties command the respect of workers. Candidness is the cornerstone of true communication. Leaders must actively develop their emotional intelligence (EQ) and soft skill quotients, so they can inspire individual employees and entire workforces by speaking to their emotions while always delivering the truth. Reality always prevails. People respect leaders who treat them with respect and prepare them with information that will impact their lives. Emotional intelligence and soft skills should become priorities for business leaders who wish to thrive in the future of work. Being able to relate to the aspirations, sensibilities and challenges of other human beings requires a concerted effort to listen, understand and take action. As workforces, especially in growth nations, gravitate from rural areas to emerging megacities, leaders must proactively address their concerns about finding affordable childcare and transportation, accessing financial investment opportunities and pursuing professional development programs. Soft skills allow leaders to communicate information instead of dictating information. This connection builds strong relationships and productivity among workers who then feel critical to the business' objectives and success. Because, in truth, they are. Genuine appreciation is a powerful motivator. 2. Have a Passion for Technology   Leaders who feel they have "made it" are doomed to irrelevance. The image of a business leader in a corner office with teams of employees to carry out their orders and promulgate their communications is becoming obsolete. Technology is always evolving, and business leaders cannot rely on others to fill the gap when it comes to proficiency with modern digital devices, platforms and strategies. Learning new technologies takes time, and for many leaders, time is a precious commodity. Digital transformation, however, demands that business leaders passionately engage with developing technological innovations and trends that impact business operations, consumer engagement and sales strategies. The future of work requires leaders to have the technical ability to communicate across the latest digital ecosystems and media channels. This acumen demonstrates their understanding of how technology is evolving and how it drives business in a hyper-interconnected world. Business leaders should regularly ask employees and outside vendors (and even competitors) to "show me" or "teach me," because these questions demonstrate a passion for learning and an emotional intelligence that appreciates the need to stay informed and relevant. Being technologically savvy also allows leaders to connect the dots in terms of operational resources, workforce skillsets and the need to pivot priorities and growth investments. When in doubt, there is no shame in asking how to use the latest application or device. The future waits for no one. 3. Know All Growth is Global   Think about your smartphone. It probably contains lithium from Chile, indium from China and coltan from Rwanda.4 Even the most local business relies on the global economy, and leaders who can contextualize business opportunities with an international mindset are poised for success in the future of work. In 2025, the world's population will reach 8.1 billion people — which represents a historic level of business opportunity, untapped markets and revenue sources waiting to be discovered.5 Growth is the result of forward-thinking initiatives that plan for where business is heading. As western economies continue to struggle with political turmoil — from the implementation of Brexit to uncertain U.S. international trade dynamics — growth economies can wield increased influence across all industries. Growth-focused leaders, however, face the challenge of building consensus and securing buy-in from various stakeholders. From C-suite executives and employees to investors and shareholders, leaders must be able to communicate a vision and strategy that captures the potential of the future of work. Leaders must always think in terms of a globalized economy, because that is where the opportunity resides — in the hearts, minds and needs of an expanding population. This will continue to propel businesses in the future, so long as leaders provide a vision moving forward. Growth economies offer business leaders more than lucrative sales markets. They provide valuable supply chains and investment opportunities in assets ranging from infrastructure and manufacturing to human capital and digital technologies. In a globalized world, the future of work belongs to leaders who understand that opportunities will come from economies on the rise and leaders who understand the influence EQ, technology and a global mindset will have on their ability to succeed. 1Some, Kamalika. "India Leads US and Japan in Driving RPA and AI Based Technologies." Analytics Insight, 2 Oct. 2018, https://www.analyticsinsight.net/india-leads-us-japan-driving-rpa-ai-based-technologies/. 2"Latin America Outlook 3Q18." BBVA Research, https://www.bbvaresearch.com/wp-content/uploads/2018/08/Latin_America_Outlook_3Q18.pdf. 3Riming, Nie. "How China's Middle Class Will Dictate the Future of E-Commerce." Sixth Tone, 16 Jan. 2018, https://www.sixthtone.com/news/1001560/how-chinas-middle-class-will-dictate-the-future-of-e-commerce. 4Olingo, Allan. "Minerals in Your Mobile Phone." The East African, https://www.theeastafrican.co.ke/business/Minerals-in-your-mobile-phone-/-/2560/2739730/-/xveeqw/-/index.html 5Olson, Alexandra. "U.N.: World Population to Reach 8.1B in 2025." USA Today, Gannett Satellite Information Network, 13 June 2013, https://www.usatoday.com/story/news/world/2013/06/13/un-world-population-81-billion-2025/2420989/.

Sophia Powe | 25 Apr 2019
tiles1

Contact Us

Speak with a Mercer consultant.

back_to_top