2Q2017 Key Highlights – Baidu, Alibaba, Tencent and Jingdong’s Financial Report
The Internet sector in China is still booming.
Baidu, Alibaba, Tencent and Jingdong (JD) have achieved increased profits this quarter, showing that China’s Internet sector is still booming despite a fairly saturated market. Baidu’s revenues rose 14.3% this quarter to RMB20.874 billion, according to an article from the Financial Times
. Alibaba’s revenue for the quarter was RMB50,184 million (US$7,403) million, an increase of 56% year-over-year, according to a press release from Alibaba
. Tencent revenue was RMB56,606 million (USD8,356 million), an increase of 59% over the second quarter of 2016, according to a press release from Tencent
. JD’s revenue was RMB93.2 billion (US$13.7 billion), an increase of 43.6% year-on-year, according to a press release from JD
Baidu’s mobile advertising platform proves to be successful as a monetization strategy.
Baidu’s chief operating officer, Qi Lu, has chalked up the revenue gains to an increase in mobile advertising through the Baidu search app. Mobile revenue represented 72% of the total revenues for 2Q2017, compared to 62% for the same period in 2016, according to a press release from Baidu
The Chinese web services provider has recently rolled out its global mobile advertising platform, DU Ad Platform
, which serves 3.6 billion monthly active users across 200 countries worldwide. The platform uses an AI-enhanced technology known as Peak Selection Algorithm to maximize revenues from ad campaigns. It also offers a range of advertisement options, allowing its partners to choose the ad according to their campaign needs.
Alibaba’s domestic and international consumer businesses are exhibiting robust growth.
Alibaba’s Taobao App experienced an increase of 22 million in mobile monthly active users on its China retail marketplaces, reaching a total of 529 million, according to a press release from Alibaba
. The company has also expanded into new segments – for instance, Alibaba digitized and transformed the traditional supermarket retail format in China through Hema, allowing consumers to use technology to experience a more efficient and convenient shopping experience.
Alibaba’s international growth is driven by strong growth in Southeast Asian online shopping platform, Lazada, and China outbound platform, AliExpress. In this quarter, Lazada launched the “Taobao Collection” in Singapore and Malaysia, providing local customers access to high-quality products from China while expanding Lazada’s product offerings. Alibaba’s revenue from international commerce retail businesses reached RMB2,638 million (US$389 million) this quarter, representing a 136% year-on-year growth.
Tencent’s 2Q2017 performance hits a new high, due to growth in online games, payment-related services and advertising.
Tencent’s profit for the period was RMB18,254 million (USD2,695 million), an increase of 68% year-on-year, and net margin increased to 32% from 30% in 2016.
Tencent’s revenue growth was driven by multiple businesses, such as online games and payment-related services and advertising. Online games revenues increased by 39% to RMB23,861 million, primarily driven by revenue growth from smartphone games, including existing titles such as Honour of Kings, new titles such as China version of Contra Return, and key PC titles such as LoL. Media advertising revenues grew by 48% to RMB4,077 million, reflecting higher traffic for Tencent’s Video services and newsfeed advertisements for Tencent’s New products. Similarly, social and other advertising revenues grew by 61% to RMB6,071 million, reflecting growth from WeChat (primarily WeChat Moments and WeChat Official Accounts) and other mobile apps.
WeChat is the top messaging app in China, and it is still growing.
Weixin/WeChat’s monthly active user base reached 963 million this quarter, representing a year-on-year growth of 19.5%. This may be due to an increased access to WeChat’s Mini Programs after Tencent launched the keyword and location-based search functions. Some analysts and developers say the launch of WeChat’s ‘mini apps’ could steal market share from iOS and Android app ecosystems, according to an article from CNBC
JD’s 2Q2017 growth can be attributed to successful strategic partnerships and continuous innovation.
JD expanded its product offerings on its platform through collaboration with multiple international brands, such as Swiss luxury watch brand Zenith, Austrian brand Swarovski, leading Italian furniture designer Kartell, Juicy Couture, Armani, and Casio. On the retail side, the JD (x) program partners JD with leading global fashion brands such as McQ and Chiara Ferragni to design clothing lines that combine premium quality and unique fashion to appeal to its Chinese consumers. Furthermore, the retailer partnered Walmart to integrate their platforms and customer resources in China in order for shoppers to access products through multiple channels. JD also entered a strategic partnership with Baidu to obtain level-one access points to the mobile Baidu users in China.
At the same time, JD worked on improving China’s logistics network by launching JD Luxury Express, so as to provide personalized service for high-end and specialty products. JD also approached logistic partners such as China Eastern Airlines and Japan’s Yamato Group to assist them in improving their logistics network. As of June 30 this year, JD.com operated 335 warehouses in China.
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