Chinese e-commerce giants unveil recession initiatives

Business-to-business powerhouse Alibaba has teamed with eight Chinese banks to help small and medium-sized businesses obtain a share of a Rmb 6 billion (US$877.77 million) loan fund. According to local reports, 600 SMEs are poised to benefit from the loans, most of which are registered Alibaba users in major cities across the country.

The scheme follows a programme launched by Alibaba and the Industrial and Commercial Bank of China in 2007 that provided SMEs with finance services. In 2009, Alibaba will work with the Agricultural Bank of China, Bank of China, China City Commercial Bank, China Commercial Bank, China Construction Bank, Industrial and Commercial Bank of China, Postal Savings Bank of China and Shanghai Pudong Development Bank to provide low-interest loans, reports claim.

Baidu, meanwhile, has extended its new auction platform to Japanese sellers looking to do business in China. The platform, provided by its Japanese partner Jshoppers.com, was set up to give Chinese buyers access to Japanese-made products.

Although Baidu has backed the platform and links its users to the Japanese sellers, the search engine will leave the direction of the venture to Jshoppers.com, which will be responsible for inquiries and problems customers submit.

While Alibaba and Baidu have launched programmes to solidify their positions in the e-commerce sector, China Yahoo has announced that it will close its lesser-known e-commerce site at the end of the month.

Yahoo launched the Zhanzhang Tianxia platform in December 2007 to give online store owners promotion and commerce services, but the site will cease to operate on 28 February.

According to Lawrence Wan, general manager of OMD China, the economic slump will work in favour of the most well-established e-commerce platforms who have already won their loyal customers - and this means Alibaba.

“The big are going to get bigger and this is going to play well for Alibaba because it was big to begin with,” Wan said. “Baidu will find it tough because it has a smaller market share. This absolutely isn’t just about e-commerce for these sites any more - if they want to survive they’ll have to do more than bring in general ad dollars. They’re not going to get a lot of strong investment at this time so these companies will really need to rely on their general users.”

However, if Alibaba cannot count on Baidu closing shop in the e-commerce sector any time soon. According to Dave Carini, analyst at Maverick China, Baidu will continue to perform well for the rest of the year because it will continue to generate funds from its search engine business.

“I think we’ll all be watching Baidu versus Alibaba in 2009, and I think Baidu still has plenty of money to help grow this new part of its business. It still has momentum in search and other parts of its business and this means it’s not completely counting on its e-commerce venture to bring in revenue,” Carini said. “These two companies in particular have been battling against each other, and everything that’s happening now is just part of their strategy to beat out each other in the same war they’ve been fighting.”