Baidu
If there is a company in China that can compete with Tencent as the king of China's Internet, it must be Baidu. Baidu's audience is even wider and deeper than Tencent's. Almost all Chinese netizens use Baidu, and the frequency of use is extremely high. As the absolute leader of China's search engines, Baidu has strong customer loyalty. Relying on the search platform, Baidu can expand into any field of the Internet like Tencent, and can constantly explore new profit models. Google is the best. example.
But relatively speaking, Tencent has stronger and more stable customer stickiness than Baidu. If Tencent customers switch to instant messaging providers, all the communication networks they have established will be invalidated, so the switching barrier is much higher than that of Baidu. At the same time, since most of Tencent's active customers are young people, they are more receptive and interested in new functions and use them more frequently. This customer structure makes it easier for Tencent to expand new Internet value-added services than Baidu. Baidu's The advantage lies in the commercial field.
Baidu's strong brand effect makes it difficult for new entrants to invade. Baidu's biggest competitor may be Google. Due to the complexity of Chinese characters and the breadth and depth of Chinese culture, Google, as an outsider, will also encounter certain obstacles in localization. Therefore, it will be difficult to shake Baidu's position in the short and medium term. This can also be seen from the fact that Internet giants in other fields have failed and returned. Cultural barriers among multinational giants. Baidu will remain the leader of China's Internet for a long time.
The following is my analysis of Tencent and Alibaba two years ago:
Tencent Holdings
As the domestic monopoly giant of instant messaging, Tencent Holdings occupies a leading position in instant messaging. Absolute monopoly in the field of communications. Users include domestic, Taiwan, Hong Kong, Macau and overseas Chinese. Its active accounts are as high as 260 million (the number of domestic Internet users is only 162 million), and its market share is as high as 79.1%. MSN, which ranks second, has only 13.4. Moreover, Tencent's share is still increasing, but the market share of multinational giant MSN is showing a shrinking trend. It can be seen how powerful Tencent's monopoly position is. It is not an exaggeration to describe Tencent as "Microsoft of China's instant messaging".
Instant messaging in the online virtual world is similar to telephone calls in reality, with high frequency of use and wide popularity. There is obvious binding between users. Just like changing a phone number, changing a QQ number will cause a lot of trouble. At the same time, unlike mobile communications and telephone calls, Tencent has not achieved interconnection with other competitors. Therefore, if you choose other suppliers, it means that you cannot contact all Tencent users. Just imagine what the consequences will be if China Unicom users cannot make calls to China Mobile users. Therefore, Tencent has set up a high switching barrier, making it difficult for new entrants to snatch Tencent users away. For competitors, Tencent's scale is also a barrier. Since Tencent has the vast majority of instant messaging users, new users will consider convenience and availability when choosing a service provider, and will naturally choose Tencent first, thus forming the Matthew Effect. , Tencent has become more and more powerful, and its monopoly position has become more and more stable. Multinational giants MSN and Yahoo Messenger cannot threaten Tencent at all, and it is even more difficult for other potential domestic competitors to shake its monopoly.
Tencent has a monopoly on instant messaging users. Instant messaging cannot generate high income. To obtain higher profits, it must rely on the QQ platform to continuously expand new businesses and transform monopoly resources into income and profit. After Tencent consolidated its monopoly position, it began to attack many other businesses, including Internet value-added services, mobile communication value-added services, advertising and other fields. Relying on its huge monopoly resource advantage, Tencent is invincible in entering new businesses such as online games, text messages, and auctions, with frequent success stories. In just a few years, Tencent has developed from a simple instant messaging service provider to an Internet giant integrating casual games, information portals, search, etc.
Tencent’s financial data in recent years are as follows:
Reporting period December 2003, December 2004, December 2005, December 2006
Turnover 734 , 957 1,143,533 1,426,395 2,800,441
Profit before tax 338,209 463,653 437,055 1,116,771
Net profit 322, 196 441, 119 485, 362 1, 063, 800
ROE() 19.3 17.39 32.01
Operating profit margin () 40.21 33.96 41.54
Gross The interest rate is as high as over 70%, the net profit margin is as high as over 30% (comparable to Moutai), the net profit has shown a steady upward trend, and it has increased significantly by more than 100% in 2006, and the return on net assets has remained above 17%. In 2006, Up to 32.01%, financial status is good.
Although Tencent has a strong monopoly position, the Internet industry still has higher risks than monopolistic companies in traditional industries, and the industry is more volatile.
1. Since Tencent’s main source of profit is not its monopoly instant messaging business, the QQ platform only provides rich customer resources and does not directly bring huge profits. The real profit part is in the fiercely competitive fields such as online games, text messages, and advertising. Although Tencent has huge customer resources and certain advantages in these fields, it has not yet reached a monopoly position. Competition in these fields has always been fierce. There is uncertainty about whether Tencent can continue to gain leadership in these areas.
2. Tencent’s solid monopoly position in the field of instant messaging is formed due to Tencent’s refusal to interconnect. If the government forces interconnection in accordance with the anti-monopoly law, Tencent’s monopoly position will be challenged. At this stage, its main competitors MSN and Yahoo Messenger have already interconnected, and Tencent has also been sued by competitors for monopoly and unfair competition. Tencent's achievements in various fields were achieved by forcibly bundling related software. If it is found to be a monopoly and unfair competition, canceling the bundling will have a huge impact on Tencent's development.
3. Excessive squeezing of competitors has made Tencent a "public enemy" and its image is at a disadvantage in the industry.
4. Spam messages and account theft are serious.
5. New business models will emerge to replace QQ in the future.
6. Revenue growth rate is highly volatile.
Flaws aside, Tencent’s monopoly on users and stickiness make it different from any other Internet company. With the rapid growth of the number of Chinese Internet users and the increasing QQ application rate of the new generation of Internet users, Tencent's customer resources will also grow rapidly. At the same time, the Internet is becoming more and more widely used, which will inevitably generate more and more value-added services. Tencent still has broad room for growth in the future.
Alibaba
Alibaba has become the world's largest B2B company and an oligopoly in China's B2B industry, accounting for more than 50% of the domestic market share based on operating income. Global Sources, in second place, only has 20%. In terms of registered users, Alibaba is unrivaled, with more than 20 million, while the second-placed HC Information only has 3 million, corresponding to HC’s operating income being less than one-tenth of Alibaba’s. Global Sources has only 650,000 registered users, targeting high-end customers. Other small and medium-sized websites and industry vertical websites such as China Chemical Network, China Clothing Network, and Global Hardware Network are even more difficult to catch up with, and their monopoly status is beyond compare.
The most important reason why Alibaba can grow into the global B2B king is that China has increasingly become the world's manufacturing center and procurement center. It has the largest number of product suppliers in the world, and buyers from all over the world flock to it. Most of these enterprises are small and medium-sized enterprises, and B2B websites provide them with efficient and low-cost marketing channels. Jack Ma proactively discovered this business opportunity and seized it tightly. The Matthew Effect will make Alibaba's membership grow faster and gain more market share. The first law of the Internet will make Alibaba's life more enjoyable.
B 2 The main customers of B websites are small and medium-sized enterprises, which are accustomed to enjoying free meals on the Internet. Now most registrants are unwilling to purchase paid services. Most domestic B websites, including HC Information, 2 Website B is in a state of burning money and losing money. The B2B revenue model is mainly based on membership fees and advertising fees. Since free customers can also post, search information and use some basic service functions, most small and medium-sized enterprises choose free services due to cost considerations, and the paid membership ratio is generally only 10%. about. The difficulty of making profits in the industry, Alibaba's far leading advantage and good financial status will make it difficult for other B2B websites to shake Alibaba's leading position.
The number of small and medium-sized enterprises in China continues to increase. At this stage, less than 30% of them use third-party B2B e-commerce platforms, and this ratio shows a rapid increase trend, which means that there will be more in the future. Small and medium-sized enterprises choose this service. At the same time, with the development of the Internet, paid services will become more and more accepted by users, and the emergence of more high-value B2B value-added products will also make customers more willing to purchase paid services. Alibaba’s rapid growth in registration and paid membership in recent years illustrates Got this. Membership fees bring stable cash flow to Alibaba.
Jack Ma often appears in various media in a high-profile manner and is the spokesperson of Alibaba. His eloquence and frequent exposure have become Alibaba's best marketing advertisements. Alibaba's internationalization strategy is one of its strengths. Yahoo and SoftBank, the two major foreign shareholders, have played a certain role in the internationalization strategy. Because foreign customers are more accustomed to using Alibaba, which has a higher degree of internationalization, and rarely search in Chinese. Recently, Alibaba's domestic and overseas expansion of domestic trade has begun, and the expansion will be accelerated after listing. There is no doubt that Alibaba will grow rapidly in the short and medium term, and it also has broad market growth space in the long term.
Main data of Alibaba:
Operating income (billion) Profit (billion) Registered users (ten thousand) Paid members (ten thousand)
2004 3.59 600 7.7
2005 7.38 0.7 1100 14.1
2006 13.63 2.19 1980 21.9
2007 first half 9.57 6.22 (forecast) 2460 25.5
Alibaba It is not that we can sit back and relax; on the contrary, we will face huge challenges in the long term. Compared with Alibaba's corporate users, the vast majority of Tencent's users are individual consumers, and their consumer brand characteristics are more obvious. The website brand loyalty of Alibaba users is lower than that of Tencent. Alibaba's huge scale has formed certain barriers in the B2B market segment, but it does not have exclusivity for customers