Business / Gadgets

WeChat vs Alibaba: Battle of the brands

By Mike Bastin (China Daily) Updated: 2014-03-11 08:57

Tencent Holdings Ltd's recent announcement that it will open up its WeChat brand to business vendors and allow online payment for products and services will certainly intensify the battle with archrival Alibaba Group Holding Ltd.

But is this really a race where the latest technology is key or is it a battle of the brand images?

Alliance of Tencent, JD could be a giant slayer

Alibaba site offers channel to foreign products

WeChat's sudden, explosive emergence - launched only two years ago and already boasting more than 300 million regular users - onto the social networking scene, has led to the creation of an extremely emotionally powerful brand. "Fun", "excitement" and, above all, "friendship" and even "romance" are associated deeply with the WeChat brand and its brand experience.

Alibaba, in sharp contrast, has established dominance in China's e-commerce industry and online payment in particular but has developed little or no emotional brand image. The Alibaba "brand", while successful at the moment, relies basically on the perception of "competence" and "trust".

This gap in emotional association between the brands could prove decisive as WeChat continues with ambitious new products and new market expansion plans.

Any technological competitive advantage and trust gained from industry experience that Alibaba may hold at present is likely to be short-lived.

Sustainable competitive advantage can only be maintained with a powerful set of emotional associations in addition to the typical rational values that characterize the current Alibaba brand.

Economic history is replete with examples of the often-dramatic vicissitudes in brand fortunes where over-reliance on rational brand values is concerned. The Nokia Oyj brand capitulation provides a prime example.

This is not say that WeChat's attempted usurpation of the Alibaba brand will be plain sailing. Not at all. E-commerce is still dogged by security and privacy issues, especially where online payment is concerned. Here, the more serious, experienced, mature and rational Alibaba brand maintains a clear advantage over the younger WeChat brand.