Baidu joins China mobile payments race

Baidu, China's leading search engine, is to launch a mobile wallet application to compete with rival internet companies Tencent and Alibaba in the fast-growing mobile payments industry.

The search engine has consistently lagged behind the two other main Chinese internet players in the mobile payments market - an industry that recorded revenues of Rmb1.2tn in 2013, according to iResearch, a Beijing-based internet consultancy. That represented an eightfold increase over 2012.

Alipay, the online payment arm of Alibaba Group, handled 72 per cent of the online payment market in the third quarter of 2013, according to iResearch. Rivals Tencent and Baidu barely rate on this scale.

However, Tencent is thought to be in the strongest position of the three for the arrival of the mobile internet as it owns WeChat and QQ messenger, both hugely popular on mobile phones.

"Many internet companies are penetrating into the financial sector - and the first step is to build one's own payment system" said Li Chao, analyst with iResearch.

Nasdaq-listed Baidu has seen its share price almost double in the last year amid a surge in interest in the Chinese internet. Its market cap is $54bn. However, to maintain its standing as one of the three titans of the Chinese internet, known collectively as BAT, it must make the transition to the mobile internet.

Nearly half a billion Chinese regularly use smartphones costing as little as $50 to get online, and analysts believe mobile is the main growth area of the internet, with smartphones and tablets increasingly "leapfrogging" PCs and laptop computers.

The shift to mobile has sparked a series of copycat launches, acquisitions and turf battles over markets in everything from taxi hailing apps to mapping software.

Baidu paid $1.9bn in July for 91 Wireless, an app store designed to give it an edge with mobile users, but is playing catch-up in the area of mobile payments. Alibaba Group is thought to be strongest of the three in mobile payments. Alipay launched Alipay Wallet in January 2013, closely followed by Tencent in August with WeChat Payment, a wallet app linked to its popular messaging platform.

Baidu Wallet provides money transfer, payment and wealth management services, according to Zhang Zhenghua, general manager of Baidu's payment branch Baifubao, in comments to Xinhua news service on Tuesday.

Mobile payments and mobile wealth management options have been hugely popular among Chinese consumers, who have piled into online investment funds such as Alibaba's Yu'ebao, a money-market fund that launched in June offering a higher rate of interest than a normal bank deposit. Baidu last October launched its own fund, Baifa.

Last month China's central bank suspended some mobile payment functions, along with "virtual" credit cards launched by Alibaba and Tencent, amid a broader review of the hazards of online finance.

Additional reporting by Zhao Tianqi

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