Alibaba 

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Business Dissection of Ant: One-Seventh of Global Population Uses Alipay [1/2]

Ant Group focuses its business on digital payments and financial services, which together make up over 99% of revenue.  The client base of the company includes almost all entities in society, including individual customers, merchants, companies and financial institutions.  Ant Group was established in 2004 when the e-commerce industry development was just getting started planetwide. The company launched the payment platform Alipay, which was developed to bridge the gap between customers and merchants. It is now the largest digital payment provider and the leading fintech platform in China, by total transaction volume. Helping to digitalize people's lives, Alipay is a platform that supports their most fundamental needs through an array of technological tools. Through Alipay, Ant Group provides: ►… consumers with a comprehensive menu, which includes financial services (digital payments, consumption loans, wealth management and insurance, among others) and daily life services, such as food delivery, traveling, and entertainment.  ►…merchants with payments services and financial services, such as credit lending to small businesses, the wealth management products. The mini apps embedded in the Alipay platform help merchants to reach more customers and link their offline and online services. ►…companies with intelligent business solutions on asset management, decision making and technology infrastructure construction.  ►…financial institutions (FIs) with technical support. They can reach more customers and even cooperate with each other through the Alipay platform, which supports both FIs and customers. By the end of the first half of 2020, the operation results of Ant Group showed that Alipay is not only a payment tool but an entire infrastructure layer embedded in people's daily lives now. The synergies of combining the payments and financial services on one platform are showing up.   Digital Payments  Ant Group provides payment services on commercial transactions, financial transactions and personal transactions. Through the Alipay app, payments can be processed among individuals and merchants, as well as financial institutions, and the service fees are charged from every payment. What is more, Ant Group also generates revenue by helping the merchants with the development of their unique mini programs. The app has gathered over 100 million users and 8,000 merchants globally. In the twelve months through the end of June 2020, it completed over CNY 118 trillion in transactions. Transaction services Transactions can be made through four tools that are divided by five types of accounts, as shown below. The payment scenarios include commercial, credit payment, transfers between individuals and other financial transactions. The independent-developed technologies support the platform to operate under large-scale and frequent transactions with the payment loss rate lower than 0.6 of billions, which ranked first in the global payment providers with a transaction scale larger than USD 500 billion.  Merchant services At the end of the first half of 2020, there were over 2 million mini programs on the Alipay platform. These give merchants access to techniques for attracting new customers and offering services, and binds the two sides closer. Through Alipay, the merchants can manage their customers and therefore develop strategies to maintain activity. Customers can easily order food on Alipay in advance and merchants can offer discount coupons through mini programs. What is more, the credit rating product, Zhima Credit (Chinese: 芝麻信用), which is similar to the FICO score in the US, enables the merchants such as hotels and car renting companies to access to users' credit performances and therefore waive the deposit in advance if applicable.  Cross-border services Though the main digital payment businesses are centering in mainland China, Ant Group is also promoting linkages between merchants and customers, banks and small to medium businesses (SMBs) in over 200 countries.  The services are provided through the cooperation between Ant Group and the local acquirer, banks, digital wallets and Independent Software Vendors (ISV). In the twelve months through the end of June 2020, the company had dealt with over CNY 622 billion transactions outside of China. Customers can easily purchase products both online and offline and exchange currency in other regions through Alipay. Also, Ant Group offers payment solutions to global merchants, such as AliExpress, a cross-border B2C online shopping platform, and Lazada, a large e-commerce platform in Southeast Asia.  (This is the first part of the series article. In the next part, we will discuss the digital financial service business of Ant Group.)

Heilan Home Establishes a Semiconductor Equipment Company in Nanjing

Alibaba Cloud Launches 1.0 Version of PaaS for Cloud Gaming, Taking On Tencent

At the 2020 Yunqi conference, Alibaba Cloud released its first Cloud platform for developers, the model for which focuses on helping businesses, instead of delivering services to gamers.  Cloud gaming has been given high expectations in recent months as 5G and cloud gaming technologies are evolving. Tencent, China Mobile (CHL:NYSE) and NetEase (NTES:NASDAQ) all rolled out their ready-to-play cloud gaming services. As a competitor of Tencent (00700:SEHK), Alibaba's (BABA:NASDAQ, 09988:HKEX) attitude towards gaming has been blurring. Jack Ma once said they would starve rather than join in the gaming business. He later expressed in 2010 that ''gaming cannot change China, we won't invest a single coin in gaming and this is our principle.'' But the fact is that in 2014, Alibaba launched their mobile gaming platform, targeting game distribution, in which the giant was willing to deliver 70% of total return to game content providers, with 10% of return going to charity. During seven years of developing gaming products, Alibaba initially took over some companies to enter the market. It used traffic to establish channels for distributing games. As traditional distribution fell back, It has to serve as a content agency and issuer and even further developed games. However, there was no significant success in the gaming business, as reflected by the infancy of the revenue figures. Until 2020, Alibaba first tasted the sweetness of some progress on the gaming business: its Sanguo Zhi Strategic Edition currently ranks number 3 in the Chinese Apple application store. The No.1 and No.2 games are Tencent's Honor of Kings and PlayerUnknown's Battlegrounds, respectively.    

Alibaba Games Upgrades to Standalone Group, Yu Yongfu in Charge

The Interactive Entertainment Division (灵犀互娱), which is affiliated to Alibaba's game business, will be upgraded into an independent business group, parallel to the Entertainment department. At the same time, Yu Yongfu, chairman of the AutoNavi Group, will soon be in charge of Alibaba's game business. He is also the former helm of Alibaba's Mobile Entertainment department. The game business accounts for almost 25% of the total revenue of the entertainment group by one game. Alibaba Group's financial report for the first quarter of the fiscal year 2021 (as of the end of June 2020) shows that the revenue of the digital media and entertainment business is CNY 6.99 billion. Starting from the first quarter of 2021, game business revenue will no longer be included in the innovation business, but in the digital media and entertainment business. After the adjustment, Alibaba's innovative business revenue decreased by CNY 1.19 billion from the previous quarter, while the digital media and entertainment business revenue increased by CNY 1.05 billion. The adjusted EBIT of the digital media and entertainment business narrowed significantly to 19% from 57% in the previous quarter. According to Sensor Tower, as of August 2020, the monthly revenue of 'Three Kingdoms: Strategic Edition' was CNY 600 million, making it the third-highest game in China. "The actual significance of this game is not income, but an assertion or self-certification of the independent research ability of Alibaba Games, which will greatly improve the overall morale," said a person close to Tencent Games.

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Alibaba Apsara Conference: Cloud Computers and First Robot Unveiling

On September 17, 2020, the Apsara Conference went online. The Cloud gaming platform PaaS1.0 was officially unveiled. Alibaba's Cloud gaming team stated that it would fully invest in 'new infrastructure' to support industry innovation. Also, Alibaba released its first Cloud computer 'Wuying' and its first logistics robot 'Xiaomanlv.' 'Wuying' is a supercomputer that 'grows' on the cloud. There is no CPU or hard disk as these functions are entirely inside the Cloud data center. With a C-Key, users can log in their fingerprint ID anytime and anywhere to access cloud computing services. Through connecting C-key to any monitor such as a TV or a screen, people can enter the dedicated Cloud desktop and access various applications and files. Currently, Wuying is only available for sale to enterprises. In the future, services may be provided to individual users. 'Xiaomanlv' is Alibaba's first wheeled robot, specially equipped for deliveries; it can easily handle complex road conditions and swiftly choose an optimal path. Its 'brain' reacts seven times faster in emergencies. It can 'run' more than 100 kilometers with 4 kilowatt-hours of electricity, and deliver up to 500 packages per day. Extreme environments such as thunderstorms, lightning, high temperature, rain and snow, garages and tunnels will not hamper its performance. Zhang Jianfeng, Dean of Alibaba DAMO Academy, stated that this robot will soon be used on a large scale in communities, schools, and office parks. Commenting further on Cloud gaming, said Zhuang Zhuoran, the Vice President of Alibaba Group, stated that "Cloud gaming will become the main scene of personal consumption in the 5G era. What PaaS 1.0 has to do is to set up a platform for industry partners and deepen the infrastructure and underlying system software for cloud gaming. Besides, it integrates Internet applications such as e-commerce, financing, services and content to connect to the new digital consumption scene of Cloud gaming."

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