China's Internet giants in acquisition spree
BY 2013-05-14 20:47:18
BEIJING - China's Internet giants have gone on a new acquisition spree in recent months as they ramp up efforts to diversify businesses amid the industry's constantly changing dynamics.
Alibaba, China's leading e-commerce firm, announced last week that it will pay $294 million for a 28-percent stake in digital mapping company AutoNavi Holdings Ltd.
The move, following Alibaba's previous deal to take an 18-percent share in Sina Corp's microblogging service Weibo, is the giant's latest attempt to map out a strategy in the key mobile Internet market, in which major companies have been vying for presence.
Li Zhi, an analyst with Internet service provider Analysys, noted that rather than developing new products on their own, the Internet giants have preferred to make up for their weak areas through mergers and acquisitions (M&A) to consolidate their positions.
Earlier this month, China's online search leader Baidu Inc. announced its plan to buy the online video business of PPS, to rival industry leader Youku Tudou, which was created last year through the merger of the country's two major video giants, Youku and Tudou.
The purchase is Baidu's latest step to diversify beyond its core search sector.
The string of M&A deals has highlighted the heated competition among Internet giants to secure dominance of the mobile Internet market as an increasing number of Chinese are going online through mobile devices.
Currently, Tencent, which has so far attracted 300 million users to its popular voice messaging platform Wechat, is widely regarded as having secured a dominant seat in the mobile Internet market.
But Ma Huateng, Tencent's chairman and CEO, took a cautious view about the company's position.
"No matter how well-placed we are now in the mobile market, a slight oversight may cause a shipwreck," he said at an Internet conference earlier this month.
According to data from the China Internet Networks Information Center, China had 420 million mobile Internet users as of the end of 2012.
With the market potential yet to be tapped, the Internet giants' M&A activity will likely to go on for a while, according to Li.