Alibaba Plunges Into Mobile Chat Apps

Alibaba Group is diving head first into China’s mobile messaging wars by officially launching its chat app, Laiwang, into a crowded field, hoping to gain traction in the social-networking market currently dominated by Tencent Holdings and Sina Corp.

Underscoring the importance of mobile computing to the strategic direction of the company, Alibaba Group announced recently the creation of an Internet Communications unit which will report directly to Alibaba’s Chief Executive Jonathan Lu, who was recently tapped to lead mobile strategy for China’s largest e-commerce company.

Alibaba is one of several leading Chinese Internet companies that have been moving aggressively into mobile and social networking, as increasing numbers of Chinese consumers use phones and tablets to access the Web. In April, Alibaba bought an 18 percent stake in Sina’s highly popular microblogging platform Weibo for $586 million. In August Alibaba rolled out a new product that made it easier for Weibo users to shop via Taobao Marketplace using their mobile phones.

The Laiwang mobile chat app is an extension of this mobile, social strategy. Laiwang allows users to find friends through various methods, form group chats that can hold up to 500 people, share maps, voice, video and stickers. It has enhanced privacy settings such as private photo albums and a “burn after reading” feature that deletes a message after the person on the receiving end has read it.  Alibaba is also working on a Laiwang function that will allow users to make VOIP (Voice Over Internet Protocol) calls.

Lu said in a prepared statement that Alibaba hopes Laiwang will be able to leverage "hundreds of millions" of users who have already installed smartphone apps for shopping and chatting on Taobao Marketplace, Alibaba’s popular online shopping website, bridging the gap between social networking and e-commerce.

"This product will help connect different aspects of people's social life, lifestyle and consumer habits," said Lu, and will "create new wireless application scenarios."

Shopping via mobile phone is growing fast but is still a relatively small part of e-commerce in China. Mobile shopping made up nearly 7 percent of all Taobao transactions in 2012.

Laiwang is launching into a mobile-messaging marketplace dominated by Tencent Holding’s Weixin, or WeChat, which has over 230 million monthly active users. South Korea’s Naver Line chat app and U.S. based WhatsApp are also popular chat applications in China.

Various media reported last week that China Telecom, the country’s smallest telco, may preinstall contract phones with Alibaba’s Laiwang. In August, Chinese Internet company NetEase tied up with China Telecom to jointly launch a mobile chat app called Yixin targeting Chinese youth.

Tencent recently expanded WeChat’s functions to allow for e-commerce on the platform by integrating payment systems and having official accounts function as storefronts on the platform. In late July, Alibaba banned applications that gave sellers’ access to WeChat to manage their stores in a move to protect users after some users complained of a large volume of unwanted promotional messages and ads.

Although details on how Laiwang would mesh with the current Taobao suite of applications are not available, it is clearly the direction in which the company wants to move.

When people shop on Taobao Marketplace or Tmall, they will already share and communicate their thoughts about the product with their friends,” said Michael Zou, Laiwang’s product manager, at a press conference.

"This was our starting thought when we decided to create this product. There is such a large volume of communication and sharing on Taobao and Tmall that happens on a daily basis, and we believe this platform will be a good way to facilitate that communication,” Zou said.

Users can download Laiwang from the Apple’s App Store and Google Play.