China's PayPal extends its tentacles into US with big travel partnership
Chinese Internet companies are getting busy in the US.
While Tencent, Alibaba, and UC Web are making big-dollar investments in US startups, successful IPOs for travel portal Qunar and classifieds site 58.com have further improved the prospects for Chinese tech companies going public in the US.
Now, ecommerce giant Alibaba, which is itself expected to soon file to go public, is extending its payments platform, Alipay, in the US.
Today, Alipay, which is roughly equivalent to PayPal, announced a partnership with UATP, a payments service used by most of the world's global airlines and accepted by thousands of merchants for air, rail, hotel, and travel agency payments.
The partnership opens up these travel businesses to the enormous and growing Chinese tourism market. Chinese consumers will be able to book and pay for their travel on international websites using their Alipay accounts. There are 800 million such accounts.
Chief architect of Alipay International Jingming Li says the company, which had noticed that a lot of its members shop directly from US and European websites, has been trying to figure out a way to help Chinese travelers have a smoother experience when going abroad. This deal now puts almost all of the world's major airlines and hotels within Alipay's reach.
The UATP deal comes soon after Alipay forged a similar partnership with American online retailer iHerb, which was announced in September. In an interview with Internet Retailer, iHerb marketing director John McCarthy said the deal had made China one of its top 10 markets.
Such partnerships could bring rich rewards to both Alipay and US ecommerce companies. While Alipay benefits from greater global reach, the American companies suddenly become more accessible to a large and upwardly mobile group of Chinese consumers. In 2012 alone, for instance, Chinese consumers made 83 billion trips out of the country. China is the world's largest spender on tourism, topping $100 billion in travel spending last year, compared to the US and Germany, both of which topped out at around $80 billion. As China's middle class grows, you can expect that travel spend figure to increase along with it.
As Alibaba nears its IPO, expected early next year, there are indications that it has high hopes for Alipay, which is China's third biggest payment platform. Last week, the company announced that it will restructure Alipay's parent company, Zhejiang Alibaba E-Commerce Co, as a new company in which 60 percent of its shares will be offered to new investors, Reuters reported.
It's probably fair to say you'll be hearing a lot more from Alibaba in the weeks leading up to its IPO. That's understandable – there's every chance it will be bigger, and more important, than Twitter's.