HOME >> BUSINESS
Caixin stake offers Alibaba clout
By Wang Jiamei Source:Global Times Published: 2016-3-7 11:16:48
Investment poses questions about e-commerce giant’s goals, influence
Alibaba Group Holding and its affiliates have been investing heavily in media over the last few years, taking stakes or purchasing outright everything from a tech blogging platform to an entire newspaper. In its latest move in that direction, media reported that Alibaba affiliate Ant Financial Services, the holding company for its Alipay online payment service, was one of several investors interested in taking a stake in Caixin Media Co, which owns the influential business and politics magazine of the same name. Analysts said the investment offers Ant Financial an avenue to sell its growing numbers of financial services. However, the potential deal also poses questions about what a stake in Caixin might buy for Alibaba and its affiliates.
An affiliate of e-commerce giant Alibaba Group Holding is in talks to invest one of China's most prestigious media brands, according to media reports, leaving Alibaba and its affiliates poised to strengthen their growing influence machine.
Last week, several media outlets reported that Ant Financial Services, the holding company for Alibaba's Alipay online payment service, was one of several investors looking to get in on Caixin Media Co's latest funding round.
Caixin, founded in late 2009, which runs an influential magazine under the same name, announced Wednesday on its website that it was nearing the completion of its series C round of financing and had received interest from several investors.
It didn't disclose details about the potential investors or how much money it planned to raise in this funding round.
The discussions highlight Alibaba and Ant Financial's recent expansion into media, and pose questions about the motives behind the investments, as well as whether they will affect Caixin's editorial independence.
Media blitz
Although no deal with Caixin has been announced, investing in news media assets is nothing new for Alibaba or its affiliates. In recent years, they have invested in dozens of media companies in China.
In December 2015, Alibaba made headlines when it announced its acquisition of the South China Morning Post, Hong Kong's leading English-language newspaper, in a move reminiscent of Amazon.com Inc founder Jeff Bezos's purchase of the Washington Post newspaper in 2013.
In October 2015, Ant Financial made a strategic investment in 36Kr.com, a Beijing-based technology blog site. In June 2015, Alibaba acquired a 36.74 percent stake in the Shanghai-based financial news outlet China Business Network from Shanghai Media Group for 1.2 billion yuan ($183.42 million). In June 2014, it invested an undisclosed seven-figure amount to obtain a 40 percent stake in the business and technology news portal huxiu.com.
It's not hard to see that most of the investments have focused on business, especially Ant Financial's. The company does more than run Alipay. It also carved out a slice of the online investment business with its Yu'ebao money market fund and has started its own credit rating agency.
Caixin, whose largest shareholder is China Media Capital, has already established itself as major force in covering business and politics in China.
More recently, it has gotten into the data dealing business.
In June 2015, it took over sponsorship financial information provider Markit's closely watched China Purchasing Managers' Index (PMI). At the time, Caixin said the deal was part of its "broader strategy to increase its capabilities in financial information."
The media investments could help Alibaba and its affiliates win some high-quality customers for their financial services, said Liu Dingding, a senior analyst from Beijing-based market consultancy Sootoo.
"Readers of financial news are quite consistent with the group Ant Financial is targeting, and it is possible that the financial services provider could turn some readers into its customers through cooperative arrangements with Caixin," Liu told the Global Times on Thursday.
The question of influence
Although there is evidence that taking a stake in Caixin could benefit Ant Financial's businesses, questions remain about whether the deal would give it sway over editorial decisions.
In its statement on Wednesday, Caixin noted that all of its potential investors will recognize Caixin's editorial independence.
For Alibaba's part, its chief marketing officer, Wang Shuai, said on his personal WeChat account on Wednesday that Alibaba has no intention to control the media or interfere in political issues.
Still, some experts were skeptical. At the very least, being the shareholder in a media company could reduce potential negative commentary, Chen Lin, an assistant professor of marketing at the China Europe International Business School (CEIBS), said in an e-mail interview on Thursday.
Liu also had his doubts. "It is hard to believe that the composition of shareholders would have no impact on media companies," he said.
According to Chen Wei, an analyst with Beijing-based investment consulting firm ChinaVenture, Alibaba is unlikely to profit directly from its media investments. Rather, it is investing to gain influence, from which it might reap "invisible benefits."
As a leading e-commerce company, Alibaba needs to pay close attention to the public to maintain its reputation and status in the industry, Liu said. Investing in media is a useful way to achieve that goal.
Other companies appear to agree. Caixin counts Alibaba's tech rival Tencent Holdings - which won China's ubiquitous WeChat social media platform - as one of its investors.
Spreading its money around
Alibaba has also spent a lot of money on businesses that can help build up its profile.
Over the past two years, it has invested in a range of industries, such as entertainment, culture and sports.
For instance, just last month, Alibaba spent about $28 million for a 4 percent stake in South Korean K-pop giant S.M. Entertainment Co, which also forged a strategic partnership Ali Music, Alibaba's music company.
In 2014, Alibaba acquired Hong Kong-listed entertainment firm ChinaVision Media Group, which it later renamed Alibaba Pictures Group.
Chen from CEIBS noted that the acquisition of media assets could help Alibaba promote these entertainment businesses through both traditional media, such as Caixin and the South China Morning Post, and new media, such as Youku Tudou and Sina Weibo.
Executives from Alibaba Group Holding and Shanghai Media Group (SMG) sign a strategic agreement in Shanghai on June 4, 2015. As part of the agreement, Alibaba promised to invest 1.2 billion yuan ($183.42 million) in China Business Network, a leading financial media outlet under SMG. The deal was one of several media investments that Alibaba made in recent years. Photo: CFP
An affiliate of e-commerce giant Alibaba Group Holding is in talks to invest one of China's most prestigious media brands, according to media reports, leaving Alibaba and its affiliates poised to strengthen their growing influence machine.
Last week, several media outlets reported that Ant Financial Services, the holding company for Alibaba's Alipay online payment service, was one of several investors looking to get in on Caixin Media Co's latest funding round.
Caixin, founded in late 2009, which runs an influential magazine under the same name, announced Wednesday on its website that it was nearing the completion of its series C round of financing and had received interest from several investors.
It didn't disclose details about the potential investors or how much money it planned to raise in this funding round.
The discussions highlight Alibaba and Ant Financial's recent expansion into media, and pose questions about the motives behind the investments, as well as whether they will affect Caixin's editorial independence.
Media blitz
Although no deal with Caixin has been announced, investing in news media assets is nothing new for Alibaba or its affiliates. In recent years, they have invested in dozens of media companies in China.
In December 2015, Alibaba made headlines when it announced its acquisition of the South China Morning Post, Hong Kong's leading English-language newspaper, in a move reminiscent of Amazon.com Inc founder Jeff Bezos's purchase of the Washington Post newspaper in 2013.
In October 2015, Ant Financial made a strategic investment in 36Kr.com, a Beijing-based technology blog site. In June 2015, Alibaba acquired a 36.74 percent stake in the Shanghai-based financial news outlet China Business Network from Shanghai Media Group for 1.2 billion yuan ($183.42 million). In June 2014, it invested an undisclosed seven-figure amount to obtain a 40 percent stake in the business and technology news portal huxiu.com.
It's not hard to see that most of the investments have focused on business, especially Ant Financial's. The company does more than run Alipay. It also carved out a slice of the online investment business with its Yu'ebao money market fund and has started its own credit rating agency.
Caixin, whose largest shareholder is China Media Capital, has already established itself as major force in covering business and politics in China.
More recently, it has gotten into the data dealing business.
In June 2015, it took over sponsorship financial information provider Markit's closely watched China Purchasing Managers' Index (PMI). At the time, Caixin said the deal was part of its "broader strategy to increase its capabilities in financial information."
The media investments could help Alibaba and its affiliates win some high-quality customers for their financial services, said Liu Dingding, a senior analyst from Beijing-based market consultancy Sootoo.
"Readers of financial news are quite consistent with the group Ant Financial is targeting, and it is possible that the financial services provider could turn some readers into its customers through cooperative arrangements with Caixin," Liu told the Global Times on Thursday.
The question of influence
Although there is evidence that taking a stake in Caixin could benefit Ant Financial's businesses, questions remain about whether the deal would give it sway over editorial decisions.
In its statement on Wednesday, Caixin noted that all of its potential investors will recognize Caixin's editorial independence.
For Alibaba's part, its chief marketing officer, Wang Shuai, said on his personal WeChat account on Wednesday that Alibaba has no intention to control the media or interfere in political issues.
Still, some experts were skeptical. At the very least, being the shareholder in a media company could reduce potential negative commentary, Chen Lin, an assistant professor of marketing at the China Europe International Business School (CEIBS), said in an e-mail interview on Thursday.
Liu also had his doubts. "It is hard to believe that the composition of shareholders would have no impact on media companies," he said.
According to Chen Wei, an analyst with Beijing-based investment consulting firm ChinaVenture, Alibaba is unlikely to profit directly from its media investments. Rather, it is investing to gain influence, from which it might reap "invisible benefits."
As a leading e-commerce company, Alibaba needs to pay close attention to the public to maintain its reputation and status in the industry, Liu said. Investing in media is a useful way to achieve that goal.
Other companies appear to agree. Caixin counts Alibaba's tech rival Tencent Holdings - which won China's ubiquitous WeChat social media platform - as one of its investors.
Spreading its money around
Alibaba has also spent a lot of money on businesses that can help build up its profile.
Over the past two years, it has invested in a range of industries, such as entertainment, culture and sports.
For instance, just last month, Alibaba spent about $28 million for a 4 percent stake in South Korean K-pop giant S.M. Entertainment Co, which also forged a strategic partnership Ali Music, Alibaba's music company.
In 2014, Alibaba acquired Hong Kong-listed entertainment firm ChinaVision Media Group, which it later renamed Alibaba Pictures Group.
Chen from CEIBS noted that the acquisition of media assets could help Alibaba promote these entertainment businesses through both traditional media, such as Caixin and the South China Morning Post, and new media, such as Youku Tudou and Sina Weibo.
Posted in: Insight