China’s insurance regulator has confirmed approval, say sources, of a major new online insurance joint-venture between two Chinese web giants. As was first proposed last August, the new business sees e-commerce company Alibaba teaming up with social and gaming-oriented Tencent (HKG:0700), who – along with the country’s top insurer, PingAn (HKG:2318) – will soon launch this online-only joint-venture that will be called ZhongAn.
Neither Tencent nor Alibaba have commented on the apparent approval, pending official word from the China Insurance Regulatory Commission (CIRC) itself.
Unlike traditional insurers – like PingAn – the forthcoming ZhongAn company will not open brick-and-mortar stores across China. The new business will reportedly focus on liability and guarantee insurance, such as for homes and possessions. It’s not clear how much of a financial investment this entails.
Alibaba, which runs online malls like Tmall and Taobao, will be the top shareholder in ZhongAn with a 19.9 percent stake. Tencent (makers of QQ and WeChat) and PingAn Insurance will each own five percent. There are also six smaller shareholders, including online travel booking site Ctrip.
E-commerce rivals forced to work together
With China having over 200 million e-commerce shoppers at present, and an anticipated 420 million e-shoppers by 2016, these companies will be hoping that the populace is ready and keen to handle its financial services online as well.
Both Tencent and Alibaba are old hands in the online finance business, as they run major e-payments platforms (Tenpay and Alipay, respectively). Plus, Alibaba has been micro-lending to small businesses on its e-commerce platforms for quite some time. Nonetheless, it’s still a major business move by the two web companies.
Tencent also has its own e-commerce business, making it a rival to Alibaba in several areas. But it’s likely that China’s strictly regulated financial sector necessitated the two rivals working together for this new business.
(Source: GlobalTimes; Image from Techweb.com.cn)