The interconnection between China’s tech giants has reached a new milestone.
According to 36Kr, Taobao will soon fully integrate WeChat Pay. Sources say the project has been a closely guarded initiative within Taotian Group (Taobao and Tmall), with preparations underway for six months. The user tools team managed the integration, and since June, some Taobao users have been able to test WeChat Pay for select purchases.
This development follows Alibaba’s recent completion of its three-year restructuring, which the company described as a new starting point for development.
Insiders told 36Kr that Taotian has been the driving force behind this WeChat Pay integration, which holds significant implications for Alibaba’s business and strategy.
For one, this move will help Taotian expand further into lower-tier markets. In the past, domestic Taobao shoppers had to use Alipay, which might have caused users without the app to abandon their purchases. Now, with WeChat Pay, users can make transactions directly within the WeChat app, potentially increasing conversion rates and boosting the frequency of purchases.
“Even a 1% increase makes a huge impact at this scale,” a source familiar with Taobao’s operations told 36Kr. “Six months of testing have shown that WeChat Pay integration is effective at reaching users in lower-tier cities.”
In 2020, WeChat data revealed that 83% of county-level users and 78% of rural users preferred WeChat Pay, compared to 76% of urban users.
An investment analyst estimates that, after full integration, Taobao will likely see millions of new daily active users, especially among seniors over 55 and younger users aged 18–26.
For Tencent, the immediate benefit is a new revenue stream. The analyst noted that Taobao will have to pay a payment processing fee for each transaction completed via WeChat Pay.
Merchants are optimistic about the integration. A Tmall clothing seller told 36Kr that, beyond boosting sales, WeChat Pay will enable them to consolidate payment data, leading to more precise market analysis and better user profiling to optimize marketing strategies.
Earlier steps had laid the groundwork for this collaboration. Alimama and Tencent had already started cooperating beforehand, allowing WeChat Channels, Moments, and mini program ads to link directly to Taobao and Tmall. Now, with WeChat Pay available, merchants are expected to increase their ad spending across WeChat’s ecosystem.
This collaboration comes after years of rivalry between Taobao and WeChat, who had long blocked each other’s services.
From 2008–2021, China’s internet platforms became increasingly fragmented. The 2010 dispute between Tencent and Qihoo 360—colloquially known as the 3Q war—forced users to choose between the two services and marked the start of an era of isolation between platforms. The two companies didn’t reconcile until a court ruling in 2014.
In November 2013, WeChat blocked Alibaba’s messaging app Laiwang, and soon after, Taobao blocked WeChat, cutting off the ability to share Taobao products within WeChat.
Taobao has made several attempts to access WeChat’s vast user base, but WeChat introduced rules in 2018 to restrict such methods.
Other major platforms also blocked each other. At one point, WeChat disabled links to Toutiao, Douyin, and NetEase Cloud Music, while ByteDance apps restricted access to WeChat Official Accounts. Most platforms also blocked Baidu’s search engine crawlers from indexing their content.
On the payment front, JD.com and Meituan both dropped Alipay, and Taobao did not support WeChat Pay until now. Douyin also restricted WeChat Pay, while platforms began developing their own payment systems to compete in the growing online payment market.
However, in recent years, the landscape has shifted. Interconnection has become the trend, and China’s tech giants have begun opening up.
In 2021, Tencent announced it would gradually relax restrictions on external links, allowing smaller players like Ele.me, Youku, and Kaola to create WeChat mini programs. But loosening restrictions for major rivals like Taobao has taken longer.
Three years ago, Tencent signaled its willingness to cooperate, but both companies were still experiencing rapid growth. In 2021, Tencent’s revenue grew by 16%, surpassing RMB 500 billion (USD 70.6 billion) for the first time, and WeChat’s monthly active users reached 1.268 billion. Meanwhile, Alibaba’s revenue grew by nearly 20% in fiscal year 2022, with the company adding 113 million new global consumers.
The past two years, however, have brought new challenges. Tencent’s revenue was overtaken by ByteDance in the second quarter of 2023, and Taobao has faced fierce competition from Pinduoduo and ByteDance.
Taobao’s journey to integrate WeChat Pay hasn’t been without its challenges either. Since 2021, Taobao’s subsidiary, Taote, which focuses on lower-tier markets, has made multiple attempts to implement WeChat Pay to capture these users. During the 618 shopping festival in 2021, Taote’s head of operations confirmed the company was working to integrate WeChat Pay and had applied to launch a WeChat mini program.
In 2023, Taobao tested a WeChat QR code payment system. However, the process was cumbersome, drawing criticism from users.
Today, Taote users can place orders and jump directly to the WeChat Pay interface, streamlining the experience to match other third-party payment services.
Before WeChat Pay’s full integration, WeChat had already updated its external link policy, allowing users to click on Taobao and Tmall links and open the apps directly. Tencent also opened WeChat advertising to Alimama three years ago.
However, full integration has yet to be achieved. Taote now supports WeChat Pay, but it hasn’t launched a WeChat mini program. Users still cannot share Taobao product cards directly within WeChat conversations, and Taotian’s mini program is not yet integrated with WeChat.
The gradual shift from isolation to cooperation between these two internet giants reflects not only their business needs but also the broader trends shaping China’s digital economy.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Peng Qian for 36Kr.