The scope of mobile phone payments in Hong Kong is about to reach a whole new level, thanks to a partnership between two of Greater China’s best-known tycoons.
Hong Kong’s richest person, Li Ka-shing, and Chinese internet entrepreneur Jack Ma Yun (Alibaba (BABA – Get Report) founder) are joining forces in a new venture that will expand the reach of digital payment services.
CK Hutchison Holdings, Li’s flagship conglomerate, and the Ma-controlled Ant Financial Services Group, parent of online payment service Alipay, on Tuesday said they were forming a strategic partnership to bring so-called digital wallet services to more consumers in Hong Kong.
The two companies will form a 50-50 joint venture to integrate online and offline Hong Kong dollar payments under the AlipayHK brand, which was introduced earlier this year. The agreement will make the AlipayHK service available in CK Hutchison’s vast network of shops.
“By leveraging CK Hutchison’s extensive market presence and combining its commercial experience with Ant Financial’s technology expertise, we will bring great benefits not only to our telecoms, retail, and other customers of the group, but also to all businesses in Hong Kong,” said Canning Fok Kin-ning, co-managing director of CK Hutchison, in a statement on Tuesday.
Ant Financial rolled out AlipayHK’s mobile wallet and payments app in the city in May, heating up competition in the market against Apple (AAPL – Get Report) Pay, Samsung Pay, Android Pay and Tencent Holdings‘ (TCEHY) WeChat Wallet service.
It attracted more than 100,000 active users in the first two weeks after launch. The mobile app is now accepted in about 4,000 retail outlets in the city.
In Hong Kong, CK Hutchison has more than 600 stores selling everything from telecommunications, food and electronics to wine, and health and beauty products. Households using utilities provided by Ck Hutchison’s affiliated companies will also be able to pay using AlipayHK.
On top of in-store payment services, AlipayHK also enables many in-app lifestyle features, such as third-party insurance products, and the ability to receive offers like food and beverage vouchers and sticker rewards from local partners, such as online dining guide OpenRice.
“There are millions of people travelling across the Guangdong-Hong Kong-Macau Greater Bay Area every month. We believe that our users will enjoy the tremendous benefits delivered through this strategic partnership,” said Eric Jing, the chief executive at Ant Financial.
Bocom International analyst Alfred Lau said the venture would make it easier for Alipay to penetrate the Hong Kong market, but it will not be an immediate profit contributor to CK Hutchison.
The joint venture is expected to be completed by the end of this year, subject to regulatory approval.
Paul Haswell, a partner at international law firm Pinsent Masons, said he would not be surprised to see Ant Financial take advantage of Li’s “global empire” to drive Alipay’s adoption around the world.
“We can expect AlipayHK to initially occupy a dominant position in the local digital finance space, competing against offerings from banks and wealth management companies,” Haswell said.
A spokesman for CK Hutchison said the two companies are eager to make the partnership a success before exploring other possibilities.
CK Hutchison’s businesses range across ports, retail, infrastructure, energy and telecommunications.
Ma, the executive chairman of Alibaba Group Holding, has invested in a unit of Shanghai-listed milk producer Inner Mongolia Yili Industrial Group and even China Super League football club Guangzhou Evergrande. With Li, Ma could find himself further diversifying his investment portfolio.
New York-listed e-commerce giant Alibaba owns the South China Morning Post.