While Apple is working hard to launch its mobile payments system in China with the help of local e-commerce giant Alibaba, peculiarities in the Chinese smartphone market would make it difficult for the iPhone maker to succeed in the venture.
Responding to IB Times UK regarding the Apple initiative, Brian Buchwald, CEO of consumer intelligence company Bomoda, said that Apple faces entrenched competition in China, especially from Tencent, despite the fact that the country is now the company's largest market.
Tencent is pushing its mobile payment service WePay through the popular messaging app WeChat, while Alipay, which is closely related to Alibaba, is powering most of the payments on the online retailer's various websites.
"While our Blueprint intelligence shows us that 37% of high end consumers own an iPhone, we found that 90% of these consumers are on Tencent WeChat at least twice per week," Buchwald said.
Alipay and WePay
"So in the mobile payments game there is Alipay, WePay, and others that Apple will need to compete with in their now most important market."
Alibaba may help Apple in a multi-faceted manner, given its broad experience in the Chinese e-commerce market, where buyers consider convenience, speed and price the most while making online purchases, he noted.
"Alibaba provides tremendous know how of the Chinese consumer. It has spent a good deal of time and effort on its Alipay integration that would also be useful from a knowledge perspective as well as potentially an integration perspective," he said.
"Lastly, Alibaba provides a platform with an incredibly variety of products and reasons for consumers to buy."
Buchwald called Apple's possible entry into China's mobile payments market "a smart move, though not one without risk", and noted that both Apple and Tencent have to work hard to make the partnership a success.
"As strong as Apple now is in China, Alibaba is even more powerful. This could be a partnership where both sides need to give more than they traditionally have in order to make it a true win win," he said.
Due to its popularity, Tencent's WeChat has become one of the ubiquitous apps on all Chinese smartphones, and the launch of WePay has made the company one of the few true threats to Alibaba in mobile payments.
However, Tencent now has to be wary of the partnership, given the strong position of Apple and Alibaba in the relevant sectors.
"It will be very interesting to see what Tencent does next as it looks to expand its own efforts and combat two leviathans whose partnership may wind up looking better on paper than in practice," Buchwald added.