Tencent's Tenpay expands in Taiwan

Tencent Holdings Ltd, the Chinese mainland's biggest Internet company by sales, is increasing its footprint outside the mainland by offering online payment services, amid similar approaches by competitors to cash in on overseas shopping.

The company has teamed up with Taiwan-based E.SUN Bank to provide an online payment service that enables mainland Internet users to buy products such as food and cosmetics from Taiwan's small and medium-sized enterprises.

In 2011, Tencent's online payment arm, Tenpay, started to cooperate with US credit-card issuer American Express Co on a similar service for its users to buy goods on websites outside the Chinese mainland. The efforts are aimed at fending off competition from rivals such as Alibaba Group Holding Ltd, which goes head-to-head with Tencent in e-commerce, online payment, and other areas.

"We are working on projects in Hong Kong and Taiwan and hope to sort out ways to provide online payment services outside the mainland and then reach out to more merchants," said Jim Lai, Tenpay's general manager.

Lai said mainland Internet users have spent more than 100 million yuan ($16.1 million) on overseas shopping websites with the service it offers with American Express since November.

Mainland users can now use their mobile phones to scan the "quick response" codes of Taiwan-made products and pay with Tenpay's service to have the products shipped directly to mainland addresses.

Around 200 Taiwan-based merchants currently support the service, and more will join, said E.SUN Bank President Joseph N.C. Huang.

Chen Tang-peng, owner and founder of Chia Te Bakery Co, one of Taiwan's best-known pineapple cake gift brands, said one-third of his customers are mainland tourists, and he hopes to better reach out to mainland consumers with the service and its own online store.

Last year, online shoppers spent an average of 1,514 yuan per person on overseas shopping websites, according to Alipay, China's biggest online payment company. The total transaction volume of overseas shopping through Alipay increased by 117 percent year-on-year in 2012, compared with 64.7 percent growth in the domestic market over the same period.

Alipay provides a cross-border payment service that has enabled its users to shop on more than 1,000 overseas websites since 2007, it said.

Cosmetics, baby care products, clothing, health products, and electronic devices are the most popular categories for overseas shopping, and milk powder accounted for a quarter of total sales, said Alipay, which held 46.6 percent of China's online payment market last year, according to domestic research company Analysys International. Tenpay ranked second with 20.9 percent.

Zhejiang province, Guangdong province, Shanghai and Beijing took up half of China's total spending on overseas shopping websites last year, but Internet users in less developed second- and third-tier cities were catching up with a higher growth rate in terms of the money they spent, according to Alipay figures.