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UPDATED: June 10, 2015 NO. 26 JUNE 26, 2014
First-Degree Merger
Alibaba has merged with mobile browser UCWeb. But will a successful business integration be a sure thing?
By Zhou Xiaoyan

JOINING FORCES: Yu Yongfu (center), Board Chairman and CEO of UCWeb, announces that the company will merge with Alibaba Group on June 11 (CFP)

The way ahead

UCWeb used to be a sought-after business in the white-hot battle between China's major Internet giants. Search engine Baidu also made a quite generous offer to UCWeb. Then why did UCWeb choose Alibaba, instead of Baidu?

UCWeb's CEO Yu said he does not think UCWeb is being taken over by Alibaba. "Very few of the investments made by China's big three Internet giants Baidu, Alibaba and Tencent were through stock offerings. It is clear that Jack Ma and Alibaba have treated UCWeb as partners by offering us shares," said Yu, adding that both UCWeb and Alibaba share the same vision in the mobile Internet.

"UCWeb and Alibaba started cooperation early in 2009. Over the past five years, Alibaba has consistently fulfilled its promise that it would support UCWeb's development unconditionally. The two companies have forged a friendship based on the foundation of equality and respect," Yu said.

The UCWeb Mobile Business Group will integrate UCWeb's 3,000 employees into Alibaba and will be Alibaba's third business group after its E-commerce Business Group and Cloud Computing and Big Data Business Group.

In the wake of Alibaba's wild spending spree, the issue of how to integrate UCWeb's business with the Internet giant's enormous resources represents somewhat of a conundrum.

Feng told Beijing Review he is quite optimistic about the integration. "There are three sources of risks facing business integration after a merger—staff, culture and businesses," said Feng. Since Alibaba's business and UCWeb's business are highly complementary, there will be no massive layoffs, therefore no major risks from the staff side. According to Feng, Yu turned down on Baidu's offer mainly because Baidu's Board Chairman Li Yanhong requires UCWeb to report to Baidu. Jack Ma, however, treats UCWeb more like a business partner than a subordinate. Ma's attitude is more in line with the spirit of Internet—equality and sharing. "That alignment in ideology, combined with their highly complementary businesses, will eventually lead to successful business integration," he predicted.

Some experts, however, are not that optimistic. UC browser is the core asset of UCWeb. However, is a mobile browser really that important in smartphones?

Li Yi, Secretary General of Mobile Internet Industry Association, said browsers are outdated in the mobile Internet era.

"Eventually, mobile browsers will disappear. The fact that UCWeb's founders and investors are willing to sell their stakes to Alibaba shows that they are not optimistic about mobile browsers' future," Li said.

Lu Zhenwang, an observer in the e-commerce industry, said time is limited for Alibaba and UCWeb to fully integrate their businesses.

"Mobile browsers have limited room to develop, because websites have developed mobile apps and don't need browsers to link users to them. There will be fewer and fewer people using browsers in smartphones in the future. The user base of mobile browsers is increasing simply because the number of smartphone users is skyrocketing. But the declining trend of mobile browsers is inevitable," Lu said.

"Whether or not the business integration can be successful lies in whether or not UCWeb can turn itself into a real portal before mobile browsers completely lose their market dominance. It should be not only a portal for linking to websites, but also for watching videos, navigating and finding games," Lu said.

"The time period is only two to three years. If UCWeb fails to achieve that, the company's value will plummet," said Lu.

Email us at: zhouxiaoyan@bjreview.com


Founded in an apartment in Hangzhou, capital of east China's Zhejiang Province, in 1999, Jack Ma's Alibaba Group Holding Ltd. has grown into a monster conglomerate, dominating one of China's most dynamic economic sectors: e-commerce.

The 15-year-old Alibaba is the world's largest online and mobile commerce company. It had a gross merchandise volume of $248 billion in 2013 on its three major trading platforms—Taobao.com, China's most visited customer-to-customer (C2C) online shopping website, Tmall.com, China's leading online business-to-customer (B2C) mall, and Alibaba.com, a leading global wholesale business-to-business (B2B) platform.

In addition to the online retail and wholesale business, it provides cloud computing services, and has the world's largest payment processor with a payment volume of $519 billion in 2013.


Founded in 2004, UCWeb is a mobile Internet software and services provider based in Guangzhou, capital of south China's Guangdong Province.

UC Browser, the flagship product of UCWeb, has 500 million users worldwide. The business of UCWeb also includes a leading mobile gaming distribution platform named Jiuyou and a mobile search service called Shenma.

UCWeb was also one of the first Chinese Internet companies to explore the global market. It has over 100 million overseas users and its market share in India is over 30 percent, ranking it first in the country.

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