Alibaba, Tencent in race to be China's one-stop online shop

People ride a double bicycle past a logo of The Alibaba Group at the company's headquarters on the outskirts of Hangzhou, Zhejiang province Nov 10, 2014. [Photo/Agencies]

Alibaba and Tencent spent more than $8 billion last year alone backing often strikingly similar ventures, as the Chinese Internet giants race to create online one-stop-shops to win the digital loyalty of a tenth of the world's population.

Before China became the biggest smartphone market, there was little overlap between the businesses of e-commerce leader Alibaba Group Holding Ltd, social networking firm Tencent Holdings Ltd and search engine provider Baidu Inc.

Now, as more and more Chinese use their phones for everything from shopping to booking restaurants, the three companies are increasingly stepping over each other - and investing in the same services - to attract the same users.

"What keeps people up at night is the fact that they might miss a certain trend or a certain hot company that really is going to bring all the attention and the users in," said Duncan Clark, managing director of Beijing-based consultancy BDA.

"The fight to stay essential, to stay relevant, to stay on top of the home screen, it's what it's all about."

In little over a month, taxi-hailing apps Didi Dache, supported by Tencent, and Alibaba-funded Kuaidi Dache raised over half a billion dollars each, while US taxi app Uber attracted an undisclosed sum from Baidu.

The next arena looks set to be group-buying services, where customers agree to buy a certain item or service at the same time to gain discounts. Baidu bought out Nuomi last year and Alibaba-backed Meituan on Monday said it raised $700 million, valuing the company at $7 billion.

Group-buying site Dianping, in which Tencent holds a stake, plans to raise a similar amount, people familiar with the matter told Reuters, declining to be named as they were not authorised to speak to the media. A Dianping spokeswoman declined to comment on the fundraising.