The latest research released by UBS Investment Research on Tuesday, Jan. 12, indicates that consolidation will be central for Chinese Internet giants, including Alibaba, Baidu and Tencent.
According to China Daily, the consolidation began in 2015 in the major sectors like taxi hailing, online travel, group buying, and online classified information platforms.
The research report revealed that mergers and restructuring will be more frequent in the highly competitive segments, especially in online to offline platforms.
The same publication added that the introduction of a strategic emerging industries board and the latest liquidity boom in the A-share market leading to a valuation difference between Chinese and United States stock market will hasten the privatization pace of more U.S.-listed Chinese firms. Thirty-four such corporations have received proposals to go private or were already undergoing privatization by the close of 2015.
With regard to online search enterprises, they should seek cooperation with non-website information providers like WeChat, since Chinese Internet users are becoming more mobile-inclined. As a result, mobile games will be central to the growth of the overall online games industry. However, mobile games will grow to be heavier, which implies that customer viscosity will be increased and the value that a single game creates will be much higher.
Strong growth momentum can still be predictable for China's e-commerce market at the time when brick-and-mortar venture effectiveness requires improvement. E-commerce firms will invest more in logistic and online payment this year.
Therefore, 2016 will be a good year for online travel organizations since they are well situated in a segmented market. For those that have not made profits before, they will see a turning point in the next 12 years.