Alibaba (NYSE:BABA) “Positive about the Potential Cooperation” with Apple (NASDAQ:AAPL), Says Joseph Tsai

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By Thomas Copeland on November 11, 2014 Company

The possible partnership will focus on helping Apple (NASDAQ:AAPL) Pay reach out to the masses in China by allowing people to use their Alipay funds with Apple (NASDAQ:AAPL)’s new mobile payment system.

Last week, Tim Cook had stressed the importance of the Chinese market for Apple (NASDAQ:AAPL)’s growth as a market leader in technology. Today, Apple (NASDAQ:AAPL) is one step closer to becoming more integrated into the Chinese telecommunications system.

According to Joseph Tsai, Executive Vice Chairman at Alibaba (NYSE:BABA), the possible alliance is currently being imagined between Apple (NASDAQ:AAPL) and a financial institute affiliated with Alibaba (NYSE:BABA), which also runs its Alipay service in the country. The proposals, which are being discussed, specify a focus on the Chinese market, to help Apple (NASDAQ:AAPL) Pay become a viable mode of payment in the country.

During an interview, Tsai said, “We are positive about the potential cooperation [with Apple (NASDAQ:AAPL)], but it depends on the details being worked out.” Other specificities are currently being discussed between the two parties, who are hoping to enter into a partnership.

The move takes its roots in the words of Executive Chairman of Alibaba (NYSE:BABA), Jack Ma, who, in a technology conference organized by the Wall Street Journal last month, had shown interest in teaming up with Apple (NASDAQ:AAPL) for potential payment solutions.

Last month, Apple (NASDAQ:AAPL) launched its Apple (NASDAQ:AAPL) Pay system to the public, which has received mixed reviews in the US market. The payment system is unique, as it allows users to authenticate their payments with fingerprints, using the TouchID fingerprint scanner installed on the iPhones.

With the popularity of the iPhones in China, and that of Alibaba (NYSE:BABA), a partnership is bound to be received with open arms. China is one of the biggest markets Apple (NASDAQ:AAPL) hopes to enter, according to Tim Cook, CEO Apple (NASDAQ:AAPL). The potential deal may just be that breakthrough Apple (NASDAQ:AAPL) is looking for.

Possibly, and without prejudice, one model of the partnership would have Alibaba (NYSE:BABA)’s financial affiliate, which is currently providing Alipay e-payments service in the country, provide services of back-end nature to the Apple (NASDAQ:AAPL) Pay system of mobile payments. This, once implemented and executed, would allow users of the latter to utilize the funds available on their Alipay accounts with the Apple (NASDAQ:AAPL) Pay system of mobile payments.

However, things can’t go as smoothly as Apple (NASDAQ:AAPL) may wish, because certain laws and regulations in China disallow big companies such as Apple (NASDAQ:AAPL) to enter their markets so easily, especially in the financial sector.

Apple (NASDAQ:AAPL) is working with an Alibaba (NYSE:BABA)-affiliated financial institution to work out possible scenarios to avoid limitations it would otherwise face when operating a business of payments in the country.

The financial-services affiliate of Alibaba (NYSE:BABA), currently in talks with Apple (NASDAQ:AAPL), is bound to become public in the future, according to Jack Ma. Mr. Tsai, approving of the possible IPO, said it would immensely help the Alibaba (NYSE:BABA)-affiliated financial company reach new heights. However, a date of the possible IPO has not been specified.