WeChat China, the chat app, for long has been a bellwether in mobile messaging future. Its purpose is to popularize brands in chats and also to integrate third-party services. Tencent is the company behind WeChat, (also known as Weixin in China), announced its impressive financials at the end of the year, including their application’s highest quarterly profit growth for three years.
Among the other items revealed is that WeChat has up to 697 million active users now, worldwide, having added about 200 million to that figure each month. At the point when Tencent initially started WeChat back in January 2011, no one thought that the application was an e-commerce and online networking giant, with over almost a billion clients.
The last half decade saw China’s former social media giants get used to living in WeChat’s shade. Renren, “China’s Facebook,” has seen its valuation crumble to a fifth of its 2013 high as users flocked to more feature-rich apps. And Weibo, while hardly obscure, has long since been eclipsed by WeChat’s enormous user base. In the year 2010, when messaging applications at the time were novelties, we lived in a world of SMS texts. From Kik to SMS, WeChat China today is such a unique, innovative platform that it’s easy to forget that it was originally framed to be
China’s answer to Kik.
Companies failed to see that China was the biggest battleground in the mobile revolution. The first version of WeChat released in early 2011, right into the midst of a messaging app revolution. As mobile users grew bored and frustrated by the limitations of SMS, a new kind of app began sprouting throughout the world. Kik, WhatsApp, and Viber all launched in 2010, and the next year saw WeChat, Line, and Facebook Messenger roll onto the global stage. In China, a nascent Xiaomi launched Milao, while many Chinese internet users logged into Twitter aims at Weibo for more than just commenting on the news.
WeChat is the Leader in Chinese Social Media
“WeChat had competition when it launched. [But] Weibo just wasn’t very good at interpersonal communication, so it left a giant hole,” says William Bao Bean, Managing Director of Chinaccelerator and partner at SOS Ventures. Whichever app managed to exploit that hole in China and grab a hefty market share in 2011 and 2012 would become the incumbent. WeChat was able to outflank its domestic competition by rolling out in-demand features on an insane schedule. Within one year, the app had expanded from its simple text/voice/picture offerings to include video messaging, a “shake” feature to find nearby users (which doubled as one of China’s new answers to Tinder), and more.
If that wasn’t enough of a leg-up over the local competition like Xiaomi and small startups, WeChat was also able to leverage Tencent’s massive QQ user base. While other services required email addresses or phone numbers to log in, WeChat simply needed a QQ account – which hundreds of millions of Chinese people already had. By early 2012, WeChat had 100 million registered users, and China’s other messaging apps were already in the dust. But what about the international competition?
Beyond text messaging, video and voice calling, its services includes games, social network timeline, shopping, branded accounts, and more. Payment is another area and over the past year, Tencent has put considerable focus into its China-based service, WeChat Pay, is used to transfer funds between WeChat users (peer-to-peer) and make online payments with some offline retailers. Tech In Asia tested it out for a day in China. Eventually, they were reasonably impressed, although it seems there’s room for improvement. Tencent disclosed that by November 2015, 200 million user cards were attached to the payment service.
Tencent revealed that it banks over RMB300 million, an equivalent of $56M USD, that is charged from WeChatPay bank transactions, almost all was from China. Currently, the service was started in South Africa through its first expansion that was international. Tencent offers it globally to all merchants who can use it to take payment from Chinese tourists.
That is hugely impressive, and it shows WeChat’s growing platform might be a significant threat to Alipay, the service by Alibaba’s $60 billion-valued payment affiliate. Alipay had not revealed its annual payment or revenue volume since 2013 — when it recorded $519 billion — though that figure will be much higher now. While Alipay is China’s top payment option with 500 million users and 200 million credit cards, the mainstream adoption and use of WeChat contribute massively to its success.
WeChat for Chinese and Beyond
Tencent is also dropping fees for transactions that are peer-to-peer, a move that aims at making WeChat a standard platform for transferring money between friends. Another new policy developed by WeChat is that it charges users a small fee for the transfer of certain funds from their WeChat wallet to their bank accounts, this incentivizes them to retain funds in their application wallet account, which will presumably then be spent on or distributed to others via the service.
WeChat makes money through advertising and games. The President Martin Lau revealed that Tencent’s does not anticipate WeChatPay to become a profitable business as it subsidizes merchants and other costs. But, the real value, Lau said that WeChatPay is for the benefit of the overall ecosystem empowering future advertisements with one-click purchasing and promotion by users, as well as synergies with financial services like Tencent’s online bank or wealth management fund.
The Future of Your WeChat Account
Tencent’s primary goal is not only facilitating chatting but also making WeChat platform a gateway into the country’s booming service economy, where everything from manicures, food delivery to car washes are all sold online. Smartphones are a crucial entry point to China’s online-to-offline sellers.
Other companies have imitated WeChat’s success — Alibaba’s chairman, in 2013, declared war on Tencent by encouraging the employees to unite and form a Marching Army and kill Tencent’s mascot. Alibaba tried, but unsuccessfully it turned out, to challenge WeChat with its Laiwang messenger.
While WeChat claims victory, analysts say it should be watchful of other threats. WeChat banks from advertising. WeChat’s app future mostly depends on how it deals with the information explosion on the app. If it continues that way, in a period of about year, WeChat will hit its peak.
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