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WeChat Flourishes At Home While Tencent Invests Abroad

WeChat, known as Weixin (pronounced way-sheen) in Chinese, was born as a WhatsApp copycat. That copycat has since baffled other giant social networking companies like Facebook with its all-in-one approach to messaging and apps.

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The Chinese super app offers users a platform through which they can do almost anything online. As a result, it has woven itself into the fabric of everyday Chinese society.

WeChat is the primary means by which mainlanders communicate with family, friends, colleagues, and employers. According to , over one-third of WeChat users spend more than four hours in the app each day.

So how did this monolith of an app come to be, and how is it faring against regional and global competitors?

WeChat And Its Global Counterparts

According to , as of January 23, 2018, WeChat ranked number three on the app store in China overall and number one among social networking apps in China and Macao. Since the app launched in January 2011, 奥别颁丑补迟鈥檚 number of active monthly users has grown from 2.8 million in Q2 2011 to 963 million in Q2 2017 .

This massive growth was propelled by the unique economic and political atmosphere in which the company was created. Facebook, Twitter, and other social media sites were in 2009 due to Chinese government concerns over content control. Tencent, which started as an online chat room platform called QQ, leveraged those users and capitalized on the social media gap to start WeChat.

But Tencent didn鈥檛 just have state policies that blocked competition on its side. In 2011, China was home to , most of whom use their phones to browse. Tencent also had China鈥檚 substantial mobile Internet population to tap into. In 2016, reported that 鈥渕ore Chinese reach the internet via their mobiles than do so in America, Brazil, and Indonesia combined. Many leapt from the pre-web era straight to the mobile internet, skipping the personal computer altogether.鈥

This mix of state-restricted competition, played out in favor of Tencent, and a large mobile user base hungry for their devices to do more, has created a network that鈥檚 moved far beyond messaging.

WeChat Becomes More Than A Social Network

Tencent transformed WeChat from a messaging app, like Whatsapp, into a monetized social media platform where third-party developers and businesses can directly access the Chinese mobile Internet market. Like Facebook, companies run targeted ads and through official accounts. Within the same environment, customers can conveniently pay for goods or hail a taxi.

In January 2017, Tencent took its innovation a step further when it began allowing individuals to instantly download and apps鈥攎ini-programs in WeChat parlance鈥攚ithin 奥别颁丑补迟鈥檚 interface. The data from the apps is stored along with WeChat data. The company it believes the program will 鈥減rovide more venues for users to sample functionalities offered by apps and thus increase the conversion rate for app downloads.鈥

, WeChat now boasts an offering of 580,000 mini-programs on the platform in just one year since its launch. It is estimated that 95 percent of ecommerce brands in China have created a mini-program.

However, just because Tencent has a goliath in WeChat doesn鈥檛 mean there isn鈥檛 worthy competition.

Competition Close To Home

Tencent isn鈥檛 the only company that caught on to the all-in-one app idea. Tokyo-based launched an in 2015, , to transform its messaging service into a platform like WeChat. Later that year, it started in Japan, and in 2016, it 鈥淟ine Man,鈥 a regional on-demand delivery service.

The company went on to raise in its dual NY-Tokyo IPO in the same year. Line has also attempted to take its success global, launching its platform and .

In Q2 2017, the company boasted 169 million monthly active users in its Japan, Taiwan, and Thailand markets according to . Though that number is quite lower than 奥别颁丑补迟鈥檚 938 million, taking into consideration global competition, its success is relatively significant.

But how does Tencent鈥檚 WeChat stack up to the West, where the real global social networking giants lie?

奥别颁丑补迟鈥檚 Competing Western Heavyweights

Facebook-owned WhatsApp, the global heavyweight in the messaging service industry, had a monthly active user rate that grew from 200 million in April 2013 to 1.3 billion in July 2017, . Facebook Messenger, on the other hand, had an active monthly user total of 200 million in April 2014 which grew to by September 2017.

Even with these huge global user numbers*, Facebook Messenger and other players, like Apple, have joined the competition to become the 鈥.鈥

For instance, Facebook Messenger made direct payments available back in 2015, and it games available within its app in May 2017. Similarly, Apple iMessage began to allow its users to within the messaging interface when it rolled out iOS 11 in September. iMessage also supports in-message payments through Apple Pay.

However, these companies have concentrate core services, such as requesting an Uber, in a messaging product鈥攎aking the unique atmosphere in which Tencent designed and implemented WeChat all the more notable.

But although Facebook and Apple have struggled to import lessons from WeChat to their local markets, Tencent has equally struggled in exporting its successful all-in-one strategy to western markets.

Tencent Invests Abroad

Aside from the potential for expansion in smaller countries with a promising mobile Internet market, like Malaysia, Tencent has focused its efforts for WeChat abroad on Chinese travelers. The company has in 14 countries outside of China, allowing foreign brands to appeal to the of traveling Chinese consumers.

Beyond mainland borders, however, Tencent has focused its expansion on investing in global WeChat competitors. Tencent invested $50 million in a for competing messaging platform . In the announcement of the deal, Kik CEO, Ted Livingston, that 鈥渨ith so much of their focus on winning China, [Tencent will] support Kik running independently to win the U.S.鈥

Similarly, Tencent invested in another messaging platform in India called . The social messaging startup raised $175 million in a Series D funding round in August 2016. Hike has also implemented a payment system. The startup launched its 鈥溾 project which 奥别颁丑补迟鈥檚 . Through the project, friends and family members can send each other gifts through an embedded payment system.

It seems likely that Tencent will continue to focus 奥别颁丑补迟鈥檚 efforts on further satisfying the needs of its Chinese mobile internet user base and keeping Alibaba at bay. On the global end, it will be interesting to see if Tencent鈥檚 influence through messaging platforms abroad, like Hike, will give WhatsApp and Facebook Messenger a run for their money. The WeChat of the West may not actually be WeChat, but it may well end up being a China-backed messaging underdog.

*WhatsApp was not widely blocked in China until . The data for both Facebook Messenger and Whatsapp is inclusive of all global users.聽

iStockPhoto /聽BrianAJackson

 

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