How WeChat is reshaping Facebook's social media future

In China, WeChat is a whole ecosystem in itself

The rise and rise of Chinese mobile app WeChat is sending a clear – and powerful – message to more established global rivals.

By Joseph Catanzaro

With the two-handed grip that is common business etiquette across much of Asia, David Luo offers up his card to the men entering the boardroom of his company’s headquarters in the southern Chinese city of Zhuhai.

In tradition-steeped China, the formal exchange of business cards has been observed with near dogmatic fervour. Luo, chief executive of marine engineering joint venture Wartsila Yuchai Engine Company, nevertheless concedes it is now fast becoming a quaint nicety, much like the green tea being poured at the boardroom table by silent attendants.

The real networking begins when Luo whips out his smartphone and asks the question that’s now compulsory in China’s boardrooms: “Do you have WeChat?”

Dominance and versatility

Called Weixin (“micro-message”) in Chinese, WeChat was launched by media giant Tencent in 2011. It was a mobile-centric app for a nation that mostly accesses the internet through more than 1.23 billion mobile phones, and it took off. Less than five years later, it is China’s number one messaging program. More than 600 million people actively use it each month, and two in every three adult Chinese online have a WeChat account.

“If all the discussions in China are happening on WeChat, you need to be there. Leave your business cards at home.” Daniel Roffman, Ptmind

To call WeChat a “messaging app” doesn’t really do it justice. Yes, you can use it for one-to-one or group messaging, or for voice and real-time video calling, or for sharing photos or a short video message through a function called “sight”.

You can also use it to shop online, follow your favourite brands and receive loyalty rewards, transfer money, play games, order taxis, pay for the bill at the local restaurant, buy plane and train tickets, take care of your utilities, book appointments with your doctor, and more.

It has an inline translation service and a location function that makes navigation a breeze. It’s also a container for other programs, called “slim apps”. 

So, it’s Facebook, WhatsApp, Snapchat, Skype, Instagram, Twitter, Google Maps, Amazon, eBay and PayPal all rolled seamlessly into one, together with extra features that Western developers are scrambling to copy. It has usurped not only traditional web browsers and email services, but also once seemingly unassailable social media rivals like Sina Weibo.

Frenchman Alex Bonhomme was hired to work in business development for the joint venture between US company Groupon and WeChat. He later co-founded CuriosityChina, which helps brands use mobile technology like WeChat to market themselves inside and outside China.

“WeChat is absolutely huge,” says Bonhomme. “In China, internet is mobile and mobile is WeChat. It is really a whole ecosystem itself and not just a messaging app.” 

He uses WeChat daily to communicate with clients and colleagues, and he also finds it a good work management platform.

“I use it personally for lifestyle,” adds Bonhomme, “especially ordering taxis, paying small bills at restaurants, transferring money to my friends and booking flights and train tickets.”

Little wonder that Luo and many other Chinese businesspeople see it as the most powerful tool for messaging – which means China-focused foreigners need to use it to do business.

Beijing-based Australian Daniel Roffman, business development manager for Chinese web analytics software company Ptmind, puts it simply. “If all the discussions in China are happening on WeChat, you need to be there. Leave your business cards at home.”

Creating a digital ecosystem

In the days before WeChat, desktop-based instant messaging software service QQ – also owned by Tencent – ruled Chinese social media. But rather than try to evolve the platform to mobile, Tencent vice-president Allen Zhang pushed to create something new that would be tailor-made for the mobile user experience. Bonhomme says Zhang had a very small team of 10 or 15 programmers build WeChat from scratch.

“They didn’t want to base it on QQ, a PC platform,” he explains.

“I think it was a very, very good strategy.”

Alex BonhommeLess than 500 days after it went live in 2011, WeChat hit 100 million users. Its architecture allowed other businesses to embed their apps within its framework. The result was a fast-growing digital ecosystem of WeChat stores, or slim apps as they are sometimes called, tied into WeChat’s huge user base.

Bonhomme says WeChat’s technology allows brands to target their customer relationship management (CRM) efforts geographically and demographically, dispensing with the outdated one-size-fits-all approach.

“In China, internet is mobile and mobile is WeChat. It is really a whole ecosystem itself.” Alex Bonhomme, CuriosityChina

WeChat’s subscription and services accounts for brands and retailers offer functions including automatically replying to a user with a text, voice or video message when the user sends a message; putting users into sub-groupings to send them targeted messages; and – with the user’s permission – collecting GPS data when a user sends the brand or retailer a message.

“I can send the right message to the right customer,” says Bonhomme.

The company has ridden the Chinese e-commerce boom, as the nation leapfrogs the West in developing a cashless economy founded on mobile phones. Easy to use – you can pay for goods in the offline world by scanning a QR code – WeChat Wallet is both taking advantage of and driving the trend.

Jason Mander, director of research and insight for GlobalWebIndex, says WeChat also has massive potential to be part of offline, physical-world commerce.

“About 80 per cent of WeChat users say they are interested in using money-transfer features on messaging apps, which compares to about half of users on Facebook Messenger or Snapchat,” he says.

Revenues beyond the norm

Today, WeChat makes its money from a mixture of advertising, e-commerce, games and chat sticker sales (think dancing cartoon characters, for when a smiley face just isn’t enough). Its exact revenue remains largely opaque within Tencent’s overall revenue, which reached US$12.9 billion in the 2014 calendar year, a 31 per cent increase on 2013 results.

What is clear, however, is that WeChat makes an unusual amount of money for a “social app”. Analysts have estimated that WeChat brings in seven times more revenue per user each month than the world’s largest messaging app, the Facebook-owned WhatsApp.

“Less than 500 days after it went live in 2011, WeChat hit 100 million users.”

Barclays has estimated WeChat’s worth at about US$30 billion, but Bonhomme is more inclined to believe a higher US$85 billion figure suggested by other analysts.

The new exemplar?

Those revenues alone mean WeChat is being scrutinised by that other giant of social media, Facebook – itself blocked from China. Facebook announced in March this year that it would become a platform that can support and integrate apps from other firms, a key component of the WeChat platform.

David LuoIndeed, some say WeChat’s rise marks a tech world paradigm shift.

“Technological influence is now coming from East to West; it’s very interesting,” says Bonhomme.

Mander says Facebook is still diversifying its offerings and functionality, and occasionally copping user backlash – as it did when it split Messenger from the main app. WeChat’s users, meanwhile, can carry out a range of activities inside one app – and WeChat has a broader range of features.

Related: Alibaba and JD.com battle it out for China's e-commerce business

WalktheChat, a marketing and IT agency that provides customised solutions for WeChat marketing, recently released a white paper claiming that, on average, users spend 40 minutes on WeChat per day and about 30 per cent of users play games through WeChat multiple times per day. The white paper also says users access about 28 per cent of their daily web content through the app.

Mander says this sort of user behaviour should make traditional search engine companies afraid.

“Globally, there’s little doubt that social networks represent the main challenge to hitherto-dominant search engines,” he says.

“We’re already seeing more people visit social networks on mobile than search engines, especially among younger groups. So WeChat wants to be at the forefront of this in Asia, taking a lot of the activities that used to occur elsewhere on the internet. Increasingly, it’s as much a general portal as it is a social app.”

Expanding its global reach

For users outside of China, many of WeChat’s more unique services and functions are not yet available. However, Mander says the app’s international user base is growing and a rollout of some of the extra features available in China may not be far off.

He believes WeChat will focus its expansion in Asia, although it is trying to make inroads to the US, Europe and Africa and has spent US$200 million in advertising to that effect. Tencent has also invested in a number of potentially complementary foreign companies, including a US$50 million investment in popular Canadian messaging app Kik earlier this year.

“We’re seeing more people visit social networks on mobile than search engines. WeChat wants to be at the forefront of this in Asia.” Jason Mander, GlobalWebIndex

WeChat usersWalktheChat estimates 38 per cent of mobile users in Malaysia now use WeChat, as do 20 per cent of users in Singapore and 19 per cent of users in the Philippines. 

In Australia, Mander says only about 5 per cent of mobile users are currently signed up for WeChat, compared with 23 per cent who use Facebook Messenger. As users increasingly take up different social networking apps, he suggests, WeChat can become a “prominent service within people’s social networking portfolios”.

Bonhomme believes WeChat will continue to grow in prominence globally with Chinese business, and Roffman points to anecdotal evidence that suggests this is already happening.

“Anyone who has spent some extended time in China will have it,” says Roffman. “Anyone doing business or marketing to Chinese people will have it.”

A WeChat world Roffman says both the design and integration of WeChat are superior to its Western counterparts and, on top of that, it’s also fun to use.

“It’s the little playful touches with WeChat that I think give it an edge over Line or WhatsApp,” he says.

“For instance, happy birthday is a trigger word. Say it in conversation and birthday cakes trickle down from the top of the screen, bringing a smile to the person on the other end of the conversation.”

It might be playful, but China’s biggest messaging app is sending a clear message of its own to competitors: WeChat is playing for keeps.

What WeChat does

Shake: shake your smartphone to connect with a new contact in your proximity.
Moments: similar to a Facebook or Instagram feed, this function enables you to share photos and comments with your friends and contacts.
Location: enables you to send, receive or mark a location and navigate using your choice of map app.
Voice message: recently adopted by WhatsApp, this enables you to send a voice message to your friends and contacts.
Message: standard text messaging.
Video call: real-time video calling function similar to Skype.
Sight: Share a short video message to contacts or in your moments feed.
WeChat Wallet: once connected to your bank account, this function enables you to transfer money, shop online for products, order taxis, pay for plane and train tickets, pay for offline services by scanning a QR code in a store or restaurant, and more.

WeChat users at a glance

  • 90% of users are under 36 years old and 86.2% are between 18 and 36.
  • 32% of users are in private enterprise; 
  • 28% are self-employed or freelance; 
  • 20% are students.
  • 30% of gamers play games through WeChat multiple times per day. 
  • 62.7% of users have more than 50 contacts. 
  • 28% of users consume more content through WeChat than any other app, including traditional web browsers. 
  • 40 minutes: the average amount of time Chinese users spent on WeChat per day. 
  • 60% of users spend more than 10 RMB per month (A$2.15) on their WeChat account.
  • 5% of users spend 500 RMB (A$110) or more per month on their WeChat account. 

Source: WalktheChat, Everything about WeChat White Paper, 2015

This article is from the December issue of INTHEBLACK

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