Tencent's WeChat could break Silicon Valley's grip
15 Mar 2013
Week in China
"Successful or not, this is a once-in-a-lifetime opportunity for Tencent," Ma Huateng, Tencent’s chief executive, told CBN.
Ma’s statement raised eyebrows not only because Tencent’s founder is media shy, and not normally known for hyperbole.
But in Ma’s opinion, Tencent’s mobile messaging application WeChat is the company’s best chance of cracking one of the world’s most competitive markets: the United States.
"In the past, China’s internet models were copied from the US so the chance of exporting them back was almost impossible. But as mobile internet sweeps the world, global giants have yet to design a product only for the mobile market… So this is a golden opportunity for Chinese internet firms," declares Ma.
Accordingly, Tencent has opened a new office in the US dedicated to promoting its mobile app WeChat (which is known as Weixin in China – we first wrote this online phenomenon back in WiC145 ). The move is unusual: Chinese firms have shied away from trying to compete on the internet in North America, which poses a series of challenges ranging from language issues to concerns among American users over the privacy of data passing through China-based servers.
Nor do Chinese firms have much of track record for exporting their products abroad.
However, this time industry observers think WeChat has greater potential to do well outside China. Although the app is often likened to WhatsApp – a smartphone application best known for allowing users to send text messages for free – WeChat is more than a simple instant messaging service. It now includes more voice messaging options, a wider range of social networking functions and even e-commerce capability.
WeChat's global aspirations have been evident for a while.
Last week Tencent announced that it has also added another new feature, albeit this one more targeted at its domestic Chinese user base rather than the international one. In a key breakthrough it allows the 300 million WeChat users to message Taobao, China’s largest consumer site, directly from their smartphones. Users type in the kind of product that they are looking for, and the app responds with links to the desired items.
WeChat’s global aspirations have been evident for a while. When Tencent first released the mobile messaging app it changed its overseas name from Weixin to WeChat to make it more friendly to English speakers. Soon afterwards, the application was translated into English, Russian, Indonesian, Portuguese and Thai. The app also supports third-party sign-ins too, making it more appealing specifically to users of Facebook, and broadening interest overseas (when Weixin launched in China it relied on the Tencent QQ login – that worked fine at home but wouldn’t be applicable abroad).
"If you didn’t know WeChat was from China, you wouldn’t be aware of that fact," Duncan Clark of BDA, a technology consultancy, told Network World. "It has transcended its Chinese-ness."
Tencent declines to offer a breakdown of WeChat users by country, but analysts estimate that about 5% – or 15 million – of its customers are outside China. But CBN concedes that WeChat probably only has about 100,000 users in the US, and that the majority of those are Chinese students studying there.
Another problem: Tencent censors Chinese-language content for users in its home market. For example, in January some users complained that the service was blocking terms related to an anti-censorship protest at Southern Weekend newspaper (see WiC177 ). Tencent later apologised for the blockage, attributing it to technical issues. And while it it remains to be seen whether Tencent would bother with censoring content in markets outside China, Pando Daily, a Silicon Valley tech blog, reckons that the censorship issue alone could "sink" Tencent’s aspirations for WeChat in the US.
But Tencent fans say the censorship issue has been overblown. “There could be some potential users who decide not to adopt it upon hearing that," says Mark Natkin of Marbridge Consulting.
"But overall if they have friends who use it and they tell them that it’s a useful application, that will probably be a bigger consideration than whether there are a handful of topics that will be blocked."
Week in China
Week in China helps keep you up to date with the key business news from the world's fastest-growing large economy. It is produced on an exclusive and complimentary subscription basis for HSBC's corporate and institutional clients.