GUEST POST-WeChat Story Part 7: More Than Chatter

The following is the 7th and final part in a multi-part series about the rise of WeChat, the popular mobile instant messaging service owned by Tencent.

By Lanie Nie

While China might be behind the US in many key areas of Internet development, it is quite advanced in the use of smartphones as the primary device for accessing the Internet. Tech guru Mary Meeker’s 2014 Internet Trends Report showed that China has more than 500 million mobile Internet users, accounting for 80 percent of its online population, the highest level worldwide. With the nation’s smartphone prices in freefall and high-speed 4G access expanding, it’s likely that a majority of Chinese people will be on the mobile Internet in the next 5 to 6 years.

The rapid development of mobile Internet, however, doesn’t change the fact that China is still a walled garden. The Chinese government has blocked foreign sites like Facebook (Nasdaq: FB) and Twitter (NYSE: TWTR), helping the success of their Chinese peers. Even without government censorship, attempts by many western technology firms to set up shop in China have stumbled like the ones by Google (Nasdaq: GOOG) and eBay (Nasdaq: EBAY). The Chinese market is huge, but at the same time also hugely different.

With Chinese people spending more time using smartphone apps than PCs, new barriers are emerging for foreign companies to reach the Chinese market. According to a recent Accenture report, Android-based smartphones priced at around 2,000 yuan ($325) have become the mainstream in China, with top local brands like Coolpad taking more than 70 percent market share. The vast low-end market has also created an extremely fragmented app marketplace, a challenge for outsiders trying to cover all possible distribution channels.

Into that picture comes WeChat, whose ambition on mobile could open up new possibilities for everyone. Tencent (HKEx: 700) said in its fourth-quarter report that WeChat has evolved from a communications service to a multi-functional platform. WeiXin Group, a dedicated business segment for related infrastructure building and platform expansion, was established on May 6 this year, with the mission of building an ecosystem around WeChat at the operational level.

By acting as a gateway for both content and services, WeChat’s role in China has become akin to that of Apple’s (Nasdaq: AAPL) iOS and Google’s Android mobile operating systems. Considering WeChat’s aspiration of creating a clean, reliable and high-quality ecosystem, the direction the service is taking looks more like that of iOS than Android, even as the latter powers most Chinese smartphones.

Unlike American Internet users who are more concerned about privacy than security, Chinese consumers are still more bothered by things like safety of their money and spam plaguing the Internet. As the iPhone is not likely to become affordable to most Chinese anytime soon, it makes perfect sense for single apps that can unify user experience and get support from an industry giant like Tencent to be well positioned to beat out their rivals.

Like Facebook, WeChat also can work as a layer for other providers of identity and social services. Similar to Facebook’s efforts to create and promote a suite of tools for developers to create apps that run across multiple operating systems, WeChat is also trying to become critical infrastructure for people to build apps that work across different mobile silos. It’s doing that via services like identity sharing, app install distributions and helping app developers to monetize their products.

WeChat is ready to play more cards. With the help of “official accounts” owned by verified account holders, WeChat is not just connecting the rest of the Internet, but also many real-world things, from your parcel to be delivered to the smart gadget on your wrist. In the same way China’s exporters and developers leverage Facebook to tap overseas markets, foreign enterprises and developers may one day think about jumping on the WeChat bandwagon to access China.

If connecting China with the rest of the global online world was the endeavor of a few American Internet giants several years ago, the task may soon become more revenue-driven as China’s wealth grows. You may have witnessed the spending power of Chinese consumers at Avenue des Champs-Élysées in Paris and Bond Street in London, but that’s just a small part of the picture: they are also shopping worldwide via the Internet.

Goods purchased by Chinese consumers on eBay’s English website grew 40 percent in 2011; Chinese consumption in Japan via Alibaba’s Alipay electronic payments service climbed more than 300 percent in 2013; and China is now the world’s fastest growing app market and second largest market for mobile application downloads behind the US.

The face of China is changing, as the remote and mysterious Orient that morphed into the famous “Made in China” label changes once again to images of legions of Chinese shoppers buying both online and offline. The emergence of WeChat may be ushering in the next change, getting China and the world engaged in new conversations. Now the ultimate question is: if Facebook has failed to connect the world with China, can WeChat successfully bring China to the world?

Lanie Nie is a writer, translator and participant observer of localization and internationalization efforts by Chinese technology, media and entertainment companies. She freelances regularly for Chinese business and technology news websites and can be emailed directly at lanienie@hotmail.com.