INTERNET – WeChat Struggles For US Acceptance
Bottom line: WeChat will face slow progress in the US and other global markets due to strong competition, and will be hobbled by concerns that it may monitor its users activities like it does in China.
Tencent’s (HKEx: 700) WeChat mobile messaging service may be wildly popular in China, but it’s facing a steep uphill climb outside its protected home market. My own recent experience using the service in Hong Kong this week highlights one of WeChat’s biggest problems, namely concerns among users that their activities may be monitored and censored. That kind of issue could push users to more popular western brands like WhatsApp and Line, which have cleaner reputations. Tencent itself isn’t helping the situation by using a half-hearted promotion strategy in the US, as highlighted in a new report on some of its recent activities to crack that highly competitive market.
Chinese Internet companies like Tencent, Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU) have had phenomenal success in their home market, feasting on a big group of wealthy advertisers and other product and service providers willing to pay big money to reach the nation’s hundreds of millions of web surfers. But the Chinese giants have met strong resistance outside their own highly protected market, where they face both local rivals and global giants like Facebook (Nasdaq: FB) and Amazon (Nasdaq: AMZN).
One of the biggest problems they face is credibility, since many local users outside China may not trust these made-in-China companies that are widely known to monitor users and censor sensitive content. And with so many other choices available for mobile messaging, such as WhatsApp and and Line, it should come as no surprise that WeChat may be struggling to find an audience in its first major global foray in the US.
I commented earlier this year that Tencent’s efforts in the US looked rather lame, with the company using a half-hearted promotion involving restaurant coupons to try and attract local users for WeChat. (previous post) Now I can make the same comments about another promotion that occurred around the same time, which is disclosed in a new report about the difficulties WeChat is facing gaining acceptance in United States. (English article)
According to the report, this particular campaign was focused on the trendy city of Los Angeles, where Tencent hired students on the UCLA university campus to promote WeChat. It paid so-called “influencer” students $25 per hour to talk up the service among their friends. But one of those hired guns admitted she stopped using the service herself after the promotion, and instead uses a more popular product from Facebook.
The failure of that campaign highlights the difficulties WeChat is likely to face in its quest for acceptance in not only the US but also other tech-savvy global markets. Tencent says WeChat now has about 3 million US-based subscribers, but I would be willing to bet that half or more of those are Chinese people living abroad or other Americans who have spent time in China or have other Chinese connections.
My own experience with WeChat in Hong Kong this week underscores the difficulty the service will face in Asia, where it already has a growing audience in Chinese-speaking markets. I attempted to upload some photos from the controversial Occupy Central protest to show my friends on WeChat, only to be informed several times the photos couldn’t be uploaded for unexplained reasons. Of course one of those potential reasons that immediately occurred to me was censorship, since such photos are considered sensitive subject matter in China.
I finally did manage to upload the photos and many of my friends commented on them. But even so, I still worried that perhaps someone in a WeChat office was taking note of my actions and the actions of my friends. Perhaps it was mostly paranoia on my part, but I presume others would probably share similar concerns. At the end of the day, this kind of concern — coupled with the many choices to Internet users outside China — could make life difficult for WeChat in its global expansion. Such issues could also present similar obstacles for other like-minded Chinese web giants looking to move abroad.
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