Tencent WeChat In Anemic US Promotion
I wasn’t too impressed on reading about one of the first promotions in the United States by Tencent (HKEx: 700), following reports last year that it planned to take its popular WeChat mobile instant messaging service to the lucrative but highly competitive market. I realize it will be difficult for WeChat to find an audience in the US, where its name is unknown and it will face stiff competition from local players like Whatsapp and even Google (Nasdaq: GOOG). But the company will have to do a bit more to raise its profile if it really hopes to win over demanding US consumers.
All that said, let’s take a look at the latest headlines that say Tencent has officially begun promoting WeChat in the US with a modest offer for people who open accounts. The deal will give new sign-ups a $25 gift voucher for online site Restaurant.com if they link their WeChat and Google accounts, and if they invite 5 friends to sign up for the service before January 31. (English article)
WeChat, which is known in Chinese as Weixin, has been in the Chinese headlines nonstop over the last 2 years, thanks to a meteoric rise that has seen it gain more than 400 million subscribers in its home China market. The company has also expanded into neighboring markets like Taiwan, Hong Kong and some Southeast Asian countries, where it has become popular among the many people who read and speak Chinese there. It said its number of registered users outside China passed the 100 million mark around the middle of last year.
But WeChat hasn’t made a big push yet into major western markets, where it would have to compete with Whatsapp and Line, which both offer similar mobile instant messaging services. Tencent made headlines about a year ago when it confirmed it was preparing to open a US office as it prepared to try and enter that market. This new promotion looks like one of the first steps to come out of that office.
I understand that the promotion is just a baby step into the US, but I’ll also add that Tencent will need to be far more aggressive if it really wants to make a serious attempt at the market. It might do well to follow the example of other big Chinese names like smartphone makers Lenovo (HKEx: 992), Huawei and ZTE (HKEx: 763; Shenzhen: 000063), which have all formed tie-ups with major western celebrities and sports teams over the past year as part of their efforts to build brand awareness in the US and Europe. (previous post)
I’m personally an avid user of WeChat, and regularly use its GPS-based “people nearby” function to see how many people are using the app when I’m overseas. There are always many users when I travel to Taiwan and Hong Kong, but nearly all the users in the US are Chinese speakers. That said, I do have a small bit of good news for Tencent, as I’m happy to report that my niece in Boston told me last week that she had installed WeChat on her phone and even sent me a message. But my niece is also studying Chinese, and admitted she only installed WeChat at the suggestion of a friend from her Chinese class.
As a regular user of both WeChat and Whatsapp, I personally think the former is a better product, as it also has many social networking (SNS) applications similar to Facebook (Nasdaq: FB), which Whatsapp lacks. Tencent is also working hard to integrate many other services into the WeChat platform, including e-commerce and games. But it will have to do a better job of promoting the service outside of China if it really wants to win over western consumers, who may already be wary of using a service that carries the “made in China” label.
Bottom line: Tencent will need to step up and sharpen its promotional activities for WeChat in the US if it hopes to gain an audience in the lucrative but competitive market.
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