What is the most popular instant messaging software in China? Undoubtedly, it’s QQ, which has acquired 721 million active users. In January 2011, Tencent launched its new product Wechat (Chinese name: Weixin), which supplies text and voice messaging communication services. It has become the most popular app on the mobile and Tablet PC, and the number one player which has acquired 200 million users, while its largest competitor, Momo, ‘only’ has 20 million users.

 

To begin with the analysis of Wechat, I want to share some interesting data to get a comprehensive view about China’s Mobile Internet Market. Picture 2.

Picture1: 2011Q1-2012Q3, China's Mobile Internet Market Size 

Source: iReasearch

 

By the end of June, 2012, the total number of Chinese netizens had reached 538 million, and the number of mobile netizens has reached 388 million. By the third quarter of 2012, China’s mobile internet market has reached CNY 14.78 billion, with a stable growth rate going forward.

 

There are 5 main aspects of this market: mobile value-added services, mobile shopping, mobile game, mobile marketing and mobile searching. Detailed information in Picture 2

Picture2: 2011Q1-2012Q3, Constitutes of China’s Mobile Internet

Source: iReasearch

 

The traditional mobile value added services like SP services declined slowly because of the popularisation of the communication Apps such as Weichat and Momo, which are very convenient to contact friends and family with super low cost.

 

Mobile shopping exhibited fast growth potential. Many companies like Taobao, Meilishuo and Mogujie have started their e-commerce on mobile terminals. Besides, some big companies have transferred their focuses to the variety of mobile payments.

 

Mobile marketing has been followed with interest by the market.  More and more brands are working on it, because of the precision in terms of grasping the target customers.

 

Many web game companies and online gaming companies have also transferred their focuses to mobile games (or ‘hand-held’ games).

 

At the China Internet conference 2012, Pony Ma, CEO of Tencent, said: “Tencent has done many Location Based Services based on Mobile QQ and Wechat. The interface of the LBS service was called 700 times per day, and that is very typical of O2O services. Meanwhile, the QR code is the key bridge between online and offline”. 

 

Wechat in Value Added Service

Wechat is a very useful and effective tool to keep in contact with friends and families. The only fee cost is the internet traffic fee and the electricity charges.  There is a product named Whatsapp in foreign countries which is very similar to Wechat. 

 

Wechat has the capability to have one-to-one conversations and group conversations in order to share text, audio, pictures and videos. Another wonderful function is that it allows you to talk easily ‘walkie-talkie’ style by just pressing one button. What’s more, in order to have conversations in an even funnier way, they provide the app with several emoticons from Tencent and some others from the well-known Emoji.

 

If you want to communicate with others and can get access to the internet, Wechat should be your first choice!

 

Tencent do value e-commerce a lot also. It has a B2C e-commerce platform named Paipai, and also involves in group-buying, Gaopeng (powered by Goupon, and Tencent is a shareholder) and QQ group-buying navigation. 

 

Tencent is also, of course, interested in payment. That’s why Tenpay (payment tool) came into being. Currently, Tenpay cooperates with wechat to start the mobile payments. Tenpay will develop several ways of payment to support the function of Wechat, such as Scan, to realise integration online payment and offline business.

 

Wechat also cooperates with physical shops for the platform. In many shops, if customers scan the QR code they will get a coupon or become a VIP of the shop. In this way, the shop can communicate with customers and get feedback. It means that we can view Wechat as a CRM system now. 

 

In China, if a company wants to start social media marketing, the first platform that will be considered is  Microblog (Twitter in China). The advantage of Microblog is that it can send out the information among people in a very short period of time. But the high exposure doesn’t necessarily mean higher conversion rates to the target customers. Actually, the conversion rates from the audience to the final purchasers is pretty low. 

 

What will lead the Microblog sphere going forward? Wechat could be a candidate, at least on mobile terminals. As mentioned before, Wechat has established cooperation with shops. Customers can choose to follow some companies and receive regular updates.

 

Wechat has acquired 200 million users, and the number is growing steadily. Based on the huge database, Wechat could become an open platform to develop and operate more games. It’s like Facebook; developers launch games on the platform and share the benefits with Facebook.

 

Investors are keeping an eye on it. It recently hit the  news that there is a new fund named Golden Seed Venture Capital which is focusing on investing in Wechat related projects. DaD Asia Seed Capital also value the Wechat platform a lot, we are trying to find more efforts on mobile internet.