Monthly Archives: January 2013

Tencent Strategy to Expand Overseas: Build a Cash Cow

Tencent is a Chinese company providing Internet services to hundred of million Chinese people. QQ, first popular product, is an instant messenger service everybody knows in China. Chinese Internet products lack of international recognition: this situation should change.

Current Transformation to Seize Opportunities

Since 2009, executives in charge of the strategy at Tencent have been working on the transformation of the company from a Chinese firm which services are still accessed through desktop computers for chat and games to an International firm providing mobile services and performing exceptionally well thanks to innovation and continuous efforts to  improve the user experience.

As explained last year, Tencent and Baidu want to follow the path of Alibaba group becoming a global leader.

The Largest User Base in the World after Facebook

An important asset of Tencent is the huge user base the company has. Current growth rate of WeChat is higher than Facebook 24 months after launch.

wechat growth compared to FB months after launch

WeChat, the Key Product both for global expansion through smartphones and for major cash cow

WeChat was designed to be a success not only in China but also in the whole world. For the people who know the Chinese culture, we can expect more and more. Commercial launches by Chinese companies are very different from American companies.

Tencent doesn’t communicate the split of the user base per country. However, TechinAsia published our work showing growth in Singapore, Thailand, Malaysia, India.

WeChat in the World by VALUE2020 - JAN2013

Monetization will not be a problem at all. VALUE2020 is one the first firm who believed in the marketing potential of WeChat: access to e-commerce, games, advertising, CRM with one to one relationship and many other reasons.

Threats from Fierce Competition Fought with Innovation, Strong Partnerships and maybe Acquisitions

All Internet players are now focused on doing their best on mobiles and tablets. With the growth of WeChat, almost all the competitors are improving their respective service: Line, Kakao, Viber, Whatsapp, Facebook Messenger… We might expect also a new product from Google.

wechat competitors

To win, Tencent develop strong partnerships in several countries and if necessary, the firm is ready for acquisitions.

Existing Risks related to Content and Sustainability

The State bans on the Internet unlawful content about illegal deals, pornography and drugs. If Tencent keeps respecting instructions, some users may feel unhappy to experiment limits in the service. This situation is a weakness against other players like Facebook.

Another long term risk is the lack of environmental strategy for Tencent like several other Chinese Internet players (for example, Amazon, Alibaba). Google is far more advanced.

Conclusion

Thanks to WeChat, Tencent is builiding a New Mobile Cash Cow. The current mobile strategy is similar to desktop strategy with QQ Instant Messaging in the past, and QQ Games today.

On WeChat product, the Question Mark of 2011 became a Star in 2012 thanks to a continuous high growth rate (better than Facebook, Twitter, Line…). After getting the highest market share possible in 2013 or 2014, the Star will become a Cash Cow 🙂

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Why is WeChat a more private social network than Facebook?

You must have a person in your portfolio of contacts on WeChat in order to interact with her or him. You cannot read about people you don’t know.

In the example of the timeline called Moments (for more about it read previous post), you will see the comments of your friend A and your friend B because both of them are in your contacts. If your friend B is not a contact of friend A, they will not see each other comment or like action on your picture.

This level of privacy is a huge protection against other users who want to know about your private life without asking you. This system provides a competitive advantage against Facebook.

Tencent’s WeChat Social & Messaging Mobile App exceeds 300 million users

We predicted back in September 2012 the current trend of an accelerating growth noticing it was stronger than Facebook.

Now it is not anymore a prediction! According to Tencent, WeChat passes 300 million users. Please see below how the illustration they posted on Tencent Weibo:

tencentweibo wechat 300 M

Next step is reaching 400 million users before the month of June 2013. Even before that, we expect a new version of the application with additional features.

wechat userbase FB

wechat growth compared to FB months after launch

31st Statistical Report on Internet Development in China, December 2012

31st Statistical Report on Internet Development December 2012

Source: CNNIC

Privacy, Terms & Security: WeChat vs. Facebook

Back in 2010, at the time to set the strategy for global expansion, Tencent Management and external consultants had in mind what the users are looking for. To compete against other existing app, WeChat had to offer a new experience.

social network security 3 iphone

Read about why WeChat respects more privacy than Facebook.

Terms are under investigation. More to come!

Protected: Yes WeChat is a Social Network like Facebook

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Adding value to your application: WeChat Open Platform is your new opportunity!

Message from WeChat to developpers:

“Leverage WeChat’s sophisticated mobile communication platform and 175 million users worldwide to add value to your app and help it grow…for free! Integrate the WeChat Open Platform into your app today and start seeing the benefits right away.”

Now the WeChat user base is over 250 million users!

wechatdeveloppers for app

The strategy of Tencent to expand abroad is up. Almost all the necessary elements are ready for global growth.

sharing content webapp coming soon

Even documentation for Web Apps is planned…

sharing content via moments

Developments suggested by the firm…

sharing content via wechat