Tag Archives: commerce

2014: the Year of Monetization for WeChat

The VALUE2020 predicts that year 2014 will be the Year of Monetization for Chinese mobile application WeChat.

In addition to exclusive sales on WeChat like the operation for Xiaomi smartphones, WeChat added in 2013 a store to buy stickers, and above a payment system which open the door to mobile commerce as expected by VALUE2020 back in 2011.

Last year, we predicted the introduction of mobile payment and continuous growth. Almost all the predictions are reality today and next year will be fascinating as well.

What to expect in 2014:

  • Development of micro-payments, Tencent great strength
  • Additional applications within the WeChat app
  • Partnerships with big names (We cannot talk today ;-))

Rising Use of QR Codes in China

KPCB published a new report of Internet trends for 2013 in May 2013 through Mary Meeker and Liang Wu. This report confirms predictions of VALUE2020 as mobile usage (code scanning) and WeChat.

2013-qr-code-beijing-subway

Below the summary as stated by them on their website:

“There are now 2.4 billion Internet users around the world, and the total continues to grow apace. Mobile usage is expanding rapidly, while the mobile advertising opportunity remains largely untapped. The report reviews the shifting online landscape, which has become more social and content rich, with expanded use of photos, video and audio. Looking ahead, the report finds early signs of growth for wearable computing devices, like glasses, connected wrist bands and watches – and the emergence of connected cars, drones and other new platforms.”

QR-code-TV-china-CCTV

In this report, they explain Chinese users now scans 9 million QR Codes every month, up from 2 million last year. This is, in part, explained by the expansion of WeChat that includes a QR code scanner. 9 million a month is a small number for China and we should expect this number multiplied in the dozen of months to come.

A QR Code makes it more convenient for Chinese users to operate their smartphones. In general, VALUE2020 believes a QR Code is one of the accesses to mobile commerce. Therefore, it will be an important tool for mobile Internet use in the near future.

wechat-qr-code-beijing

Any user with a payment application like Alipay on their smartphone can pay with their phone in offline stores by scanning the QR code on the products and entering their  account name and password.

As well as being a new way for people to get access to goods and services, scanning QR Codes is becoming fashionable among mobile users.

photo-metro-smartphone

The usage of QR Codes is endless: payments for products, redeem coupons, access to practical information like transport times or any information related to a product, social networking like WeChat and information discovery.

Sources:

VALUE2020

KPCB, Mary Meeker and Liang Wu, URL: http://www.kpcb.com/insights/2013-internet-trends

Tencent Ready to Market WeChat, Mobile Social Media & Messaging App, in the United States

The United States, Next Step of Expansion

As explained for the development of the user base of  WeChat in India, Tencent, the largest social media company in China, will launch similar campaigns in the United States.

Local marketing actions will  be developed to expand the user base locally. In the coming year, WeChat should suggest to users location-based services according to where they are.

With over 300 million users, WeChat is growing faster than Facebook. Following the path of Huawei and the goals of Baidu, Tencent expands operations outside China: Chinese companies are gaining market share overseas. Hong-Kong, Singapore, Malaysia, Vietnam, Thailand, Taiwan, India, Indonesia, Australia, and even Argentina & Turkey has been already launched!

wechat-facebookpage-per-country-2013-03-15

 

WeChat Ready to Compete with Facebook Using American Social Media

What is interesting about the expansion of WeChat is the use of the tools of  the competition to expand the user base. In the United Sates, Facebook will be used to take user time to Facebook! The value is mobile commerce with many American and Chinese players as explained in a previous post.

The Twitter account of WeChat United States, @WeChatUS, is visible with  no tweets but already 7 followers including VALUE2020.

wechat-usa-twitter-account-followers-2013-03-15

The Facebook page has been active since December 2012 with already 47 likes but with many more likes coming 😉

wechat-usa-facebook-account-2013-03-15

In the United Sates, WeChat will compete with Whatsapp and Facebook Messenger between others.

WeChat has strong advantages in managing better privacy and being a private mobile social network.

Will WeChat monetize faster than Facebook and Linkedin? Their strategy is worth the analysis we made at VALUE2020.

4 Mobile Internet Trends to Watch in China in 2013 from VALUE2020 (China Focus)

In 2012, mobile phones became the main devices for accessing the Internet in China.

1/ Global Internet Market: China to play a dominant role

-Thanks to China, global mobile traffic will hit 25% of total internet traffic
-Thanks to among others, China and the USA, global mobile and tablet shopping will go over 25% of total internet shopping
-New players will emerge in China and in other parts of Asia like Singapore and Indonesia

2/ Search Engines: fierce competition for market share 

Bǎidù will face strong competition from local and global players in China. As a consequence the firm will accelerate growth in other countries directly or through partnerships (mobile browser, advertising services…)

market share graphiqueV2

3/ e-Commerce: growth & traffic from social media

-The country is likely to become the world’s largest online shopping market in 2013
-Lower-tier cities will replace first-tier cities (like Beijing, Shanghai, Guangzhou) at the top of the ranking on growth of online shopping
Alibaba e-Commerce will boom (IPO to come in either 2013 or 2014)
American players in e-Commerce will be back  thanks to partnerships (for instance eBay)
-WeChat will become a new player of e-Commerce in China (and later in other countries of Asia, and maybe the world in 2014)
@value2020 American & Chinese eCommerce – October 2012 – https://value2020.wordpress.com/

4/ SOLOMO: the real start in China

a) Social Commerce (SO)

WeChat/Weixin will become the first social chat mobile app in the world. More on WeChat in 2013.
-Google has to launch new products including a new social mobile app (GTalk should be improved and integrated to a Google+ app or more)
-Facebook will monetize but be challenged by new mobile social applications
-SinaWeibo will increase monetization through brands and marketing campaigns

16x16sinaweibo

b) Location based services (LO)

WeChat from Tencent could enter the game and become the first location based service on mobile in the world (criteria= volume of users). More on WeChat in 2013.

c) Mobile OS: no success yet, looking for opportunities (MO)

Even though Ālǐbābā and Bǎidù tested the market with respectively Linux-based Aliyun (阿里雲) and Android-based Bǎidù-Yì (百度•易平台), there is no significant players from China. Android is dominant in China, and in the World. Either Ālǐbābā, Xiaomi, Bǎidù, or Tencent (腾讯) is likely to choose partners and try a launch in 2013.

5/ Other Predictions

-UC Browser, the mobile browser, will expand to other countries but face competition from Baidu Brower and other players
-Telecom firms like China Mobile will sign partnerships with Internet companies, likely to create or buy Internet solutions
-Tencent might decide to compete with Telecom companies launching phone call services either in 2013 or 2014
-Xiaomi expansion to other countries

For Chinese Internet, year 2013 will be a year of innovation  and a year of continuous global expansion.

For the world, year 2013 will be the year of mobile commerce growth and mobile payment transaction boom.

Cloud services and Big Data, Internet Of Things, NFC and HTML5 technologies are other hot topics according to Gartner.

For firms with excess of cash reserve and no need to monetize now, expanding the mobile user base is the most important focus to have for all the global players of the Internet during year 2013.

Notice that the prediction we made about WeChat in June 2012 became reality: the user base exceeds now 200 million!

Sources:
1/ VALUE2020 Market Intelligence
2/ Gartner, URL: http://www.gartner.com/it/page.jsp?id=2209615

tencentweibologo16x16

China Mobile Shopping Market in Q3 2012

Mobile Taobao, 360buy.com and Tencent are top three players in the mobile shopping market in Q3 2012 with market shares of 75%, 5% and 3.6% respectively . They accounted for a total of 84% of market share.

mobile shopping China Q3 2012

Scanner Feature of WeChat: Likely a Master Piece of the Strategy for Mobile Commerce

We believe the scanner is not included just to add friends but for much more.

Today you can scan QR codes only. If Tencent decides to invest or find a partner, tomorrow, you will be able to scan 1D code as well.

Being able to scan 1D codes opens the application to products and therefore mobile commerce.

Will Alibaba or Amazon sign a deal with Tencent WeChat?

2012, Year of the Chinese Internet industry growing beyond borders: it is just the beginning

What is currently planned at Alibaba, Tencent, Sina, and Baidu worth an additional paper. My duty is to continue the story published last year and called “Chinese Internet industry ready to grow beyond borders”.

Some of my readers were quite skeptical in 2008 when I announced that China was a country good at disruptive innovation following a trip in Beijing. At that time, I bet for a Chinese Internet becoming almost the only alternative to American Internet. Who would have imagined at that time that it would accelerate as soon as year 2012?

China becoming an Internet giant

China has the world’s largest Internet audience thanks to its population, the world’s biggest with more than 1.3 billion people. With the strong increase of its Gross Domestic Product, extraordinary engineering talent, plenty of venture capital, Chinese entrepreneurs and large firms have now the resources to compete worldwide.

Looking at social behaviors, there is a main difference between American people and Chinese people: in the U.S.A. and Europe a majority of online users are “Spectators” while a majority of users in China are “Creators”[1]. China is a market more active and users generate a lot of content every day. This behavior explains part of the success of QQ games, a service of Tencent focused on online games.

More people than anywhere else, and a more active profile than European and American users enables the development of robust Internet firms. Now that China is an Internet giant, time to grow beyond borders is coming.

Strategic investments before 2012

In 2011, Tencent formed several strategic partnerships in China: among them, Kingsoft Corporation Limited., a firm providing software focused on Internet security and eLong, Inc, a leading online travel service provider in China. Outside China, in addition of being active in the U.S.A., Russia, India, Vietnam, Thailand, Tencent acquired a majority stake in Riot Games, a Los Angeles-based developer and publisher of online video games. [2] In 2010, Tencent invested $300m in Digital Sky Technologies (DST) of Russia, bringing two internet powerhouses of the emerging markets together in a long-term strategic partnership. In 2009, Sanook of Thailand became a partner of the Chinese firm.

Alibaba prepared the future of Alipay reaching an agreement with Yahoo!, and SoftBank. Alipay is a leader in China in providing payment processing services. Alibaba also developed operations in the U.S.A. and formed a partnership with Turkey’s Logo Group to reach Turkish companies.

Among others, Renren and Dangdang are listed on the New York Stock Exchange. We can expect more US IPOs by Chinese companies. There are at least 10 Chinese Internet companies who have made confidential filings through the Security Exchange Commission. Those Chinese tech companies aiming to IPO are also growing their business through innovation.

Development of operations outside China: starting to use the powerful strength of overseas Chinese presence

The strategy to develop operations outside borders is focusing on emerging countries with growing markets or developed countries where Chinese people and Chinese firms are well established. Expand abroad is a service for overseas Chinese and for non-Chinese users a form of outreach to Chinese audiences.

The service developed by “QQ International” division of Tencent is an instant messenger in either English, French or Japanese. This new service, launched in 2010, allows non-Chinese speaking people to use the service and communicate with Chinese people easily: they can talk to local Chinese people and stay connected with them in case they go back home.

The same is true with the English version of Sina Weibo microblogs. Sina Weibo has not only built a platform for interaction in China public, but Sina Weibo’s influence has also extended abroad. Recognizing Weibo’s importance, almost all foreign missions have started their Weibo tweets to highlight their activities and policies of their countries. Microblogging enjoyed explosive growth and emerged as a major social media contender in China. Taobao is the e-commerce firm that benefits the most from clicks on Sina Weibo.

There are 2 million Chinese living in Western Europe. To expand abroad and explore new markets, Chinese companies target the Chinese communities. The nation’s third-largest wireless carrier, China Telecommunications Corp,[3] facing an intensifying competition at home, has started to expand in Europe with the U.K. targeting more than half a million Chinese citizens living in the country since May. The company will become the first Chinese operator to start a mobile virtual network outside China. The service, aimed at Chinese residents, might expand to France in 2013 if it’s successful.

Alibaba aims to reach the whole world and to turn the services into a global marketplace for importers and exporters. The successful business model can work almost anywhere. The firm is establishing partnerships with other companies well established in other emerging countries, Turkey being one of them.

Alibaba is able to challenge eBay and Amazon.com for the top spot in e-commerce around the world.

Baidu is positioning itself as an access to mobile commerce in China, therefore it is a way for non-Chinese companies to reach the Chinese markets. To differentiate from the competition (mainly Google), the company focuses its efforts on emerging markets (Brazil, Argentina, Egypt among others). The firm is currently expanding all over the world directly or through partnerships  including China Search International (UK, Singapore, Australia, USA).

Tencent launched in January 2011 Weixin (微信), a free mobile application for instant communication. Weixin supports mobile instant communication through photo and video sharing, voice chatting (one to one and group chatting), and of course traditional text messages. Weixin’s success in China is explained by the integration of all Tencent communication tools including QQ, e-mail and Tencent’s Weibo platform. Moreover, comparing with telecommunication operators’ services, the use of the app is free for its users. The social feature allows to find if a contact or another Weixin user is nearby. VALUE2020 is aware Tencent has an ambitious plan to connect people beyond China. Weixin will become a new type of social network.

Social part of WeChat application

The international version is called “WeChat” since April 2012 and users cannot guess the service is Chinese. Strategy for WeChat is to customize the product to local markets, rather than simply translating into local languages. After successful official launches in Thailand, Vietnam, India, and Singapore, the service is now marketed in Malaysia. [4] For Tencent, Malaysia is a new country and the firm continues its growth outside China (Indonesia, & Taiwan should be the next targets for local marketing efforts). We can expect over 200 million users at the end of the year.
After creating the big user base, VALUE2020 predicts Tencent will likely monetize the traffic through micro-payments first, then with mobile commerce through partnerships, and later business as usual both within & outside the app.

Partnerships of US firms with Chinese firms

We could believe there is a business war between Chinese companies and US companies. This is not always true as they seek to cooperate in several projects.

In December 2011, in China, Dell has unleashed the Dell Streak Pro, an Android handset with a special feature.[5] This device uses “Baidu Yi”, the Operating System (OS) from the Chinese search giant, that is modeled and built on top of on Google’s mobile platform. In this case, “Baidu Yi” replaces Google’s options for many of the handsets core functions, such as the search engine, instant messenger, ebook reader, and the app store.

American firms are investing money and time in reaching the Chinese market what could be helpful for Chinese Internet firms to expand abroad through partnerships. In China, Microsoft is using its new partner Nokia to gain market share in the internet industry in China investing in Ganji.com, and creating location-based services with Sina Corp and Tencent.

We are likely to see a greater cooperation and competition all over the world.

Conclusion

The Chinese Internet industry through innovation, but above all, a very good understanding of what a user values, is on the road to globalization. This process can count on other existing Chinese firms already well-established outside China, on overseas Chinese and on the universal need for a quick and friendly Internet.

Mobile commerce, through the power of social commerce and other strategies of combined business models, is the long term goal for the current efforts for being a place of interactions. Through QZone and Weixin, Tencent is well positioned in China and Asia. Facebook is dominating the social network market outside China. What can we expect from the Chinese industry in the years to come?