{"id":6530,"date":"2018-02-01T17:35:39","date_gmt":"2018-02-01T22:35:39","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/wechat-a-winner-in-china-but-a-loser-abroad\/"},"modified":"2018-02-01T17:35:39","modified_gmt":"2018-02-01T22:35:39","slug":"wechat-a-winner-in-china-but-a-loser-abroad","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/wechat-a-winner-in-china-but-a-loser-abroad\/","title":{"rendered":"WeChat: A winner in China but a loser abroad"},"content":{"rendered":"

WeChat is an app that seems to have it all: features offered by Amazon, Apple Pay, Facebook, Grubhub, Messenger, WhatsApp, Uber, and Venmo all live within the same app. As of the second quarter of 2017, Tencent\u2019s WeChat had 963 million active users [1]<\/a>, with the majority located in China. The app is wildly successful in China: 79.1% of smartphone owners access the app regularly and 84.5% of messaging app users use WeChat. Given the variety of features available on WeChat, users spend an average of 90 minutes a day on the app\u00a0[2]<\/a>\u2014 that\u2019s almost twice as long as global users spend on all of Facebook\u2019s suite of apps including Facebook, Instagram, and Messenger [3]<\/a>.<\/p>\n

A winner in China<\/strong><\/p>\n

WeChat was released in early 2011 amidst competition from Kik, WhatsApp, Viber, WeChat, Line, Facebook Messenger, Miliao, and Weibo. However, it beat its competition for several reasons:<\/p>\n

    \n
  1. The Chinese government blocked foreign messaging apps, thus encouraging the adoption of domestic apps.<\/li>\n
  2. Tencent leveraged its existing user base from its instant messaging software service, QQ. Competitors required the creation of a new account, while WeChat allowed users to create an account for free using their QQ account, which millions of Chinese people already had. Network effects rapidly kicked in: the more users joined WeChat, the more other users wanted to join to connect with family and friends\u00a0[4]<\/a>.<\/li>\n
  3. Tencent had user data through QQ, and was able to use this information to develop WeChat in a way that it offered what users wanted. For instance, by opening up its platform to third-party developers, it quickly offered new capabilities ranging from ordering food to booking a doctor\u2019s appointment to meeting nearby strangers. This led to the creation of an ecosystem that users were dependent on rather than just a messaging app.<\/li>\n
  4. Tencent used creative ways to get users comfortable with new features and make the app stickier. For instance, WeChat introduced mobile pay in 2013, but it wasn\u2019t until 2014, when it introduced Red Packets, that users got on board with sending money electronically. Red Packets allows users to exchange money electronically. A user can, for example, put $5 in a red envelope, send it to a chat group with five friends, and set up the gift so that only the first two to tap the envelope receive the money, thus creating a competitive, gambling-like thrill that keeps users hooked to the app. This contributed to a surge in mobile payments; in 2015; China\u2019s mobile transactions reached $235 billion, surpassing the US for the first time\u00a0[5]<\/a>.<\/li>\n<\/ol>\n

    A loser abroad<\/strong><\/p>\n

    Despite its success in China, WeChat has failed to take off overseas. Several reasons account for this:<\/p>\n

      \n
    1. By the time WeChat entered foreign markets in 2012, most markets already had a dominant chat app. Furthermore, since the adoption of an app like WeChat depends on network effects, it was difficult for WeChat to convince users to join a platform where users did not have connections.<\/li>\n
    2. WeChat failed to offer comparable capabilities to foreign users. Even as of mid 2016, the app did not allow American users to order food, book an Uber, or control a smart TV.<\/li>\n
    3. WeChat was too China-centric and failed to adapt to the unique needs of foreign markets. For instance, WeChat allows users to buy sticker packs, but the majority of these stickers are tailored towards Chinese users. As of 2016, searching for \u201ccarnival,\u201d Brazil\u2019s most famous festival, led to no results, despite WeChat\u2019s attempt to enter the Brazilian market\u00a0[6]<\/a>.<\/li>\n<\/ol>\n

      What next?<\/strong><\/p>\n

      Frankly, the prospects for WeChat\u2019s expansion into foreign markets looks grim. There may still be opportunities for WeChat to serve as an aggregator app\u2014especially given that in most markets, users use different apps for different functions\u2014but the opportunities in this space are not very appealing.<\/p>\n

      However, WeChat\u2019s success story in China may be an indication that there are opportunities for players to build comparable ecosystems in emerging markets. For example, Vodacom\u2019s M-Pesa is the largest mobile money platform in Tanzania with 42% market share, and 14% of the population uses M-Pesa as of 2014 [7]<\/a>. Players such as M-Pesa with a sizeable user base may be able to take advantage of the relatively low penetration of \u201cconvenience\u201d apps in their markets to start building an ecosystem.<\/p>\n

       <\/p>\n

      References<\/strong><\/p>\n

      [1]<\/a> WeChat: Number of Active Users 2017 | Statistic. https:\/\/www.statista.com\/statistics\/255778\/number-of-active-wechat-messenger-accounts\/
      \n      [2]<\/a> WeChat Users in China Will Surpass 490 Million This Year. https:\/\/www.emarketer.com\/Article\/WeChat-Users-China-Will-Surpass-490-Million-This-Year\/1016125
      \n      [3]<\/a> How Much Time Will the Average Person Spend on Social Media During Their Life? http:\/\/www.adweek.com\/digital\/mediakix-time-spent-social-media-infographic\/
      \n      [4]<\/a> What did WeChat Succeed in China Where Other Apps Failed? https:\/\/www.techinasia.com\/why-wechat-succeeded-china
      \n      [5]<\/a> How WeChat Became China\u2019s App For Everything. https:\/\/www.fastcompany.com\/3065255\/china-wechat-tencent-red-envelopes-and-social-money
      \n      [6]<\/a> Why China\u2019s Biggest App Has Sputtered Everywhere Else. https:\/\/www.fastcompany.com\/3060494\/why-chinas-biggest-social-app-has-sputtered-overseas
      \n      [7]<\/a> M-Pesa Retains Position as Tanzania\u2019s Leading Mobile Money Platform. http:\/\/kenyanwallstreet.com\/mpesa-tanzanias-leading-mobile-money-platform-42-market-share<\/p>\n","protected":false},"excerpt":{"rendered":"

      How WeChat became China’s most successful ecosystem but failed in foreign markets.<\/p>\n","protected":false},"author":2194,"featured_media":6533,"comment_status":"open","ping_status":"closed","template":"","categories":[639,1971,102,1221,7],"class_list":["post-6530","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-china","category-international","category-loser","category-wechat","category-winner","hck-taxonomy-organization-tencent","hck-taxonomy-industry-technology","hck-taxonomy-country-china"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/digital-winners-losers-2018\/","yoast_head":"\nWeChat: A winner in China but a loser abroad - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/wechat-a-winner-in-china-but-a-loser-abroad\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"WeChat: A winner in China but a loser abroad - 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