What’s your number? I mean…your WeChat number.

Picture showing messaging apps on iPhone
Image: Álvaro Ibáñez, CC BY 2.0

WeChat has only been here for seven years, but it got more active users than any other social networking platforms in China. What is WeChat? What’s its history? And how does it change the Chinese society?

 


 

It is not an overstatement that WeChat has become indispensable in Chinese people’s everyday life – it acts as a communication tool, a payment method, a review app, a social media platform and so on that an individual depends on to complete their daily tasks. Since WeChat was launched seven years ago, it has brought a brand new lifestyle to Chinese people.

 

This essay will draw a critical analysis on WeChat in terms of its transformative influence on the country’s society, before which, an overview of what WeChat is and its genesis will be examined. In addition, its business model and internet ecology will also be discussed.

 

What is WeChat?

 

WeChat, also known as Weixin in Chinese, is a social networking platform that integrates instant messaging, social feed, friends seeking, gaming, payment and many other features that help users to connect and bond with their friends (Tencent, 2018). WeChat users are free to communicate with their friends via multimedia messages including text, voice recording, voice and video call. As for its Moments feature, which operates like Facebook’s News Feed, allows users to share “moments” with texts, photos and videos.

 

Now, the amount of WeChat’s monthly active users reached 1 billion, with most of its recent growth coming from foreign countries such as the United States (Hollander, 2018). Compared to QQ, a similar messaging application created by WeChat’s mother company Tencent decades ago, one of the factors why WeChat gained unprecedented number of users in just seven years is its simplicity and freeness. As its executive described the payment feature in WeChat, it is rather an infrastructure than a service that generates profits for the company (Horwitz, 2017).

 

Everything you need to know about WeChat

Video: Lenaaround, CC BY

 

The Genesis:

 

Being a social media giant in China already, Tencent’s business before WeChat was primarily based on desktops. However, after mobile messaging applications such as Kik and WhatsApp hit the market in 2010, Tencent realized the possibility in mobile apps as smartphones just began to occupy more and more people’s life in China (Millward, 2018). In November 2010, Allen Zhang, the senior executive vice president at Tencent, with 10 developers who created QQ Mail years ago, started working on the project (Brennan, 2015). In January 2011, Tencent launched Weixin (without an English name then), whose first version was merely for real-time text messaging. At that time, no one predicted that this app would have such big influence on today’s Chinese society. Yet, it marked “a big break from Tencent’s very PC-era social networks” (Millward, 2018, para. 3).

 

There were three major turning points in the early stages of Weixin: the launch of Weixin 2.0 with voice messages, People Nearly, and Shake, before which the slow increase of Weixin users made the team unsure about their decision of doing this (Wang, 2014). However, after Talkbox went viral in foreign countries, in May 2011, Weixin 2.0 went for public and added advanced voice messaging feature that can censor the users’ position to turn on/off speaker automatically. Harvey Zhou, the assistant general manager, admitted that the percentage of users sending voice messages was not large, but people were curious about such never-before-seen feature.

 

Furthermore, it was not until the late 2011 when Weixin launched “People Nearby” and “Shake” that the number of Weixin users boosted dramatically for the first time. These two features transformed Weixin communication from chats between acquaintances to friends making among strangers (Wang, 2014).

 

https://vimeo.com/136695591

WeChat voice call commercial in Thailand

Video: Nutth Ritharom,CC BY 3.0

 

One of the most used features in WeChat is Moments that was launched in April 2014, in the same year, Tencent picked WeChat as this app’s English name and its total registered users outnumbered 100 million (Millward, 2018). Moments, also known as “Circle of Friends” in Chinese, encourages users to share pictures with captions. Compared to other similar platforms, Moments tends to be more intimate as it follows the principle that “a friend of my friend is not my friend” (Tomar & Kakkar, 2014).

 

However, as it allows external links such as articles written by Official Account authors, there have been serious cases of spreading false information by people sharing them to their Moments. In response to this situation, WeChat founded a rumour refuting program where fake news and false information are listed and users who have read those article will be notified. In addition, since August 2016, messages posted in Moments and other social media platforms in China would be used as evidence in court (Koetse, 2016).

 

Business Model:

 

It is hard to figure out how WeChat makes money and how much it earns, as Tencent never revealed a clear report indicating the revenues WeChat made. However, by looking at the three parts Tencent divided their revenues into in its financial reports, it can be inferred that WeChat plays a major role in it. The three parts are value-added services (VAS), online advertising, and others (Tencent, 2018).

 

Firstly, the revenues from VAS takes up the majority of Tencent’s earnings. It mostly comes from digital activities such as subscription and add-on services for smart phone gaming (Tencent, 2018). It seems irrelevant to what WeChat does, yet, WeChat is used as a promotor that put Tencent’s services in front of its 1 billion users (Horwitz, 2017). Besides mini programs that can be viewed in WeChat, there are major mobile games developed by Tencent that require players to link to their WeChat accounts, so that the game gains the access to their contacts.

 

Take Arena of Valoras an example, with all of the players’ friends being their WeChat contacts, it becomes all about playing and competing between friends, in terms of their scores and even paid avatars (Horwitz, 2017). In addition, as for other subscription services of Tencent Videos and QQ Music, subscribers get discounts when they turn on automatic payment through WeChat Pay. Thanks to the inability to share songs to Moments via other music apps such as Xiami, WeChat users tend to use services provided by its mother company, Tencent.

 

Gamers playing Arena of Valor

Gamers playing Arena of Valor

Image: Marco Verch, CC BY 2.0

 

However, WeChat started to contribute to Tencent’s revenue directly in January 2015, when three major brands advertised in Moments for the first time. WeChat further removed the barrier of exclusivity months later, allowing other brands to have sponsored momentsthat targeted audiences based on their location, interest, gender, age and so on (Loras, 2105). Compared to other platforms where advertisements are all over the place, ad appears in Moments up to once 48 hours, which gives the users a relatively balanced contents between ads and moments posted by friends (Loras, 2105).

 

Furthermore, in 2016, WeChat decided to charge people using WeChat Pay, as online transaction and digital payment have been so popular in China that merchants are charged by 0.6% while users who withdrawal money from WeChat wallet to their bank account are charged by 0,1% (Horwitz, 2017).  Although it was said to offset the company’s burden of significant bank handling fees (Chen, 2016), revenues from WeChat Pay was classified into Others that contributed over 13 billion yuan to Tencent’s revenue during the second quarter of 2018 (Tencent, 2018).

 

Internet Ecology:

 

An internet ecology refers to the organizations and communities that keep the internet working and progressing based on shared values for their development (Internet Society, 2014). WeChat, as one of the most used social applications in China, with its diverse features ranging from messaging to payment, has its competitors and partners.

 

Social media like Weibo and payment service like Alipay are direct competitors of WeChat. As far as WeChat’s the social networking function is concerned, Weibo provides almost identical services, including up-to-date news feed and private messaging. Yet, different from WeChat, Weibo tends to provide users with an open and freer platform where almost everyone can see posts made by each other. At the same time, the relatively narrow space of WeChat satisfies the user’s need for privacy protection. Although the CEO of Sina admitted that people spent less time on Weibo since WeChat Moments came out (Millward, 2018), the development of these two platforms should be complementary.

 

As for Alipay, by which people transfer money, buy grocery and tickets, pay for utilities, and make doctor appointments just like they do via WeChat, is another major threat to WeChat Pay. Moreover, due to the fact that Alipay parent company, Alibaba, holds the largest online shopping platform in China, users who use Alipay to make transaction outnumber the amount of WeChat, with 53% and 40% of market shares respectively (Armstrong & Wang, 2018).

 

WeChat vs Alipay

WeChat vs Alipay

Image: John Pasden, CC BY-NC 2.0

 

The more active users, the more possible Tencent can make money out of WeChat. To keep their users, Tencent has collaborated with many businesses operated by third parties that people use on a daily basis. For example, Didi, the taxi-calling company that emerged Uber China, was backed and integrated with WeChat wallet in 2014, which allows user to order a taxi through WeChat, without even downloading the Didi app (Chen, 2018).

 

Below is a diagram showing WeChat’s internet ecology:

 

WeChat Internet Ecology

WeChat Internet Ecology

 

How WeChat changed the Chinese society?

 

One of the most remarkable influence WeChat has on Chinese people is the shift from traditional transaction model to digital payment method. The emergence of WeChat Pay has satisfied and appealed to the white collar, who lives a fast pace of life that would rather have an “app that rules it all”. Compared to Alipay, another payment application that occupies slightly more market shares than WeChat, the communicative and social networking essence helps WeChat to keep their users. According to the 2017 WeChat User Report by China Channel (2017), the majority of WeChat users are from the age groups of 18 to 25 and 26 to 36, with 83% of the users using WeChat for work.

 

Besides the apps-within-an-app model mentioned above, the online to offline mode that people can process payments by scanning QR codes also makes it easy for both customers and merchants. For example, QR codes can be found in restaurants, vending machines, grocery stores, and even roadside stalls, with 31.9% of WeChat users being private enterprises while 28.3% of them being self-employed (Cormack, 2015).

 

WeChat Pay

WeChat Pay

Image: 羊小卉, VRF License

 

On the cultural level, digital payment has been interlaced with Chinese traditional culture, by which families and friends bond together. The Chinese tradition of Red Packets (Hong Bao) can be traced back to thousands of years ago, where on festivals and major occasions, people, especially the elders, give money to the young as a wish for health and luck. However, rather than a way of encouraging fortune, digital red packets developed by WeChatwas more of a game that adds to the festival atmosphere.

 

The feature was launched 20 days before Chinese New Year in 2014. Besides the normal red packets with fixed amount of money, it has been popular to send red packets in group chats with diminishing amount, in this case, not everyone in a group chat can receive red packets and not every recipient gets the same amount (Balnaves, Homles & Wang, 2018). Such competitive way of collecting red packets soon got popular among WeChat users, with over 400 million yuan being exchanged during the first month of the feature (Balnaves, Homles & Wang, 2018).

 

Consequently, sending red packets has transformed from a festival tradition, to an everyday entertainment. There are even bosses sending red packets to remind employees of new announcements. Digital red packets certainly enhanced festival vibes, there are also criticism that virtual money exchange reduced the physical communication between family members, especially with those elderlies who are not on WeChat (Balnaves, Homles & Wang, 2018).

 

WeChat red packet

Screenshot of WeChat red packet

 

With the emergence of WeChat Pay, rises a new business model for WeChat users, weishang, which stands for micro retailing where businesspersons conduct their business using the WeChat platform (Huang, Liu & Ng, 2016). By observation, weishangs use Moments to advertise products, and collect money by direct money transfer. They sell products that mainly focus on female peers – snacks, cosmetics, and cheap fashions. Because females are more likely to accept friend request from female strangers, and they are more willing to chat (Huang, Liu & Ng, 2016). Although there is an increasing amount of females who are mostly college students and housewives becoming weishangs, with 107 million in 2014, it is found that many of them only regard this as a leisure-time pursuit (Huang, Liu & Ng, 2016).

 

Conclusion:

 

Overall, WeChat, “the app that rules it all”, acts not only as a social media platform, but as a portal where users can complete social networking, texting, shopping and payment on a daily basis. Indeed, as a transformative internet innovation, what WeChat can do is beyond what was mentioned above. Yet, that WeChat integrates so many features all in one app truly makes people’s life easier, in terms of cashless shopping, family bonding, private business and etc. As a business, it plays the role of the “real estate” that helps attract users to Tencent’s other services. Finally, in the battle between WeChat and its competitors, the Chinese consumers are, and will always be the ultimate winners.

 

 

 

 

References:

Balnaves, M., Homles, K., & Wang, Y. (2018). Red Bags and WeChat (Wēixìn): Online collectivism during massive Chinese cultural events. Global Media Journal, 12(1),1835-2340

Brennan, M. (2015). DO YOU KNOW WHO INVENTED WECHAT? Retrieved 31 October 18, from https://chinachannel.co/who-invented-wechat-zhang-xiaolong/

Brennan, M. (2017). 2017 WECHAT USER REPORT IS OUT! Retrieved 2 November 18, from https://chinachannel.co/1017-wechat-report-users/

Chen, L. (2018). Tencent Backed Super-App Emerges to Rival Its Own WeChat. Retrieved 1 November 18, from https://www.bloomberg.com/news/articles/2018-01-24/tencent-backed-super-app-emerges-to-rival-its-own-wechat

Chen, Q. (2015). Tencent’s charges for WeChat pay users kick in amid fight for mobile payment marketshare. Retrieved 1 November 18, from https://www.cnbc.com/2016/03/01/tencents-charges-for-wechat-pay-users-kick-in-amid-fight-for-mobile-payment-marketshare.html

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Huang, M., Liu Y., & Ng, J. (2016). The ‘feminine’ entrepreneurial personality trait: The competitive advantage of female college-student entrepreneurs in Chinese wei-shang businesses? Asian Business & Management, 15(5), 343-369.

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Multimedia reference list

Ibáñez, A. (2014). iOS / iPhone. Flickr. Retrieved from https://www.flickr.com/photos/alvy/12769823803

Lenaaround. (2017). EVERYTHING YOU NEED TO KNOW ABOUT WECHAT [Video file]. YouTube. Retrieved from https://www.youtube.com/watch?v=W1Ghx9_3ZC0

Ritharom, N. (2015). WeChat Myanmar – Voice Call [Video file]. Vimeo. Retrieved from https://vimeo.com/136695591

Verch, M. (2018). Von Tencent und ELS organisiertes Arena of Valor Turnier auf der Gamescom 2018. Flickr. Retrieved from https://www.flickr.com/photos/149561324@N03/42411863720/in/photostream/

Pasden, J. (2018). WeChat Alipay. Flickr. Retrieved from https://www.flickr.com/photos/jpasden/43304842762

Yang, X. (2017). WeChat Pay. 699pic. Retrieved from http://699pic.com/tupian-500525110.html

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