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WeChat Faces U.S. Skeptics, Banking Friction

WeChat screenshots via Flickr

WeChat image via Flickr

I’ve been traveling through Hong Kong, Taiwan, and Macau these last few days, so thought I’d end the week with a look at Tencent’s hugely popular WeChat mobile messaging service and the challenges it faces in its quest to go global and commercialize. I’ve been quite surprised by how widespread WeChat, known in Chinese as Weixin, has become in all three of these Chinese-speaking areas. But at the same time, comments from one of my industry friends also indicate Tencent could face an uphill battle winning acceptance in the US, where it could face heavy competition from rival products and skepticism due to its China connections. New media reports also indicate WeChat’s hyped new relationship with China Merchants Bank may also be running into problems, indicating the road to commercialization may not be as smooth as Tencent had hoped.

Let’s begin this WeChat review with a look at how the service is faring in Hong Kong, Macau, and Taiwan, based on my own personal experience. The answer is that it seems to be doing quite well, especially among Chinese speakers. Three of my good Taiwan friends now regularly use the service, though two others still prefer rival products like Japan’s Line and the US-developed Whatsapp. Still, that’s not too bad a ratio, equating to around a 50 percent adoption rate for what’s admittedly a very small sampling size.

My other way to measure the service’s popularity was through its “look around” function, which uses global positioning technology to let you see how many people around you are using WeChat. Searches in all three places revealed that plenty of people are using the service, and it was always easy to find 30 or 40 other WeChat users within a 1 kilometer radius of anywhere I looked. Perhaps that’s not too surprising, since WeChat said its subscribers outside China recently passed the 100 million mark. That compares with more than 300 million registered users in its home China market.

Apart from Hong Kong, Taiwan, and Macau, WeChat’s other major markets include Malaysia, Singapore and Indonesia, all of which are home to large ethnic Chinese communities that often speak Chinese. But the company could face a much tougher climb into non-Chinese areas, especially in lucrative but highly competitive western markets. Tencent has specifically targeted the U.S. for its first major move into a western market, and opened an office in U.S. earlier this year as part of that effort.

During my trip, a friend who works in a related field told me the word on the street is that Tencent is worried about resistance in the U.S. due to skepticism about its China connections. Such skepticism wouldn’t come as a huge surprise, following Washington’s controversial decision last year to ban Huawei and ZTE from selling their telecoms equipment in the US due to concerns about the potential for spying by Beijing. I would be less worried about spying by Tencent, though one does hear occasional gossip that the company monitors WeChat messages to some extent.

From global expansion, let’s look quickly at Tencent’s other major focus for WeChat, namely finding ways to commercialize the service. One of those ways involved forming tie-ups with big commercial partners, which we saw earlier this year when China Merchants Bank began offering some of its banking services over the platform.

Media are now reporting that relationship has soured a bit lately over Tencent’s desire to maintain control over WeChat users who do some of their banking on the platform. These kinds of issues are almost inevitable for such an experimental new service, so it’s far too early to comment on whether this is a serious issue. But such differences could easily end up causing major problems if Tencent becomes too protective and heavy-handed in its dealings with its commercial partners.

Doug Young lives in Shanghai and writes opinion pieces about tech investment in China for Techonomy and at www.youngchinabiz.com. He is the author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.

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