WeChat has been a hot topic in the news after recently reaching the milestone of 1 billion active monthly users. I became one of them after moving to Shanghai, and I have spent a lot of time learning the ins and outs of China’s most-used app. Several months into life as a Shanghainese, what can I tell you about WeChat?
First, a WeChat few basics for those who may not be familiar. The Chinese call the platform “Weixin.” It is the “jewel in the crown” of tech-giant Tencent’s growing empire. WeChat accounted for at least one-third of Tencent's $9.8 billion USD earnings ($65.2 billion RMB) in Q3 of 2017. Further, WeChat drove its huge user base and their cash into other Tencent services, like gaming.
Tencent launched WeChat in 2011 as a simple messaging platform, but it has since evolved into China’s “everything app.” It is a social network, messaging platform, mobile pay service, professional interface, eCommerce site, and national ID system– all rolled into one.
Like so many things in China, WeChat defies a simple East versus West comparison. It is a uniquely Chinese digital ecosystem that is best understood on its own terms. Here are a few ways WeChat is distinctive from the digital players that dominate in the West.
1) It’s Your Chinese Wallet
Mobile pay has experienced explosive growth in China over the past few years. 90% of consumers use some form of it, and the country is well on its way to becoming the world’s first cashless society. Chinese consumers spent $9 trillion USD via mobile payments in 2016, and this dwarfs the $112 million paid in the U.S. over the same period.
WeChat helped put mobile pay on the map in 2014, when the brand launched a campaign that allowed users to send digital versions of the red envelopes (hongbao) that Chinese traditionally exchange
during the Chinese New Year. The digital red packets were wildly popular, and Chinese of all ages scrambled to sign up for WeChat Pay so they could participate.
During the red packet promotion, the number of people using WeChat payments more than tripled, from 30 million to 100 million, and this user base continues to grow. Tencent now owns 40% of the mobile pay market, and is quickly gaining on rival Alibaba. Incidentally, the red envelope campaign continues to feed that growth; during this year’s Spring Festival, WeChat users exchanged a record 688 million virtual packets.
Big picture, this huge base of WeChat pay users are making mobile pay a way of life in China. Your phone is becoming the preferred, if not the only way, to pay for food, transportation and goods. Restaurants, from white tablecloth establishments to street vendors, only accept mobile pay. Taxis don’t take credit cards. Grocery stores feature scanners that allow one-touch mobile pay, and three-quarters of fast food purchases are paid for using mobile. In fact, 40% of consumers carry less than 100RMB ($15US), and many people I know can’t remember the last time they carried cash at all.
2) WeChat Is a One-Stop Shop
WeChat is your Chinese wallet, but it is so much more. Reporters use words like “embedded,” “revolutionized” and “operating system for your life,” to describe the role WeChat plays in Chinese culture.
Stratechery's Ben Thompson explained this well, noting that “for all intents and purposes WeChat is your phone, and to a far greater extent in China than anywhere else, your phone is everything.”
After living here a few months, I can attest that these comments are absolute truth versus journalistic hyperbole.
On an average day, I can wake up to check my social media feed, pay for my green tea, join a video call conducted within the app, confer with colleagues, catch a cab to dinner, buy plane tickets for an upcoming vacation, make a doctor appointment, pay a few bills and order groceries – all without ever leaving the WeChat ecosystem.
This is quite different from the U.S., where I would need to toggle between a number of interfaces like Facebook, ApplePay, iMessage, LinkedIn, Slack, Skype, email, Uber, and several different websites, to complete the laundry list above.
I find myself spending increasing amounts of time within WeChat, something I have in common with my Chinese-born friends. Today, Chinese internet users spend one-third of all their time on mobile in WeChat. And, over one-third of WeChat subscribers use the WeChat app 30 times per day.
Currently, digital life is more fragmented in China than in the US. In fact, the average user installs 40 apps per year. However, Tencent is focused on adding new services that keep users within the WeChat ecosystem. The launch of mini programs in 2017 (more about those below) and a very recent foray into a mobile marketplace called WeShop means I’ll eventually be able to purchase almost anything I can think of from right within my WeChat account.
Tencent’s stated vision for WeChat is to connect “people to people, people to services, people to objects” – and they are fast achieving it.
3) WeChat Is Blurring the Lines Between the Online & Offline World
If universal connectivity is the name of Tencent’s game, “mini programs” are one principal way WeChat is achieving it.
Launched in 2017, these “light” applications allow users to find and use an application through WeChat without downloading the app or leaving the WeChat ecosystem.
For example, let’s say I spot a bike rental kiosk and decide I want to get some exercise instead of hailing a Didi. I simply scan a QR code on the bike to open the app within WeChat, sign up for the service and then pay using WeChat Pay.
No waiting for a space-hogging app to download. No complicated registration and verification process. I just scan, touch and go.
A recent article calls Mini Programs “bookmarks dropped all over the physical world,” and that is an apt description. For sellers of all kinds of goods and services, they provide a link between the physical world and the digital world of WeChat and their users. I can access anything I see in the offline world by scanning a QR code. And, anything that provides a paid-for good or service can be finalized with WeChat Pay.
At current, I can use mini programs to check into a hotel, buy something on social commerce site Pinduoduo, or pick up food at KFC without waiting in line. Companies are just starting to experiment with the capabilities of mini programs, and new uses are appearing daily. For brands that have a significant presence in the physical world, these embedded apps provide an extremely powerful way to allow consumers to discover and interact with your offering in real-time.
What to Make of WeChat?
If it is almost unthinkable for an individual to navigate life in China without a WeChat account, the same is quickly becoming true for companies of all sizes.
As I embark on my journey to understand the nuances of WeChat marketing, the word seamless will guide me. WeChat makes it seamless to buy things, seamless to accomplish most any task, and creates an increasingly seamless link between the brick-and-mortar and the digital.
The frictionless world of WeChat is creating incredibly high expectations among Chinese consumers. They are accustomed to a hassle-free shopper experience and have a lot less patience for some of the hallmarks of the U.S. shopper experience. For example: interacting with an associate, verifying identity to pay, typing in a website, toggling between a social media app and a retail site, or even waiting in a line.
WeChat has made QR codes a ubiquitous part of life in China, and using them is second nature for Chinese consumers. They expect to use QR for payment, but also for a growing number of tasks like finding a company online, researching product information, or accessing how-to videos for physical products. A company not actively using QR codes to make life more convenient seems behind the times by Chinese standards.
Further, the WeChat ecosystem is driving a huge appetite for personalization. WeChat (and competitor AliPay) are amassing incredible amounts of data. With every transaction, they know what you buy, where, and how much you spend. They use that data to continually add new features and personalized recommendations within the app. Consumers across the globe expect personalized service, but Chinese consumers are taking this to a new level.
WeChat makes so many parts of daily life supremely easy, and Chinese consumers consequently have little patience for companies that don’t follow suit. This is important for business leaders looking to develop a China strategy and also a great inspiration to help us imagine what could be in the United States and throughout the west. Seamless experience is the name of the game.