How WeChat is Dealing with the Challenges Ahead
While you may be lamenting the need to constantly evolve your marketing mix to stay ahead in China, you can rest assured that even WeChat faces a similar challenge.
Although China's super app hit 1.083 billion monthly active users in September last year, each sending any average of around 45 messages a day, WeChat faces headwinds to stay relevant to Chinese consumers. Readership for articles referred by friends on Moments has been dropping and Tencent's share of screen time is being cannibalised by newer, easier-to-use and more entertaining alternatives such as short video platform Douyin.
That's why all eyes were on WeChat's founder Allen Zhang's four hour speech at Tencent's conference last week, about how he plans to reinvigorate the app to mitigate the risk of it becoming obsolete. Zhang got philosophical in acknowledging that WeChat has lost the veneer of authentic discovery that endeared it to users, because people were becoming too sensitive to their online personas on Moments.
Across the board, Chinese consumers are seeking more authenticity: from the way they travel, to the brands they buy, to how they project themselves on digital platforms. Women 'beautification' app Meipai discovered this as user numbers plunged 55% as Chinese women sought more natural and less formulaic portrayals of themselves. WeChat is hoping to evolve from photoshopped and choreographed Moments feeds, to a more real account of what people are really experiencing. To enable this, WeChat has launched a new video-streaming feature, not unlike Instagram’s feed, so people share their lives in real time, not through carefully curated photos and messages. Even the user interface aims to keep it real, with the typical 'send' button, replaced with 'this will do' to remind people their social feed doesn't have to be airbrushed and polished.
Another area in which WeChat is pinning its hopes to counter the app's saturation and encourage more engagement per user is Mini Programs. The WeChat-embedded 'light apps' are already hugely popular, but curiously, the majority of traffic isn't coming from the famous mini programs you may have heard of, but rather the long-tail applications used by niches such as parent-teacher groups or your neighbourhood grocery store. Given WeChat is installed on virtually every smartphone in China, app developers are not concerned with having to create separate tools for Androids and iPhones, it is one simple app, seamlessly installed and launched from the comfort of WeChat. Tencent is thinking, if 'there's an app for it' wouldn't it make sense to make it a Mini Program?
Something that hasn't received due airtime is the impact that the new ecommerce laws will have on WeChat. Commerce is one of the areas showing great promise on WeChat, with its transactional nature providing a logical way for the platform to grow revenue. Yet many of those stores have been run by smaller vendors and daigou, attracted by WeChat's low barriers to entry. The new laws mean that it will be a lot more trouble to set up and maintain a simple WeChat store - or any online store - with the new taxation and reporting requirements. There are already signs of changes in the way smaller vendors promote their wares on WeChat as they try and skirt the laws, but for many, the effort won't be worth the reward.
Regardless of its challenges, WeChat remains China's super app with no other app being better positioned to evolve and stay relevant to Chinese consumers. To Allen Zhang's and Tencent's credit, they have recognised that they need to do this. There are some good lessons for any brand in China - you may be 'killing it' in China today, but you need to constantly review your position to stay that way. China Skinny can assist you with just that.
Here are this week's news and highlights for China:
Chinese Consumers
Chinese Consumer Confidence Remains Weak in Fourth Quarter as Beijing Looks for Answer to Economic Worries: China’s consumer confidence nudged up a fraction to 99.4 in the October-December quarter last year, up from 99.3 in the previous three months – but well below the 105.1 of the last quarter of 2017. Well-marketed brands appear to continue showing healthy grow with Nike posting a 31% increase in quarterly revenue for Greater China last month and Audi growing 11% to 660,888 cars (seriously, 888?) despite China's auto market contracting by 6% for its fall in two decades.
Digital China
WeChat's Star Founder Seeks Second Act for China's Super-App: WeChat needs to stay relevant for those hundreds of millions of users who just want something simple to use, that looks good and is entertaining, and are used to newer, shinier things being launched.
Tencent’s Future Requires Tapping into the Long Tail: With WeChat's user numbers reaching saturation the app plans to focus more on business apps, much of WeChat Mini Program's growth is being driven by niche applications.
Small WeChat Vendors Lose Their Jobs Due to China’s New E-commerce Law: Smaller WeChat vendors have stopped using words such as price, products, are hand drawing product profiles and even stopping even accepting WeChat payments as a way to avoid having to register a company to sell on the platform or face fines up to ¥2 million ($300K) following China's new ecommerce laws. Chinese shopping agents (daigou) are feeling the chill as the new law takes effect.
Amid Intensified Scrutiny, Baidu Removes 50 Billion Pieces of 'Harmful' Content: Baidu removed 50 billion pieces of content last year including pornography, drug use, gambling, and fraud - up from 45 billion in 2017.
China's Top Gay Dating App Stops Accepting New Users After Claims it Put Minors at Risk: Dating app Blued, which says it has more than 40 million users worldwide, said in a statement Sunday that the week-long halt will enable it to review the claims and make improvements to the app. Despite homosexuality remaining a sensitive subject in China, Blued has continued to grow, moving beyond straightforward matchmaking services into live-streaming and gaming. Last year, it raised $100 million in funds.
China's Xiaomi Places a $1.5 Billion Bet on AI and Smart Devices: Xiaomi believes the future will be about 'AIoT', the combination of AI and the so-called ecosystem of connected devices known as the Internet of Things.
Chinese Tourists
Can an App Clean Up the Overseas Image of Chinese Tourists?: New Chinese-language tourism app 'Shake to Win' adds to the increasing list of tools targeting independent millennial travellers wanting to keep away from the tour groups. Instead of listing shopping malls or Michelin restaurants, the Chinese-language app acts as a cultural directory, compiling around 1,500 heritage locations around Europe – ranging from decades-old artisan cheese shops to sites like the Van Gogh home in Brabant.
Entertainment
China's Box Office Increases by 9% to $8.9 Billion in 2018: China's box office grew 9%, meeting Beijing targets, but down on last year's increase of 13.5%. Admissions increased by 6% to 1.72 billion over the course of the year, while the total number of screens grew by 9,033 to reach 60,079. Chinese films' share of takings grew from 54% to 62%, with Chinese New Year releases Operation Red Sea the top-grossing film on $530.8 million, followed by Detective Chinatown 2. Avengers Infinity War was the highest-grossing Hollywood movie, and the fifth biggest film overall, with $347.5 million, joined in the top ten by four other US studio movies – Venom, Aquaman, Jurassic World: Fallen Kingdom and Ready Player One.
Sport
Manchester United to Open Series of 'Entertainment Centres' Showing their Games Live in China: ManU is opening facilities in the heart of Beijing, Shanghai and Shenyang, and will use state-of-the art technology for club-themed exhibitions and experiences - as well as featuring restaurants and a merchandise store. The club says the centres will allow their estimated 100 million Chinese fans to "experience the thrill of a match day at Old Trafford" as well as learn the history and heritage of English football’s most successful and storied club.
Healthy
China Investigates Latest Vaccine Scandal After Violent Protests: Another scandal eroding Chinese parent's trust as more than 100 children aged 3 months to 4 years received expired polio vaccines. In a rare display of contempt against the authorities, dozens of emotionally-charged parents surrounded the party secretary of Jinhu, chanting: “Beat him, beat him.”
Education
Chinese Students are Hooked on Homework Apps… Because they Have Games and Sexually Explicit Content: Many schools in China use a lot of “study apps” which let students do their homework online, search textbooks and exam papers for reference, and also lets them connect with teachers and take online lectures. Students can even do exams in some of the apps. Yet some apps use games and sexually suggestive material to hook the students and Beijing and parents aren't happy. China had more than 145 million monthly users of K12 education apps in 2018, up 41% from 2017.
Luxury
3 Marketing Gurus on Strategies for Selling Luxury to China in 2019: In this new and subdued climate, luxury goods brands must consider shifting strategies.
Cars
Elon Musk’s Warm Reception in China is a Wake-Up Call to Tesla’s Skeptics: Nice to see some positive news in US-China relations as construction begins on Tesla's Shanghai factory and Elon Musk is offered a green card by Chinese Premier Li Keqiang. Tesla expects to start producing its cheapest car, the Model 3, by the end of the year. Here's a good infographic for a view into the scale of the EV sales in China versus the US.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
