WeChat: China’s Omniscient App Who’s Ticket to the U.S. Might Just Be its Economic Implications

First, a question: Which app on your smartphone do you most frequently use?

Now, imagine: Using one single app to text message, upload and share photos with friends, book a taxi, buy movie tickets, check in for a flight, find geo-targeted coupons, manage your credit card bills and send money to friends, make calls… and more.

Finally, believe: It’s one app, and it exists. It is: WeChat.

What is WeChat?

Known as WeiXin in Chinese, WeChat is China’s largest and most popular social messaging app, with over one billion downloads to smartphones in China. A free, easy-to-use app founded by Tencent in 2011, WeChat is used by people of all ages, has 650 million monthly active users amongst its one billion registered users, and brings together messaging, social communication, and product/service purchasing.

Users can send texts and voice messages to one another, use “WeChat Out” to make low-rate calls around the globe, and launch audio/video calls with their WeChat contacts. Users can also publish “WeChat Moments” (texts or short videos) related to their daily life, read news, share articles, pictures, songs or videos on their walls, and interact with other contacts. Additionally, WeChat users can create and launch discussion groups, play games, discover and meet strangers, and “shake” their mobile phones to find who else in the world is shaking it at the same time.

When thinking about the different platforms that have come to encompass and define human social connectivity, WeChat is equal to a combination of WhatsApp, Facebook, and Skype. Therefore, as an incredibly multi-functional app, WeChat has become an evermore-important piece of a mobile user’s everyday life.

WeChat Red Envelops Brings Chinese New Year Traditions to Mobile

One of WeChat’s most popular features is the digital payment service that allows users to send digital red envelopes (Hongbao in Chinese) to gift random amounts of money to one another. Through the app, these monetary gifts can be deposited into mobile payment accounts. WeChat introduced the red envelopes feature for the 2014 Lunar New Year, but its popularity was so large that people now use it throughout the year. In 2015, according to Tencent, WeChat delivered over one billion red envelopes. On February 7, 2016 alone — this year’s Chinese Lunar New Year — more than 8 billion red envelopes were sent.

When I was growing up in China, I looked forward to the Chinese New Year just like children in the U.S. look forward to Christmas gifts. One of the happiest things about the New Year for me was receiving red envelopes from my parents, relatives and friends. The giving of red envelopes is a gifting tradition; instead of wrapping presents and tying them up with colorful ribbons, Chinese people put a small amount of cash in a red envelope as a gift. The red envelope represents good luck and the money comes in handy too! As I have been abroad over the past several years during the Chinese New Year, I haven’t enjoyed the opportunity to receive or give red envelopes. But thanks to mobile technology, I am now back in the game.

WeChat Brings Mobile Commerce Inside the App

Mobile Commerce has become a central component of the WeChat experience. WeChat’s mobile payment options allow users to bind their bankcards to the application and purchase items or services within the app itself (“Mobile Wallet”). When consumers buy in-store, retailers scan QR codes within the app and the money is instantly deducted from the user’s account. Alternatively, online purchases can be made inside the app and, akin to Amazon Prime Now, will be delivered to users later.

At least one in five active WeChat users has set up WeChat Payment function. When I visited China last fall, I found most of the stores and merchants were in support of WeChat payment. I sent my orders to the nearest Costa Coffee shop so that it would be ready when I arrived. This function is parallel to me using my Starbucks Mobile App to order my coffee online and pick it up in-store in the U.S. But where the U.S. requires multiple branded apps to utilize these useful functions, China’s WeChat is a one-stop platform that allows me to pay for food ordering, taxi services, movie tickets, hotel room reservations — everything, in a word.

WeChat also has functionality for brands and businesses, allowing them to open a store inside a WeChat brand account. This feature is open to major companies as well as small businesses. JD.com, the second largest e-commerce website in China with an integrated interface on WeChat, can sell their items to potential customers without having to direct them outside of the app. What’s more, businesses can create a “public account” on WeChat, to promote whatever they want to their subscribers. Media organizations use it to promote their news articles, while companies use it to promote their brands, products and services. Today it has become a “must-have” marketing and communication tool in China.

Looking at the United States

Messaging apps in U.S. generally have less functionality and are not nearly used with the same frequency as they are in Asia. This is due, in large part, to the inexpensive texting rates in the U.S. as compared to China. Text messaging plans cost approximately 26 times more in China than in the U.S., according to the Wall Street Journal.[1] Although the mobile messaging market in the U.S. is dominated by WeChat’s competitors (WhatsApp, Skype, Facebook Message), 2% of mobile Internet users in the U.S. use it.[2] Despite its low American usage, WeChat has made marketing efforts to expand in the U.S. During this year’s Chinese Lunar New Year, WeChat sent red envelops to users via New York’s Time Square billboards. Passersby were gifted Lucky Money by shaking their smartphones in front of the screens and having the funds get directly deposited into the app’s mobile wallet. The Times Square billboard campaign was designed in part to remind Chinese tourists that the Red Packet service is accessible worldwide. Its purpose was also to attract those smartphone users who wanted a chance to get a “hongbao” in the U.S.

One of the reasons for WeChat’s success in China is its privacy design. Chinese people as a whole worry a lot about personal privacy, because a lot of them are forced to lead different lifestyles in different social circles due to professional expectations. WeChat led the way in privacy by adding a feature that only allows certain friend groups see WeChat moments, and blocks non-friends from seeing it. In my mind, people in the U.S. have a strong sense of privacy rights. An American user typically addresses the same privacy concerns by using different applications for different parts of their life: Facebook for family-friendly forms of social expression, Instagram for a curated visual representation, LinkedIn for business, etc. Each of these platforms has cornered a particular desire across many of the same users, while WeChat has methodically tackled each of those needs in one application.

For Chinese people living in the U.S., WeChat provides a platform to bond and bring the community together to share news, interests, and concerns. Additionally, Chinese students studying in the U.S. can use WeChat to keep in touch with friends and family at home and fellow Chinese international students in the U.S. WeChat has also served as an economic tool. Of the tens of thousands of Chinese tourists visiting the U.S. annually, shopping is an essential item on the itinerary. Through WeChat these tourists share information on merchandise, deals and brands with friends and family. Last year, 1.8 million Chinese tourists visited America and spent a whopping $21.1 billion. The number of visitors from China to the U.S. is expected to rise to 3.1 million in 2019.[3] You can imagine the economic implications.

While I believe that much of WeChat’s success is tied to its deep-rooted understanding of Chinese culture, I think that the economic features of WeChat could translate well in the U.S. With brands trying to reach consumers on their mobile devices now more than ever, it is not too far fetched to think that the ticket to WeChat’s success in America might be enticing brands with the ability to buy their products directly through the WeChat app.

And the draw for American consumers?

Perhaps it’s as simple as gaining more storage space on their mobile devices by replacing various apps with just one.

Angela Wang
VP of Finance
Blue Bite

[1] http://www.wsj.com/articles/the-future-of-texting-e-commerce-1451951064

[2] http://expandedramblings.com/index.php/wechat-statistics/5/

[3] http://www.businessinsider.com/chinese-tourists-to-us-on-the-rise-2015-1

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