“In about 2013, the iPhone and smartphones took off in China, and because they already had the trusted QQ network, which became WeChat, and Alibaba with Alipay, it meant these two companies got into a head-to-head battle over payments,” adds Mr Skinner.Īlipay and WeChat integrated with all aspects of lifeīut the explosion ultimately only happened because Alibaba and Tencent managed to blend social media, ecommerce, payment and other finance functions seamlessly into single apps and user-friendly ecosystems. Widening access to the internet, mobile networks and smartphones was another factor. So when mobile payment apps first came out, they immediately caught on. The low penetration of card payment point of sale terminals in China, partly down to the fact Visa and Mastercard are banned in the country, has been another factor, as has Chinese millennials’ open-mindedness to technological change and willingness to entrust large portions of their lives to companies such Alibaba and Tencent.ĭigital banking expert and author of Digital Human Chris Skinner says: “They were able to leapfrog in China because most people didn’t have credit cards, debit cards or plastic of any kind. Bank customers have to contend with long queues in city branches, long journeys to branches in the countryside and horrendous bureaucracy to get a Chinese credit card. One thing that has driven the recent growth of social media payments through Alipay and WeChat Pay has been the inadequacy of China’s traditional banks. China uniquely primed for mobile payments By contrast, Apple Pay has only 127 million worldwide, even though it is installed into every iPhone. In many ways Alipay, which has around 700 million active monthly customers in China, and social media payments company, WeChat Pay, with over one billion, point to the future of payments for the rest of the world. To put their scale into perspective, each organisation handled more payments in a single month this year than PayPal’s $451 billion for the whole of 2017, according to research firm Analysys. Reserved.China’s two mobile payments giants, Alipay, an affiliate of the Chinese ecommerce group Alibaba, and WeChat Pay, owned by the messaging and social media powerhouse Tencent, are streets ahead of their Western rivals in terms of technology, user friendliness, number of users and ubiquity. Mob: +91- 2015 IBS Center for Management Research. ICMR- IBS City Office #52, Nagarjuna Hills, Knowledge and Communication Systems management, Managing Networked Businesses, International Marketing, International Management, Competition, Social Networking platforms, Network effects, managing beyond borders and cultures, Emerging Chinese global competitors, Messaging services, e-commerce Explore ways in which WeChat could emerge as a leader in the global market.Identify the challenges before WeChat in establishing its presence in international markets.Understand issues and challenges in managing networked businesses and multifunctional-platforms like WeChat.Understand the reasons for WeChat’s success in China.The case is structured to achieve the following teaching objectives: Moreover, the mobile messaging space was also getting increasingly cluttered and the competition had intensified with Facebook acquiring WeChat’s main rival and market leader, Whatsapp, in February 2014. Another potential challenge before Pony Ma and his team was how to monetize WeChat’s popularity. Whether WeChat could reverse this trend was the question. However, some analysts were of the view that the service of Chinese Internet companies was so localized that they could not compete in the global market. Having already established a dominant position in China, Tencent invested hundreds of millions of dollars in marketing and popularizing its WeChat services in international markets in 2013. The company had developed it into a multi-functional platform through initiatives such as smartphone games, official accounts and payment functions. According to Pony Ma, Founder and CEO of Tencent, WeChat was more than just a communication tool. WeChat was the most popular messaging application in China where it was called ‘Weixin’ (micro-message). Launched in January 2011, it quickly came to be seen as the future world-leading messaging app by some industry observers. The case is about WeChat, a mobile phone text and voice messaging communication service developed by Shanghai, China based Tencent Holdings Limited. WeChat: An Emerging Chinese Global Competitor

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