WeChat is not just a messaging app. With nearly a billion active users, it is used to make voice calls, play games, read news, hail cars and more. With WeChat Pay, people use the app to send money and pay bills by scanning a QR code, and friends and families use WeChat to send lucky money during festivals. For many, WeChat is already indispensable. How did the company grow? What were the key decisions and strategies? In the fierce competition between WeChat pay and Alibaba’s Alipay, who will win? There are many questions about WeChat, but the app’s success is certain—for now.
Live streaming in China is not new. Even back in 2005 there were live streaming businesses based on the PC, but it was not until 2014 that this industry really started to take off in the Chinese market, as China’s almost 700 million internet users became aware that mobile live-streaming is fun and can even be profitable. China’s internet giant companies have long recognized that live streaming is going to be the new portal to bring in traffic, so just like their competition in other battle fields, Baidu, Tencent and Alibaba have spread their tentacles to live streaming and mapped out their respective businesses.
Tencent has used WeChat to create a mobile ecosystem for China, which has more smartphone than PC users. By steadily integrating value-added services into a social media app, Tencent has made it increasingly useful to both consumers and businesses. That means WeChat has more opportunities than other messaging apps to make money. In contrast to Facebook, which earns most of its revenue from advertising, WeChat monetizes by integrating online payment functions that encourage shopping through the app and selling games. In the second quarter, Tencent recorded RMB 4.5 billion in revenue from games purchased through WeChat and its older instant messaging app QQ, up 11% year-on-year.
In 2014 rival taxi apps Didi Dache and Kuaidi Dache engaged in a fierce price war that left onlookers stunned. According to multiple sources, Didi and Kuaidi altogether splashed over RMB 2 billion (approx. $376 million) on subsidizing customer ride fares. Yet in early 2015, the two bitter rivals announced their decision to merge. It made little sense. They couldn’t possibly have buried the hatchet that soon. Cases like Didi-Kuaidi are becoming common in China’s internet industry, spanning areas like online travel, group buying and classified advertisement websites. Why is China’s online sector witnessing a series of frenzied mergers, acquisitions and partnerships between sworn rivals?
To boost the economy and help small and medium enterprises get capital more easily, the Chinese government is encouraging non-government entities to invest in financial institutions, even allowing private companies to open their own banks. When the government announced its decision to grant five banking licenses for private banks earlier this year, the big three tech companies—Tencent, Alibaba and Baidu—jumped at the opportunity. Given the technological expertise of their backers, these online banks are able to leverage things like big data and cloud computing to assess credit worthiness and tailor the user experience. But can they outmaneuver traditional banks?
China’s internet world is ruled by three big players: Baidu, Alibaba and Tencent, collectively known as BAT. The three companies generated revenues of $20 billion in 2013 and $8.16 billion in the third quarter of 2014. The big three account for a significant, and perhaps disproportionate, share of China’s internet market. Another technology company that has risen to prominence pretty quickly is Xiaomi. BAT and Xiaomi are quickly making inroads into new areas outside their core business—by either investing in or acquiring companies. Take a look at the brand and companies that are backed by these four companies.
With companies like Baidu, Alibaba and Tencent branching out into new areas, China is witnessing the rise of a new breed of digital conglomerates.
Wang Jianlin’s sprawling business conglomerate, the Dalian Wanda Group, has its fingers in many pies: from real estate and retail to sports and entertainment.
As China’s tech giants expand and diversify, a new era of digital conglomerates is dawning.
Mobile wallets are taking off in China but it is too early to say what they mean for the use of cash and bank cards.