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This article was published on July 27, 2013

WeChat took Facebook’s mantle in China and now it’s going global

WeChat took Facebook’s mantle in China and now it’s going global

It’s been a positive past few days for Facebook. The world’s most popular social networking site announced an impressive set of results for Q2 2013 which were well-received by investors, particularly its spike in usage and revenue from mobile.

Facebook passed 819 million mobile monthly active users during the period, which collectively accounted for 41 percent of its total ad revenue, or $656 million. In conjunction with that, revenue from Asia — where mobile devices are particularly prevalent for Internet access — grew nearly 25 percent quarter-on-quarter to reach a record high of $247 million.

Asia is Facebook’s largest region for users, and its latest revenue figure isn’t far from being double the $135 million that Facebook pulled in from the continent one year ago. As Tech In Asia notes, Asia is surely the key growth region for the company, in terms of new signups, increased engagement and more advertising dollars.


Aiming to connect the world via Facebook

Co-founder and CEO Mark Zuckerberg has never been shy to admit his goal is to connect the planet through the service that he created in his dorm at Harvard. Over the past two years, Facebook has consistently grown its user base — adding 45-50 million users each quarter since Q3 2011 — which has led some to speculate that it could add billions more users to the 1.15 billion monthly active users that it has today.

Facebook’s growth to such a figure is impossible to predict, however, given the way technology and habits rapidly evolve; but one thing seems increasingly certain: Facebook will never crack China.

The company’s IPO filing from February 2012 admitted China is a “complex” market that it is struggling to find a compromise for, but neither Zuckerberg nor Facebook have said much about the issue since then. Yet, market developments over the past year have made any chance of Facebook finding success in China remote.

Already too late in China

The growth of WeChat, a mobile messaging client run by Internet giant Tencent, has revolutionized the way the average smartphone owner in China communicates with friends, family and even strangers.

In the past we’ve mused over whether Facebook could comply with censors in China — it is among a number of Western services blocked by the Chinese government; any unblocking would be contingent upon it agreeing to censor content, the same issue would apply if it acquired a firm there — or whether the culture of Weibo, China’s equivalent of Twitter which has beaten out domestic Facebook clones, means there is little demand for a Facebook-like user experience — but Tencent’s success with WeChat represents an even greater question mark: if all these questions were answered, is there even room for Facebook?

WeChat has 195 million month active users (MAU) which makes it the world’s second most popular messaging app behind WhatsApp (250 million MAU), and ahead of the likes of Line, Kakao Talk, Tango, Viber and others.

WhatsApp doesn’t provide a lot of figures about its business, but details from app stores and reports suggest that its user base is widely spread worldwide. In comparison, just 70 million of WeChat’s near-400 million registered users are based outside of China.

That stat illustrates just how colossal a force WeChat is inside China and Chinese consumer culture.

The service is a smartphone-only messaging app, but it sits squarely in the space that Facebook targets. That’s to say that it is used to message friends daily (using free text chat, voice/video calls), it has location-based services and includes profiles and a social network-style feature that lets users share moments with friends.

wechat img

It has also attracted media and brands — including global names like Nike, Starbucks and others — which can interact with users through the service. WeChat is widely-expected to introduce mobile payments and a social games service to begin monetizing its large following of users.

If that sounds familiar, it’s reminiscent of how Facebook grew its service for PCs, and they are key areas it is aiming to develop to better suit the increasing number of smartphone and tablet users.

All in all, WeChat is the dominant mobile social network in the world’s largest smartphone market. Every day that Facebook is not in China, WeChat’s presence among users, advertisers and even more traditional foes, like (it seems) mobile operators, becomes stronger.

WeChat pushing out overseas

WeChat is expected to pass 400 million registered users within the next few months and it is already accelerating its overseas presence. The service added 20 million users outside of China in the last two months, and a new global advertising campaign — fronted by football star Lionel Messi — is likely to see its presence in markets like Southeast Asia, Latin America, Africa and Europe surge.

The company is also said to be planning to open a US office to ramp up its fight against WhatsApp, Facebook and other mobile messaging and social services on their own turf.

As WeChat furthers its global presence, its hold on China only increases. While Facebook itself has big decisions to make (or hold off making) about China and censorship, the chances of it ever ‘connecting’ the country — which Mark Zuckerberg is said to aspire to do — are fading since another service is already busy doing that.

The counter-argument may be that WeChat is growing a market that Facebook could take over — in the same way that the likes of Friendster, Myspace, Japan’s Mixi and others helped create the initial wave of social networks which Facebook came to dominate — but Tencent has the resources, experience and local presence to fortify its position. It is a billion dollar Internet company with a pedigree of instant messenger services in China, such as its Skype-like QQ service for desktops, and key domestic relationships.

The real question is what effect the mobile-optimized WeChat service, complete with video calls, gaming and more, can have on Facebook’s own business worldwide. Its dominance will be hard to dethrone — certainly the odds of a non-Chinese company doing so are remote.

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