Tencent’s super app WeChat plans to share revenue with short video creators and launch a paid subscription service on its short video product WeChat Channels, the Shenzhen-based company announced on Tuesday night at a public event. Tencent also announced the launch of a new Quora-like question section in WeChat. 

Why it matters: Tencent is expanding its monetization efforts with regard to WeChat’s short video section, after seeing rapid growth in the channel but also facing direct competition from rivals Douyin and Kuaishou. This strategy aligns with CEO Pony Ma’s speech late last year in which he hailed short videos as “the hope of the company.”

Details: Zhang Xiaochao, leader of the WeChat Channel unit, spoke first at the event and shared that in the three years since its launch, the short video section of the super app has seen creators grow two times more active, while creators with more than 10,000 fans grew more than four times in 2022. Leaders from other WeChat units — WeChat Pay, WeChat mini-programs, office automation-focused WeCom, and WeChat search — also spoke at the event. 

• In 2022, the value of goods sold through livestreams on WeChat surged by 800% and creators who earned income through videos increased nearly three times, Zhang said.  
• Increasing earnings for content creators is a priority for WeChat Channel’s next phase of development. Zhang said WeChat will soon launch a paid subscription feature, which will allow creators to set up a paid content section where users can pay a monthly subscription fee. This will help creators quickly set up their own commercialization subscription system, Zhang added. 
• Additionally, creators will have the option to access Tencent’s advertising system, which can display content-related ads in the comment section. This incentive is part of Tencent’s aim to attract more influencers.
• WeChat is also planning to roll out a new question function called Wenyiwen (meaning “ask a question” in Chinese), similar to a Quora-style Q&A platform. The feature will aggregate high-quality answers to common questions. Tencent added that more than 800 million monthly active users utilize its search feature, which saw a 54% year-on-year growth in search volume in 2022.

Context: With just over 1.3 billion monthly active users, all-in-one messaging app WeChat primarily monetizes via livestreams, e-commerce, and advertising on its short video section Channels. 

• Total time users spent on WeChat Channels exceeded the time they spent on WeChat Moments (a Facebook-like timeline function) in the quarter ending Dec. 31, Tencent’s latest filing showed.
• Tencent conducted its first test of paid-to-watch livestreaming in January 2022, with users required to pay approximately RMB 10 ($1.45) to access a live feed of an NBA game. However, compared to rivals Kuaishou and Douyin, which have already furthered their attempts at paid content, Tencent is still lagging behind. 
• Kuaishou, for instance, has a separate “paid content” section on its app and recorded 59.6 million paid subscribers in the third quarter of 2022. Meanwhile, ByteDance-owned Douyin has operated a paid business model for watching short dramas since November 2021.

Duoduo Video, a vertical short video offering from Chinese e-commerce company Pinduoduo has reportedly recorded comparable watch time statistics to Tencent’s WeChat Channels, sparking a sudden uptick in attention from Chinese tech media. Local media outlet 36Kr said in a Wednesday report that the video section on Pinduoduo’s shopping app is seeing users spending about 30 minutes a day watching, a number that puts it roughly on a par with tech giant Tencent’s similar platform. 

Why it matters: Pinduoduo’s use of short vertical videos is another example of Chinese online retailers’ increasing competition with content platforms such as Kuaishou and ByteDance’s Douyin, as the latter two ramp up in-app shopping functions. Alibaba’s Taobao shopping app also has an embedded content section called Guangguang, using a combination of photos, articles, and videos to attract more users. 

Details: Pinduoduo added the short video section to its app in February 2022, according to a report from Chinese media outlet Jiemian. Pinduoduo incentivizes users to watch more videos by giving out cash rewards, which users can withdraw directly to other digital wallets.

• In a recent test, TechNode found Pinduoduo gives out significant cash rewards to newer users. Our reporter, a new user of the section, earned RMB 10 (about $1.5) after watching less than one minute of short videos. But the app only allowed the user to withdraw a small fraction of the earned reward (up to RMB 0.6) and encouraged them to log on more frequently to increase the withdrawal amount. 
• Duoduo Video is now led by a person who worked for Douyin before joining Pinduoduo in around 2021, the 36Kr report said. Pinduoduo is committed to investing in the business, not expecting commercial results in the short term, the report said, citing a source close to Pinduoduo.

Context: As China enters a relatively slower growth period, competition among the country’s top tech companies is heating up, with more cross-sector rivalry. For example, ByteDance’s Douyin, the equivalent of TikTok in China, has recently increased its investment in offering on-demand services, a core business offering of the life services giant Meituan. 

• Known for offering generous discounts and ultra-low prices, Pinduoduo saw great growth last year, with revenue up 65.1% year-on-year to RMB 35.5 million in the third quarter of 2022. But the company is facing more challenges from established online retailers such as JD and Alibaba. JD is set to launch a subsidy program worth billions of RMB and applicable to almost all items sold on its platform. Pinduoduo launched a subsidy program in 2019. 
• Taobao Deals, Taobao’s budget shopping platform, is set to form 50 offline service spots in industrial cities across China to help boost supply of quality products in nearly 900 categories, local media outlet 21Jingji reported on Feb. 27.

Tencent’s short-video product WeChat Channels reported impressive growth at its annual flagship event on Tuesday. The unit saw a 200% yearly growth in the total number of video views, and an 800% growth in total gross merchandise value (GMV) from livestream shopping content. 

Why it matters: WeChat Channels’ strong growth in creator numbers and view counts offers a wider basis for monetization plans. Tencent will likely see the short-video unit play a bigger role in its advertising revenue, with CEO Pony Ma recently declaring it “the hope of the whole company.”

Details: The total time users spent on WeChat Channels exceeded 80% of the time they spent on WeChat Moments (a feature similar to Facebook timeline) in 2022. The messaging app hasn’t revealed the amount of time users spend on the Moments feature since 2019, when WeChat founder Allen Zhang said the figure had been roughly the same over the years at an average of 30 minutes per day.

• WeChat saw the total view counts of its video unit increase by 200% from last year, and the number of creators with over 10,000 followers was up 308%.
• WeChat also posted significant growth in its live-commerce business, saying GMV grew more than eight times from last year, and the average unit price exceeded RMB 200 ($29.5), similar to last year’s.
• For livestreaming, executives said the number of users and time spent watching jumped 300% and 156%, respectively. The video unit has already livestreamed multiple concerts by popular singers, speeches by public figures, and major sports events to the public. Last April, the Chinese rock star Cui Jian’s livestreamed concert attracted more than 46 million viewers, setting a viewing record for live online concerts at the time. 

Context: Tencent urgently needs to find a new revenue growth point as it faces slow growth in video games and advertising operations. The company’s overall revenue has declined in the last two quarters. The company’s CEO Pony Ma sees WeChat Channels as a major source of hope for the future of Tencent, with the unit already initiating various attempts to monetize.

• Similar to rivals Douyin and Kuaishou, WeChat’s short-video unit have attempted to accelerate the commercialization process in multiple ways: livestream e-commerce, in-feed ads, encouraging users to tip livestreamers, and charging merchants a 1% to 5% commission fee, which started on Jan. 1.
• Launched in 2020, WeChat Channels positioned itself as a short-video platform for personal video content, largely thanks to its integration with Tencent’s WeChat super app.

Tencent’s founder and CEO Pony Ma has warned employees that any part of the business could be shut down if it underperforms, adding that short video is key to the tech giant’s future. Ma made the remarks at a Dec. 15 internal staff meeting held online. Part of his speech was first reported by the Chinese news outlet Jiemian on Thursday.

Why it matters: Focusing on profitability has become even more important as Tencent’s core revenue streams in advertising and gaming have been hit by the macroeconomic slowdown and Chinese regulators’ tightening of gaming limits for young people. Tencent’s billionaire co-founder insisted the company should make cost-cutting a long-term habit, a clear bellwether for current sentiment in China’s tech sector.

Details: Pony Ma, who rarely expresses frustration at internal meetings, was unrelenting in his criticism of some of the company’s best-known and established units, such as Tencent News, according to Jiemian’s report. He also emphasized that Tencent should continue to focus on its core businesses while making short videos its new priority.

• For Tencent News, Ma stated that if the business couldn’t be self-sustaining, “there would not be much time left for them.” Ma did note however that the unit had begun to turn around in October after he made a “high demand” regarding profitability to Jonathan He, the new Tencent News head, who replaced Wang Shimu in May.
• Ma indicated that he expects Chinese regulators to continue issuing limited numbers of video game licenses, asking the firm’s gaming unit to focus on making high-quality games and “not to waste any chance of getting a license.”
• According to Jiemian’s report, Ma told employees that he regards WeChat’s short video channel as “the hope of the whole company”. He said Tencent will incorporate e-commerce features into its short video channels in the near future. He also said that the rapid development of short video in recent years is forcing the company to adjust its investment strategy for longer-length videos.
• Ma reportedly went on to turn his attention to what he described as the “corruption” faced by the internet company, labelling the situation as “shocking”. Tencent fired nearly 70 employees in 2021 over claims of commercial bribery and embezzlement, local media outlet Yicai reported earlier this year. Among the 70, more than a dozen were referred to the authorities for suspected criminal activity.

Context: In the April-June period this year, Tencent posted its first quarterly revenue decline since it went public in 2004, with revenue falling another 2% year-on-year the following quarter. Tencent’s core gaming revenue and revenue from its online advertising business both recorded year-on-year declines in the first three quarters of 2022, hit by China’s economic slowdown and ongoing regulatory scrutiny.

• Ma’s remarks followed another round of layoffs at the company in November, with Reuters reporting the layoff affected Tencent’s video streaming, gaming, and cloud businesses. The tech giant undertook multiple job cuts earlier this year, with Tencent’s earnings showing that it had 108,836 employees by the end of September, 6.3% lower than in the first quarter of this year.
• Tencent has shut down at least 16 products in 2022, including digital collectible platform Huanhe, video player QQ Player (which had run since 2008), and free WiFi software Tencent WiFi-Manager. It also cut 29 games, four of which have been online for more than a decade, according to local media outlet Times Finance (in Chinese).

In locked-down Shanghai, Zhang Chen was standing by her community gate, waiting to pick up apples to be delivered to her apartment compound. She reveled in her luck at striking the apple deal because fruit had become a rare treat in the metropolis locked down since late March in response to a new Covid-19 outbreak. The city authorities prioritize delivering essential foods like rice and vegetables to the city’s 25 million residents. 

A neighbor who bought 15 kilograms of apples through a community group’s bulk buy last week was willing to split the order with her, saving Zhang days of waiting in this challenging time. 

Some Shanghainese have been locked in their homes since early March, when the city was only doing partial lockdowns. Shanghai began a two-stage city-wide lockdown on March 28 and promised to reopen by April 5, which never happened. The lockdown has been extended, and as of the time of writing, most of the city is still under lockdown. The unexpected long locking period has left many residents unprepared and scrambling to find food and supplies.  

At 10 in the evening, the little square in front of Zhang’s community gate was crowded with other people like her, either collecting their deliveries or waiting for their food to arrive. Meanwhile, more residents were clinging to their phones at home, waiting for their group buying heads to tip them off the arrival of their purchases. Delivery times have become unpredictable as truck drivers are asked to show negative Covid test results certificates to deliver goods across the city.

Zhang’s phone rang. Her neighbor called to confirm her identity because they were only connected on WeChat and had never met before. It turned out the neighbor was a casually-dressed woman standing right next to her. After collecting a big box of apples, the pair split the apples by counting out half for each because no one had a scale. Neither woman cared about who got slightly more weight in these unprecedented conditions. 

“I already bought some apples last week. But they disappear so quickly because I have a big family to support. My parents are under lockdown with us to take care of the kids,” Zhang said.

For millions stuck in Shanghai like Zhang, purchasing daily necessities has become a hassle over the month as they have been forced to stay home. During the lockdowns, reliable delivery platforms have become lifelines for people living in the financial hub, China’s second-largest city with a 25 million population. 

As other online grocery delivery services struggle to keep up with the city’s spiking online orders, community group buying has revived, thanks to its flexibility. But analysts say that a regional resurgence of the service won’t turn the tide for the cooling sector.

It’s a ‘last-mile’ problem

Shanghai’s current food shortage problem is more about how to deliver food to residents rather than a lack of national food reserves, according to the city authorities. 

Shanghai’s deputy mayor Chen Tong said at an April 7 press conference that the city had sufficient food reserves to feed locked-in residents for the foreseeable future.  Chen pointed out that the current problem lies in the lack of last-mile delivery forces, the couriers who complete the last leg of a delivery process. 

“The battle against the epidemic has affected the quality of life for Shanghai residents. There are cases when food supplies can’t be delivered to residents’ homes. We are trying our best to address the problem,” he said.

As part of the municipality’s pandemic fighting initiative, all major grocery delivery companies, like Meituan, Alibaba’s Freshippo, and Dingdong Maicai, are attempting to keep up with the rocketing online demand across categories from vegetables and rice to fruits. 

Different business models, different solutions

China’s decade-old grocery delivery industry consists of players operating under various business models. For example, self-operated platforms like Dingdong Maicai and huge grocery retailer marketplaces such as JD Daojia and Meituan.

The various business models mean the platforms are confronting locked-down circumstances differently.

The sudden surge in orders soon overloaded nearly all mainstream grocery delivery platforms, including Alibaba’s Freshippo and Ele.me, Meituan, Dingdong Maicai, JD, and MissFresh.

These services usually rely on powerful teams for a promised 30-minute delivery for individual customers, but operations have become strained this time when the labor shortage is a critical issue.

Many users of services like Dingdong set their alarm clocks for early morning to scramble for the limited number of orders couriers can deliver that day. For example, Zhang Menglin, a mother of a six-year-old, tried for a few days only to find the websites and apps repeatedly crashed due to soaring demand. After an experience similar to Zhang’s, TehNode reporter Ward Zhou resorted to using an app that repeatedly clicks the “buy” button, thus upping his chances of placing an order.

Instead of giving away hefty cash donations for disaster alleviation, Chinese tech majors have resorted to a more practical approach to address Shanghai’s delivery labor shortage: providing more hands. 

Grocery platforms and supermarket chains, including Ele.me, JD, Dingdong Maicai, and Yonghui pledged in early April to move more than 6,000 staff to the Shanghai by April 11 while also leveraging autonomous delivery vehicles, according to a rough count by local media outlet Awtmt. 

Of the total, the Alibaba-affiliated services Ele.me, RT-Mart, Freshippo, and Cainiao account for a combined 3,000 workers, mainly filling delivery and sorting positions. 

Meituan launched urgent deliveries and vowed to move at least 1,000 delivery workers to the city after its vice president Mao Fanglie made a rare public appearance at Shanghai’s April 7 government briefing. 

Pinduoduo, WeChat benefit from community group-buying surge 

In normal times, community group-buying platforms operate by selling products in bulk through group heads, typically stay-at-home mothers or local store owners who collect orders from residents in nearby housing compounds. The platform’s couriers drop off products at community stores or the compounds’ gates for consumers to pick up overnight. 

This model has emerged as a more reliable food source for millions of people in Shanghai, compared with the above-mentioned platforms catering to individuals. On the one hand, the models’ bulk sale approach allows grocery apps to make the best use of their available delivery forces. On the other hand, customers are much more tolerant of the less predictable delivery times. 

“I have given up on grocery delivery apps like Dingdong after multiple failed tries and depend solely on community groups buying my food now,” said Wang Jia, a 40-year-old Shanghainese. 

After being locked down for three weeks in Shanghai, the reporter of this article tried to order bread from JD on April 9. Instead of its standard same-day delivery, the retailer’s app showed the bread would arrive in two weeks. In frustration, the reporter turned to her neighborhood’s group buying head, which delivered two loaves of bread in two days. She was thrilled and grateful to get bread for her six-year-old daughter’s breakfast sandwich. 

Besides the veteran group heads already in the business before the outbreak, novices are becoming group-buying leaders, both to meet their own needs and to help neighbors. 

Given that most group heads communicate and promote their products through various WeChat groups, WeChat-based mini-programs gained popularity among group-buying participants.  They are Pinduoduo’s community group buying service Kuaituantuan, Tencent’s e-commerce feature Weidian, and WeChat Jielong.

Platforms like Freshippo and Carrefour have moved to a wholesale model too, requiring a minimum price or number of orders to support delivery. That’s similar to the community group buying model, except that unpaid volunteers, who are locked-down residents themselves,  are functioning in the group heads’ intermediary role. E-commerce platform Pinduoduo also rolled out wholesale services in the city, encouraging individuals to resell the goods to their neighbors.

A comeback for community group buying?

The inflow of venture capital and internet giants plays a bigger role than real consumer demands in driving the rise and fall of the community group-buying industry.

—Zhang Yi, consulting CEO and chief analyst at iiMedia Research

However, looking beyond its current boom in Shanghai, the dust had already settled for China’s grocery community group-buying vertical after a crazy ride in the past two years. High regulatory fines and cash-burning battles put the sector on the brakes. As the market tide ebbs, the once red-hot sector has become an area where tech giants have enacted deep headcount counts amid industry-wide layoffs. 

Covid-driven demand will become an opportunity for the broader online grocery shopping industry, and the trend will live on after this wave of epidemics subsides. But it won’t be a game-changer for the failing community group-buying vertical, according to Echo Gong, a Shanghai-based analyst with global research agency Coresight. 

Data from market intelligence agency Emarket shows that online food and vegetable sales reached an annual growth rate of 61.4% in 2020 when the coronavirus hit China the hardest. The growth rate slowed down to 24.6% in 2021, but the sector nonetheless was still growing. “Shanghai’s epidemic will reinforce the use of online grocery shopping for certain groups, such as the elderly who didn’t use the platforms before,” Gong told TechNode.

But it’s a different case for the community group-buy vertical. “Most of the group leaders who initiated group-buy are motivated to help each other during difficult times. Most of the parties engaged in the group-buys now, either group heads, volunteers, vegetable suppliers, or catering services providers, are not profit-driven. After the pandemic, it will be difficult to keep them motivated without incentives,” she said.

Long-term drivers: VC, tech giants

“The inflow of venture capital and internet giants plays a bigger role than real consumer demands in driving the rise and fall of the community group-buying industry,” said Zhang Yi, consulting CEO and chief analyst at iiMedia Research, echoing Gong’s opinion. 

Shanghai’s Covid outbreak highlighted the importance of last-mile delivery capabilities. Zhang said he’s bullish on companies with mature inter-city delivery forces like Meituan and JD, as well as Freshippo, all of which have strong offline presences.

“At the end of the day, the industry threshold and winning factor for a platform is the ability to ship products to customers in an efficient and timely manner,” said Zhang.

WeChat’s app store-like mini program ecosystem attracted more than 450 million daily active users (DAUs) in 2021, up 12.5% from 400 million DAUs in 2020, according to figures released on Thursday by the Tencent super app.

Why it matters: Mini programs have seen increasing adoption in China and WeChat’s latest figures suggest users have grown used to operating on apps-within-an-app rather than going to multiple standalone platforms. 

• Mini programs allow users to access an array of services without leaving the main app. The system offers merchants a chance to access a vast pool of users by building lightweight apps within WeChat, an ubiquitous app in China, instead of having to develop a separate app and convince users to go there. 

Details: WeChat mini programs have expanded their user base and seen growing usage over the past year, head of Weixin Open Platform Lake Zeng said on Thursday at WeChat Open Class Pro 2022, an annual event for WeChat business partners and developers held in Guangzhou.

• Ahead of the system’s fifth anniversary on January 9, it was revealed that WeChat mini programs topped 450 million DAUs in 2021, with users spending 32% more time on them each day when compared with 2020.
• In 2021, the total number of mini programs increased 41% year-on-year, while mini programs supporting payment transactions grew by 28%. Users who pay through mini programs soared 80% year-on-year. Small- and medium-sized companies drove 90% of the growth, Zeng said. 

The pandemic accelerated mini program adoption: The company said that more than 700 million users have accessed pandemic control services such as Covid-19 tests and vaccination appointments through mini programs on WeChat, cultivating habits of using the embedded app function. 

• Sectors hit the hardest by the pandemic, including catering, tourism, and retail, saw their transaction volumes on mini programs double year-on-year in 2021.
• During the pandemic, the number of active mini programs offered by overseas merchants grew 268% over the past two years, with total transaction volume surging 897% in the same period. 

Context: Launched in 2017, WeChat mini programs have been aped and adopted by a host of Chinese apps, including Tencent’s QQ, JD.com, Baidu, Meituan, Alibaba’s Alipay and Taobao, and ByteDance’s Jinri Toutiao and Douyin. 

• WeChat’s healthy growth for mini programs comes as the total number of native apps in Chinese app stores has slumped more than 40% over the last three years amid regulatory crackdowns and a mature market.

China’s super app WeChat plans to launch a paid cloud storage service, state-owned media China Daily reported on Sept. 3, citing unnamed sources. The iCloud-like feature would be WeChat’s first paid subscription service since it launched in 2011.

Why it matters: The move could give WeChat’s 1.25 billion users an option to back up their chat records on the cloud, addressing an outstanding users’ complaint. The subscription could also bring new income streams for Tencent, WeChat’s parent company, as regulatory pressure on mobile games grows and companies are being encouraged to be more socially responsible. 

Details: The project, which has been pushed by Tencent aggressively, has entered “the final stage,” the report said, citing another unnamed source. 

• WeChat plans to charge users on a yearly basis. iOS users could be paying RMB 180 ($28) a year while Android users would pay RMB 130, the report said. 
• A WeChat spokesperson declined to comment on the issue when contacted by TechNode on Monday. 

Context: WeChat’s global monthly active users reached 1.25 billion in the second quarter of this year, up 3.8% from last year, according to Tencent’s Q2 earnings report.

• WeChat users have long been annoyed by loss of chat data as the app only allows local storage on devices. 
• More Chinese people are demanding cloud storage services. The number of cloud users in China was forecast to exceed 400 million in 2020, according to market intelligence firm iiMedia (in Chinese). 

Meituan, a Chinese life services and food delivery platform, is testing a social feature for food-ordering users, Chinese media Tech Planet reported (in Chinese) Thursday.

Why it matters: The social feature is part of Meituan’s effort to find new growth areas. The move comes as the food delivery sector becomes more crowded—social media giant ByteDance has been reportedly testing a food delivery feature through its short-video app Douyin since last month.

Details: Named “Fanxiaoquan,” the new feature allows users to share orders with their contacts on the Meituan app, in a format that is similar to WeChat’s Moments or Facebook’s News Feed. 

• Users can comment and like posts, access merchants’ shops through posts, and place similar orders.
• Users can add friends either through WeChat contacts or phone contacts. The platform also recommends new contacts based on users’ past behavior on the Meituan app, such as the mobile games they have played. 

Context: After years of fast growth, China’s food delivery industry is now growing at a slower pace. The market expanded 15% yearly in 2020, the slowest growth in the past decade, according to market consultancy Zhiyan (in Chinese). 

• Meituan hit a record in the number of transacting users and active merchants using its flagship app in the first quarter of the year, 569.3 million and 7.1 million, respectively, according to its financial statement. The growth is partly driven by the company’s popularity in lower-tier Chinese cities. 
• Meituan is seeking new growth areas in recent months by introducing social and content features, including a Pinduoduo-like group buying feature in its Meituan-Dianping unit and a short video feature in its flagship app.

Tencent’s popular super app WeChat said Tuesday it has temporarily suspended new user registrations, attributing the decision to “related laws and regulations.” 

Why it matters: This is the first time Tencent has suspended new user registration for the ubiquitous app in China, which many people rely on for communication and other life services such as paying utility bills and shopping online. 

• The action comes as China accelerates scrutiny on tech companies’ anticompetitive behavior and their data security practices.

Details: WeChat said in a Tuesday social media post (in Chinese) that the app is not accepting new individual users and public accounts to comply with “related laws and regulations.” The company calls the suspension a “technical security upgrade.”

• The company said it expects the upgrade to be completed by early August. 
• A WeChat spokesperson declined to comment when reached by TechNode. 

Context: Earlier this month, the Cyberspace Administration of China (CAC) banned ride-hailing platform Didi Chuxing from registering new users while launching a cybersecurity review into ride-hailing app Didi Chuxing. 

• The CAC in the same month announced similar cybersecurity investigations into three other companies, job recruitment platform Boss ZhiPin, transport companies Huo Chebang and Yun Manman, and asked them to stop registering new users.
• WeChat is China’s most-used instant messaging app. In 2020, the app had more than 1.2 billion monthly active users worldwide.

May holiday consumption

The Ministry of Commerce will kick off a month-long campaign to increase consumer spending on May 1 in the hopes of boosting economic recovery amid the pandemic. Some 260 e-commerce retailers will participate in the national event including tech giants Alibaba, JD.com, Meituan, Trip.com, and ByteDance. (SCMP)

Meituan, livestream commerce probes

• The State Administration for Market Regulation (SAMR), China’s top antitrust regulator, said in a one-line statement on Monday that is investigating food delivery leader Meituan for “forced exclusivity,” a practice in which platforms force merchants to use only one company’s platform or services. Meituan said that it would cooperate with the investigation. The Tencent-backed platform, along with 33 peers in the internet sector, had previously pledged from April 14 to 16 to comply with SAMR rules. (TechNode) 
• Seven central government agencies including the Cyberspace Administration of China, the Ministry of Public Security, and the Ministry of Commerce also announced new rules on April 23 governing livestreamed e-commerce that will go into effect on May 25. The regulations on livestream views and transactions, misleading marketing, and user data privacy follow a previous set of rules announced by SAMR on March 12 at the annual 315 consumer rights protection gala. (TechNode)

Funding and IPOs

• JD Logistics, the logistics arm of Chinese online retailer JD.com, will seek approval from the Hong Kong stock exchange for a public listing. The company filed its prospectus for an initial share offering on Feb. 16. JD Logistics would be JD.com’s third publicly traded unit after its healthcare arm went public in December. (IFR)
• Alibaba-backed edtech newcomer Zuoyebang may pursue a US listing as early as the third quarter of this year. The study services platform could raise over $500 million. The startup has hired a CFO from Nasdaq-listed Joyy Inc purportedly for his knowledge of the American market. (Bloomberg)
• According to Sohu Finance, Chinese supermarket chain Wumart Group submitted a prospectus to the Hong Kong stock exchange on March 29, in which it had agreed to either take an up to 2% stake in Chengxin Youxuan or buy a maximum of $100 million in shares in the Didi-owned community group-buy platform. Community group buying is a platform-based grocery service employing a network of organizers who coordinate selling products to their neighbors. By combining individual orders into bulk shipments, group-buy companies can offer lower prices to customers. (Sohu Finance, in Chinese)
• Delivery service Baishi Express hosted an internet conference in Hangzhou on April 24, where CEO Zhou Shaoning announced that the company is currently in financing discussions. He said that the quickest timeline for an IPO would be in 2022. (36kr, in Chinese)

Food delivery and grocery

• Grocery e-commerce startup MissFresh began offering its produce on the JD.com app and its offshoot JD Daojia earlier this month. In exchange for access to its marketplaces, JD will collect commissions and fees per transaction. The two platforms have the same target audience, consumers who want produce delivered to their doors. MissFresh filed a prospectus to US regulators earlier this month. (KrAsia)
• Food delivery behemoth Meituan’s new autonomous delivery vehicle commenced full operations beginning last week. The company highlighted improvements in vehicle range, storage capacity, and artificial intelligence capabilities. First trials of the vehicle began in February to minimize the need for close contact amid the pandemic. This space is one to watch as Meituan and Tsinghua University are teaming up to work on autonomous vehicle and other AI technologies, while Beijing’s city government has set aside urban districts for vehicle prototype testing. (Caixin Global)

Cross-platform troubles

• Alibaba’s Taobao Deals, a Pinduoduo rival, has made little progress in applying for a mini program on Tencent’s mega chatting app WeChat, according to an Alibaba executive. The executive said that Tencent has stopped testing for Taobao Deals and has not provided a timetable for the launch of the mini program. (SCMP)

China’s top antitrust regulator is looking into Tencent’s WeChat for monopolistic practices and how the popular messaging app had possibly squeezed smaller competitors, Reuters reported, citing anonymous sources. 

Why it matters: The latest development in China’s antitrust campaign indicates that Tencent, the country’s largest social media and gaming company, might be the next tech behemoth to be targeted. The company had previously been sued by rivals for anti-competitive behaviors.

Details: Wu Zhenguo, the head of China’s State Administration of Market Regulation (SAMR), expressed concern about some of Tencent’s business practices, and asked the firm to comply with antitrust rules when he met with Tencent founder Pony Ma this month, Reuters reported Wednesday, citing two people with direct knowledge.

• SAMR was gathering information and looking into WeChat’s business practices, and how the super app—China’s largest instant messaging app with more than 1 billion users—may have competed unfairly against smaller rivals.
• Ma, Tencent’s low-key chief executive, was in Beijing this month for China’s annual parliamentary meeting and visited the SAMR office two weeks ago. He met with SAMR officials to discuss compliance at his company.
• Tencent did not respond to requests for comment on Wednesday.

Context: SAMR had previously targeted Tencent in its antitrust actions. It fined a Tencent affiliate in December over unreported acquisition and merger deals and punished Tencent earlier this month for the same reason.

• Tencent is also involved in a lawsuit with Douyin, ByteDance’s Chinese version of TikTok, which accused the company of violating China’s antitrust law by blocking Douyin’s content on its WeChat and QQ instant-messaging apps.
• Tencent is about to report its fourth-quarter earnings on Wednesday. The company is expected to report a 42% rise in its quarterly profit, according to Reuters, but analysts said the investor focus will be on regulatory developments.

Mimi Tao walked outside of her residential compound at seven in the morning as usual, but found that the driver had already dropped off the products at the front gate and left. After checking her order list and confirming all the products were accounted for, she hauled them all back to her garage and began the deliveries to residents on her list. There were cherries, apples, imported snacks, rice, and even handmade wontons from a local store in Suzhou. It usually takes Tao about two hours to complete the deliveries. 

Tao is the organizer of the group-buying platform Linxuanhaohuo for her residential development in Zhangjiagang, Suzhou in eastern Jiangsu province. She started the job in August 2018, after a friend’s recommendation. Tao works full time as an accountant as well. She says she usually spends four to five hours every day coordinating the orders and posting products on the WeChat group of 219 people she manages. 

“I am busier on Mondays, Wednesdays, and Fridays because I need to deliver products on these days,” Tao said (our translation). 

Tao is not the only person in the apartment complex who manages a community-buying group. She has a competitor in the compound—Maggie Xu, who works for another platform, the name of which roughly translates to Tongcheng Life. Xu’s group is double the size of Tao’s and the platform offers a wider variety of products. 

Group-buying platforms have their own mini programs on WeChat which customers use to place their orders. Each day, organizers post links in the chat group to products that are popular or are on sale. Xu usually starts putting product links in the group chat around 9 a.m. She first posts links for products on promotion, and then fruits. In the afternoon she posts links for snacks such as yogurt, sweets, and nuts, and then sometimes eggs. As Spring Festival approaches, gift boxes are also popular in the group. 

Resurgence of online fresh groceries

China’s grocery market is large—it is expected to be worth RMB 11 trillion ($1.8 trillion), the world’s largest, in 2023, according to research agency IGD. But it’s complicated—rather than a weekly trip to the supermarket, most Chinese consumers visit a variety of stores and marketplaces to stock their pantries.

Chinese companies from small to large have been trying to figure out how to sell groceries online for years. Venture capitalists fueled the craze by injecting hundreds of billions of yuan in the sector since its first boom around 2013.

The earliest attempts included asset-heavy approaches like Dingdong Maicai, which ran its own warehouses and logistics systems, and marketplace operators like Meituan and JD Daojia that offered delivery support for offline vendors.

However, within the broader online grocery category, selling fresh produce online has proven a hauntingly difficult task. Selling highly perishable goods with significant logistics requirements has driven more than a few fresh produce platforms out of business, from Amazon-backed Yummy77 to Xianpinhui. The most recent example is the collapse of Dailuobo, a grocery upstart that burned $92 billion in five months. 

China’s community-buying trend can be traced back to the early days on platforms like Meituan and Dianping, which offered Groupon-like deals. Community-based group-buying emerged around 2016 within chat groups on ubiquitous messaging app WeChat. The model gained momentum around 2018, especially in second-and lower-tier cities after WeChat launched its mini program ecosystem.

The Covid-19 outbreak changed Chinese consumers’ daily routine of shopping for fresh food and daily necessities offline. Although the behavioral shift boosted all businesses in the grocery delivery sector, community group-buying has taken off. One platform, Xingsheng Youxuan, has attracted investment from a number of tech giants, and was valued at $5 billion as of its latest round of funding led by Tencent. 

The group-buying model addresses the pain points of online grocery deliveries. Many group leaders themselves operate small mom-and-pop stores, which become informal hubs for such platforms. This saves on overhead costs such as running an offline storefront and expensive last-mile deliveries. Pre-ordering and overnight deliveries lower the attrition rate for fresh food compared with storing big piles of inventory at a nearby location to sell. Meanwhile, group leaders, motivated to acquire users through their own social networks for higher commission, help the platform save on user acquisition costs. 

The community group buy platforms are popular in second- and lower-tier cities in China, often outside of service areas for big-name online platforms such as Alibaba’s Freshippo. Some 85% of group leads for the community-based group-shopping model platforms are based in second-or lower-tier cities, according to a report (in Chinese) from Kaiyuan Securities.

Lower-tier cities and rural areas are also powering the next stage of overall e-commerce growth in China. Its shoppers are viewed as being more inclined toward social shopping experiences, given the quick rise of social e-commerce site Pinduoduo.

Bargain-hunting buyers

Unlike other sectors in China’s tech industry, there’s no big player monopolizing the community group-buy market. It’s more like a collection of stores, where customers place orders on different platforms according to what kind of products they want, such as fruit, seafood, or snacks. Some residents will buy eggs on one platform and cherries on another. 

For most of the buyers, finding a good deal is the main reason to join a community-buying group. Some residents in Zhangjiagang told TechNode that they have joined more than one group-buying platforms to compare prices. Customers aren’t loyal to a platform; what matters is the price of the product and how well the platform handles the order fulfillment.

Partially due to platform competition and partially because of consumer demand, group leaders have started to promote products from multiple platforms (in Chinese) within the WeChat groups they manage, and offline pickup centers serve several platforms.

Xu said her mother-in-law had used Duo Duo Maicai exactly twice to take advantage of the platform’s free gifts for new shoppers. Unlike many group-buying platforms that deliver products to customers’ front doors, Duo Duo Maicai opened offline stores outside of compounds for customers to pick up. 

“She hasn’t bought anything since then because there are fewer products on their platform and they don’t support home delivery service,” she said.

The community aspect

Discussions with neighbors who share the same interests is a reason for shoppers to stay active on one platform. 

Deng Chanling, a stay-at-home mom in Shanghai, became an organizer for group-buying startup MMchong after using the service for a year. When Deng moved to her new neighborhood in October 2019, the part-time job helped her to get to know her neighbors. She now knows most of her 200-member WeChat group from offline promotional events, she told TechNode.

The workload of less than 20 hours a week gives her a comfortable balance between a job and taking care of her son, who is in primary school. Deng earns around RMB 3,000 ($462) a month, and RMB 6,000 during peak holiday seasons, through the 10% commission she earns from her sales in exchange for promoting the products, using her space for product storage, and logistics services.

The income is far from sufficient to support a family in a metropolis like Shanghai, but good enough for the time and energy she invests daily, Deng said.

The company delivers the products to Deng’s home the morning after a group order is placed, every other weekday. “It usually takes me an hour or two to sort out the orders. My neighbors will drop by to pick up their orders in the afternoon.” she said. She only delivers the parcels to a doorstep if the order is higher than RMB 108. 

The part-seller, part-user role of the group leaders help the platform select what products to sell, a crucial factor in differentiating from rivals. MMchong constantly updates its product listings. Deng says she tests samples recommended by suppliers and gives her feedback as a user before the platform determines whether or not to sell it. 

Deng doesn’t rely on the job to make a living, but some co-workers do. There are group heads who earn monthly income of around RMB 15,000 by mobilizing the whole family. “In such cases, they are operating on a larger scale and can afford to rent their own pickup storefronts,” Deng said.

Scorching hot market

As the community group-buying sector grows in size, smaller group-buying platforms are feeling the pressure. Xu said the competitive market has affected her commission rate. When she first started in 2018, she would net around 10% to 11% commission on each product, but now she earns just 6% to 7%.

“Last year there were not so many group-buying platforms so we had a high commission rate,” she said. “Now, more platforms have joined and they give a lot of coupons and discounts to attract customers, so the platform ended up cutting our commission.”

At the onset of the group-buying war last year, tech giants that set their eyes on the model had been poaching staff from existing players like Xingsheng Youxuan and Nice Tuan by promising to double or triple their salaries for similar positions, according to local media. In one case, most of Xingsheng’s employees at a Wuhan delivery center jumped ship to Pinduoduo within two weeks, forcing the downtown center to suspend its business. 

Competition between platforms starts with suppliers, according to Deng, the MMchong group lead. “Our supplier for sweet corn, a top seller on our platform last year, says that they have already sold out this year’s harvest to higher bids,” she said.

A threat to offline markets, maybe

Experts expect group-buy platforms to eclipse grocery stores. “There’s no chance for supermarkets larger than 500 square meters to survive in the next year or two given the increasing adoption of community-based grocery e-commerce,” (our translation) Ye Guofu, founder and CEO of Chinese low-cost retailer and variety store chain Miniso, said in December.

Pinduoduo cited an estimate from Goldman Sachs: By 2025, nearly half of China’s grocery shopping will take place online, up from 20% currently, and reach about $1 trillion in sales.

For Xu, she hasn’t set foot in the neighborhood supermarket for a while. She believes group-buying will replace the offline supermarket one day.

“I can just order online and the products will appear at my door the next day,” she said. “The price is also cheaper, so why not?”

However, there is still a lot of uncertainty in the sector. 

The government summoned tech majors including Alibaba, JD.com, Meituan, Tencent, Pinduoduo, and Didi for a meeting in December. Regulators issued a list of restrictions on group-buying businesses, forbidding predatory pricing to beat out competition as well as falsely advertising discounted prices and posting misleading product information.

The move follows a few months after these companies pushed into the sector with rock-bottom prices for fresh groceries, charging RMB 0.99 (around $0.15) for a box of eggs and RMB 0.01 per 500 grams (around a pound) of cabbage. The state-run People’s Daily ran a commentary telling tech companies to focus on innovation for bigger benefits instead of “thinking about the traffic of a few bundles of cabbage and a few pounds of fruits.”

Using low prices to attract users is reminiscent of the subsidy wars seen in many industries, but particularly tech-related sectors, from ride-hailing to bike rentals. Such an early intervention from state regulators comes against the backdrop of intensifying tech regulation, but could also be a result of the importance of fresh produce and grocery, a sector considered too vital to the masses for hot money to mess up. 

Many people have relied on group-buying platforms for daily groceries, rivals to offline supermarkets that also stock standardized and durable goods such as packaged snacks and detergents.

But there are exceptions, including neighborhood wet markets that consumers in China still depend on for the day’s fresh vegetables. Freshness still outranks convenience for many shoppers, particularly older generations who would rather make the daily trip outside rather than risk allowing a platform employee select food for the family dinner.

Xu stopped posting links for vegetables to the group after many complaints about quality. Tao said one of the advantages of living in second- and third-tier cities is their proximity to the countryside, which means easy access to fresh vegetables and seafood. For Tao and her family, going to the wet market for vegetables is a deeply ingrained habit.

“Usually it’s my mother-in-law who buys the vegetables and she is more picky and wants to see them before buying them,” Tao said.

The People’s Bank of China has proposed new antitrust rules for non-bank digital payment companies, which are likely to pressure the duopoly held by Ant Group and Tencent over the market.

Why it matters: The rules set the standard for monopolistic behavior in China’s third party digital payment market. If implemented, they are likely to trigger regulatory scrutiny of Ant Group and Tencent.

• The move is part of a wider regulatory antitrust clampdown on tech companies and particularly on fintech, but it is the first to target the digital payment sector.
• Sources have told TechNode that Ant Group and Tencent’s online payment duopoly does not sit well with banks and authorities, but there had been little to no regulatory movement to curb their power.

READ MORE: CHINA VOICES | The unsigned op-eds that foreshadowed Ant Group IPO suspension

Details: The new rules set market share thresholds for the “confirmation of market dominant position,” which might trigger a regulatory review. If non-bank online payment companies exceed these thresholds, the central bank will consult with the antitrust watchdog to determine whether the company or companies have engaged in monopolistic behaviors.

• For a single third-party payments provider, the market share threshold is half of the market; two-thirds of the market for two providers’ combined share; for three providers’ combined market share, the limit is 75% of the market.
• If one of the multiple-party payment providers accounts for less than 10% of the market, it will not be included in the anti-monopoly review.
• Ant Group individually and in combination with Tencent exceeds these thresholds. Ant Group holds 55.6% of China’s market for digital payments, and Tencent accounts for 38.8%, a June 30 report from market intelligence firm iResearch said.
• The rules also set early warning thresholds, which are lower than the “confirmation” thresholds, and might mean key personnel is called in for interviews.
• The draft rules are open for comment until Feb. 19.

Context: Regulators have been trying to rein in big tech in the last few years. Regulatory efforts have intensified, however, since Ant Group’s initial public offering in Shanghai was abruptly halted in November.

• Sweeping antitrust rules were released in the days following the Ant Group listing fiasco. Soon after, Alibaba, an SF Express subsidiary, and a Tencent-backed platform were fined for failing to report acquisition deals for antitrust reviews.
• The central bank released a technical document to standardize the use of AI and big data in payment risk prevention on Jan. 4.

Pinduoduo backlash, again

The Shanghai-based e-commerce platform was denounced on Chinese social media for infringing on data privacy after a user accused the app of remotely deleting screenshots in his smartphone photo album without consent.

The user saved screenshots as evidence to support a complaint he made about the company. In a marketing campaign, Pinduoduo had promised a RMB 100 ($16) cash reward to users who invite a friend to the app. The user only received a small voucher after doing so.

Pinduoduo responded in a statement (in Chinese) that it deletes the original picture in its app if it is edited, causing an erroneous command to delete related photos in the user’s smartphone album. The firm pledged that it will no longer delete users’ original photos once they are edited. (Liehuw, in Chinese)

• On Jan. 12, Pinduoduo launched Duo Duo Maicai in Shanghai, highlighting the e-commerce giant’s big bet on expanding its community group-buying business into the more competitive markets in major metropolises. (21st Century Business Herald, in Chinese)

Luckin the franchise

Luckin Coffee announced a partner recruitment program on Monday, inviting franchisees in 22 provinces and autonomous regions, including Sichuan, Shanxi, Heilongjiang, and Jilin to join the coffee chain. The firm has continued its offline expansion efforts, especially to lower-tier cities, despite its management tumult.

Cities where Luckin already had a solid presence, such as Beijing, Shanghai, and most of China’s provincial capitals, are excluded from the program.

The company will not collect franchisee fees from the partners, but becoming a Luckin franchisee requires an upfront investment between RMB 35,000 to RMB 37,000 for storefront decoration, equipment, and deposit. (Luckin, in Chinese)

Upcoming Spring Festival

• Short video app Douyin has taken over from Pinduoduo as the sole red packet sponsor for this year’s CCTV Spring Festival gala in February, local media reported Friday. The Shanghai-based firm is facing a wave of negative media coverage after two employee deaths which many attribute to its compulsory overtime work schedule. (KrAsia)
• Alibaba’s Tmall kicked off on Wednesday the shopping season for Spring Festival holiday, which falls on Feb. 12 this year. Alibaba’s logistics arm Cainiao is setting aside RMB 200 million for delivery staff incentive pay for working during the holiday. (Ebrun, in Chinese)

WeChat levels up in e-commerce

• The gross merchandise value of WeChat mini program commodity transactions doubled in 2020, reaching around RMB 1.6 trillion in 2020 based on the RMB 800 billion GMV figure the company disclosed for 2019. (TechNode)

The amount of goods sold on digital storefronts accessed via instant messaging app WeChat doubled in 2020 as the mega social platform becomes an increasingly popular entry point for online shopping in China.

Why it matters: WeChat parent company Tencent is a rising challenger for the sector’s biggest players, including Alibaba, JD.com, and Pinduoduo.

• Mini programs are an important growth driver for apps, functioning as an entry point for Chinese mobile users to access online services, according to a Quest Mobile report published in July.
• The Covid-19 pandemic accelerated consumer adoption of e-commerce on WeChat and powered growth, as confined shoppers spent more time browsing and shopping on the app.

Details: The gross merchandise value (GMV) of WeChat mini-program commodity transactions doubled in 2020, the company announced Tuesday at its 2021 Weixin Open Class PRO conference held in Guangzhou.

READ MORE: Why analysts don’t trust GMV, and why they use it anyway

• GMV booked through the “lightweight” apps on the chatting platform reached around RMB 1.6 trillion ($247 billion) in 2020 based on the RMB 800 billion GMV figure the company disclosed for 2019.
• In comparison, Pinduoduo posted RMB 1.46 trillion GMV for the 12-month period ended Sept. 30, 2020. WeChat mini program GMV includes sales from lightweight apps belonging to other platforms including Pinduoduo.
• Daily active users for WeChat mini programs increased by a third to 400 million in 2020 from 300 million in 2019, out of WeChat’s massive pool of 1.2 billion monthly active users.
• There were  731 million annual active buyers on Pinduoduo as of end-September, and 757 million on Alibaba platforms as of June.
• Fast-moving consumer goods and fashion brands were among the platform’s categories that recorded the most rapid growth, with GMV surging from two- to five-fold.
• Per user, the number of mini programs used rose 25% and the average transaction value increased 67% year on year in 2020, according to the company.
• WeChat Search, the app’s built-in search function, saw its monthly active users exceed 500 million for the first time.
• WeCom, WeChat’s enterprise and work communication tool, serves more than 5.5 million organizations and has more than 130 million active users.
• The company is planning more integration this year between official accounts, mini programs, and its short video feature, Channels.

READ MORE: New Wechat e-commerce tools point to Tencent’s ambitions

Context:  First introduced in 2017, mini programs have become ubiquitous on many of China’s biggest apps, including Tencent’s QQ, Baidu, Meituan, Alibaba’s Alipay, and Taobao, as well as Bytedance’s Jinri Toutiao and Douyin.

Dalian, China—“1411 hours. The station is back in crisis. Once again, we cannot use the printer.”

A railway depot in the northeastern city of Dalian held China’s technically savvy readers in suspense—or, perhaps, stitches—with a minute-by-minute bulletin of its 20-hour “battle” to revert a Flash update on Jan. 15, which achieved brief viral fame before being deleted. Screenshots are still available on programming forum Github.

Depot staff were confused when their computers lost access to the local dispatch system on the morning of Jan. 12, according to the bulletin. The reason: Adobe’s last update to its Flash Player included a kill-switch set to go off that day, when the company ended support for the notoriously virus-prone web standard. Flash was little missed—except in the Chinese government, where it remains in widespread use. 

“0816 hours: After calls and online searches, we confirmed the source of the issue is American company Adobe’s comprehensive ban of Flash content.” 

So began the “insurmountable challenge of updating Flash”—a process the depot chronicled on its WeChat public account in the style of a military thriller, written with all the self-awareness of Dwight from “The Office.” As journalist Tony Lin, who first flagged the post in English, wrote on Twitter, it was “the Y2K content the world owes us for 20 years.”

The post was later deleted after catching on with technically minded online wags, many of whom asked why the depot didn’t plan for the retirement of Flash despite three years’ advance warning. 

The staff divided into hardware and software task forces, and attempted to restore an older version of Flash from a backup “GHOST system,” an effort marked by triumphs and defeats. By 10 p.m., they had mostly restored computers to backup states—when, suddenly, automatic updates caused the systems to disable Flash again.

According to a brief statement which later replaced the viral post, the issue was limited to newer computers in the depot and no trains were affected.

After midnight, the team began to chalk up lasting victories:

“Jan. 13, 0113 hours: ‘Wan Jia Ling station is fixed! Ling Ma shouted…we all gathered and confirmed. The room burst with cheers and applause.”

Finally, after 20 hours, the team had Flash up and running again on all its computers. Flush with victory, the author of the bulletin reflected on what they’d learned:

“During more than 20 hours of fighting, no one complained and no one gave up. The slim hope motivated each and every one and turned into the fuel to push forward. In the solving of the Flash malfunction, the depot displayed true initiative, innovation, and brilliance.”

All translations are TechNode’s own. Featuring contributions from hardware and regulations reporter, Wei Sheng.

Chinese tech giant Tencent continues its gradual push into e-commerce with new search and marketing features aimed at helping brands reach consumers on its giant messaging app, Wechat.

New Wechat features for marketers

Tencent is developing a new feature lineup to help narrow the distance between marketers and consumers, according to George Xie, head of consumer packaged goods planning for Tencent marketing solutions, at the Luxury Society Keynote Shanghai 2020 Summit on Thursday. Following Tencent’s acquisition of Chinese search engine Sougou, the search feature previously only accessible Wechat’s Discovery tab has been prominently placed within chat windows. In addition to in-app search, the firm released in mid-November a hashtag feature, which redirects users either from a chat window or a Wechat Moment post to the hashtagged topic for more information. Hashtags can refer to content in Wechat “Channels,” a short video feature that began testing livestream functions in October.

Wechat already offered a set of services for online marketing and sales. Wechat official accounts help brands push promotions and advertising campaigns while engaging with users. Mini programs allow content, often from official accounts, to link directly to a checkout page, and consumers can use Wechat Pay to make purchases without leaving the app.

Social DNA

Long seen a promising platform for e-commerce, Wechat’s massive monthly active user base of 1.2 billion has lured online marketers into using the app as a social touchpoint for advertising and promotions. Tencent is aiming to close the entire e-commerce loop on the app, to build out capabilities so it can offer brands a place to acquire, interact, and engage with users who then make purchases.

Wechat’s “social DNA” is a competitive edge for the company’s e-commerce push because “whenever there’s less re-direction [in the consumer purchasing process], there’s higher conversion,” Xie said.

Discovery and engagement is more natural when the user journey starts with content shared by friends or come from the brand’s officially registered Wechat mini-program stores, Xie added. References from friends or promotions from authorized stores are reassuring for Chinese consumers, who are very conscious of product quality and authenticity, he said.

READ MORE: Why Wechat mini-programs are the cutting edge of e-commerce

Tencent’s annual report showed that gross merchandise volume (GMV) booked through Wechat mini-programs surged to RMB 800 billion in 2019, making it the fourth largest online platform in terms of GMV, following Alibaba, Pinduoduo, and JD.com. GMV for sales placed through Wechat surged 210% year on year in the first eight months of this year, Xie said.

Retail sales via social commerce in China has significant growth potential, according to data from market intelligence firm Emarketer. Sales in the segment are expected to reach $242.41 billion this year and nearly double to $474.81 billion by 2023. Retail sales via social apps account for 11.6% of total commerce sales in 2020 and is expected to reach 14.2% by 2023.

The decade plan

Tencent, while a giant in the social and gaming sectors, has struggled to gain a foothold in e-commerce. Unsuccessful e-commerce ventures included Paipai and Yixun before the company retreated to merely holding equity in JD.com and Pinduoduo.

Wechat is spearheading Tencent’s e-commerce ambitions, but the company is wary of damaging user experience. Market watchers meanwhile have complained (in Chinese) about the company’s slow progress in e-commerce.

For Tencent’s e-commerce initiative to succeed requires a major change in consumer shopping habits. A majority of online shopping traffic still goes to platforms like Alibaba’s Tmall because “Chinese consumers have their habits to search and do their e-commerce purchases there,” Kim Leitzes, chief executive officer of marketing platform Parklu, told TechNode.

However, Wechat stores could work as an e-commerce option that provides a differentiated shopping experience or products for brands, she added.

Wechat Work for CRM

Enterprise communication app Wechat Work now has 250 million registered users as more and more brands use the app for customer relationship management (CRM), Xie said. Wechat Work allows brands and their sales associates to manage customer relationships in a decentralized fashion by creating and engaging with their private customer pool. At the same time, consumers using Wechat Work can be connected to the company’s CRM databases, allowing brands to retain a direct connection with customers without the need for a sales rep intermediary. The app also offers digital data analytics tools to help brands better allocate their resources.

READ MORE: WeChat Work will disrupt social selling

Golden Week shines

• Chinese tourists took 637 million domestic trips during the eight-day Golden Week, generating revenue of RMB 466.6 billion ($69.7 billion), according to data from the Ministry of Culture and Tourism. However, China’s battered travel market still has a long road to recovery. This year’s number of domestic trips was around 80% of last year’s figure, even with the additional day, while revenue was 70% of last year’s RMB 650 billion. Trip.com, China’s largest online travel platform, trumpeted lackluster wins to offset the downturn in its lucrative international travel business. (TechNode)
• China recorded RMB 3.7 billion of box office revenue from October 1 to 7, second only to last year’s RMB 4.5 billion during the same period, according to data from the National Film Special Fund Office. This year, the state mandated a 75% operating capacity for public places including theaters. China’s online ticketing services like Maoyan Entertainment and Alibaba-backed Taopiaopiao benefited the most from the surge. (Tencent News, in Chinese)
• China Union Pay recorded online transaction volume of RMB 2.52 trillion during the holiday, up 8.3% year on year. China’s centralized online payment clearinghouse Nets Union Clearing Corporation reported that daily transaction value during the holiday increased 47% from the previous year, a sharp deceleration from the 163% annual growth seen during last year’s holiday. The number of daily transactions increased by nearly 42% year on year during the holiday, down from 80% annual growth last year. (Mpaypass, in Chinese)

Bytedance enters cross-border e-commerce

• Bytedance, the owner of short video apps Douyin and Tiktok, is testing a cross-border e-commerce project named Fuxiang Haigou, which offers special sales for branded products from a dozen countries. The service is accessible through mini-programs on the company’s news aggregation app, Toutiao, as well as Douyin. (Ebrun, in Chinese)
• Shein, Chinese fast fashion app primarily targeting overseas markets, entered a partnership with Canada’s installment payment service Paybright as the Nanjing-based company continues to expand its global footprint. With annual gross merchandise volume of RMB 20 billion in 2019, the Chinese fashion retailer’s popularity among teen consumers in the US, Europe, and the Middle Eastern markets is on the rise. The company is reportedly aiming for a US IPO this year. (Newswire)

Tencent gears up for livestream e-commerce

• Tencent’s mega messaging app Wechat is reportedly testing on a select group of users a livestream function on Channels, the Douyin-like short video feature it launched in January. The feature does not support virtual gifting now but allows viewers to like and comment on the livestreams. The livestreamer can share the sessions in Wechat chat groups as well as their Moments newsfeeds. Integrating a livestream feature to Channels highlights Tencent’s ambition to tap into short video and livestream e-commerce business, creating a new facet for competition with Douyin and Kuaishou. (Sina Finance, in Chinese)

Alibaba vs. Miniso

• Taobao Deals, Alibaba’s take on Pinduoduo targeting China’s bargain-seekers, opened its first offline experience store on Friday, selling products from manufacturing partners for as low as RMB 1. The move helped promote an online shopping campaign on the low-priced shopping app from Oct. 10 – 31. The company reportedly plans to open 1,000 such stores within three years. Taobao Deals, also known as Taobao Tejia, said it had around 40 million monthly active users as of June 2020, growing rapidly after a major update in March. Meanwhile, Alibaba’s expansion to offline retail for low-price products competes with Tencent-backed household product brand Miniso. Miniso filed its prospectus with the US Securities and Exchange Commission in late September for a New York listing. (Ebrun, in Chinese)

Last week, US President Donald Trump took aim at two of the most internationally successful apps ever made by Chinese companies. After preaching about the national security risks posed by Chinese-made apps for months, he signed two executive orders on Aug. 7 that ban transactions with the owner of Tiktok and Wechat starting from Sept. 20. It looks like the US is now in the app bans game.

No one knows how the ban will be interpreted. It’s not clear if users who have already downloaded the apps would be prevented from using them, or if the bans will have effects beyond the borders of the US. But as the US continues to pursue its “clean network” policy, more bans may be coming soon.

The executive orders: The orders ban “any transaction”with Bytedance by a person or company under US jurisdiction, and any transactions with Tencent that relate to Wechat. The Secretary of Commerce will be tasked with identifying these transactions when the bans come into effect on Sept. 20.

What’s banned? Critics say the orders are “incredibly broad and vague” with little clarity on the  “transactions” that are banned until Sept. 20. But lawyers told TechNode that it’s possible to guess based on the law behind the order. 

• The key policy precedents are the 1977 International Emergency Economic Powers Act (IEEPA) and a May 15, 2019 executive order declaring a “national emergency” (the precondition for trading bans under IEEPA). 
• Clay Zhu, an attorney at Deheng Law Offices in California, told TechNode in an interview that the May 15 order, viewed broadly as targeting Chinese telecommunications equipment maker Huawei, defined transactions as “acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service.” If this definition is applied to Wechat, Zhu said, it would effectively be a total ban of the app. 
• A White House document, reported by Reuters, lists as banned “transactions” actions that include putting Tiktok on an app store, buying an ad on Tiktok, or accepting the app’s terms of service as a user.
• “We should assume companies have 45 days, and any further dealing with Wechat or Tiktok will require a license, which presumably will be denied,” Alex Capri, visiting senior fellow at the National University of Singapore Business School, told TechNode.

Best case: Greg Pilarowski, founder of tech-focused boutique law firm Pillar Legal, told TechNode that IEEPA may limit the president to blocking financial transactions—so it could be that Wechat Pay and perhaps Tiktok ads are blocked, while the apps survive.

More likely: The White House is aiming for a total ban on the apps in the US, Pilarowski said. Even if the law is disputable, the Commerce Department will likely order the apps removed from app stores, which would put pressure on Apple and Google to comply.

Jump the wall? In the event that apps stores are forced to de-list the apps, would users be blocked from using them? The US probably can’t block the apps the way China blocks many foreign apps—but the apps could block themselves.

• Tiktok already blocks users in Hong Kong, China, and India based on SIM card nationality as well as IP address, meaning a VPN alone doesn’t allow users to access the app. 
• Wechat has also begun blocking users in India in response to that country’s app ban.

Worst case: The US tries to enforce these app bans beyond its borders, as it is doing with the ban on exports to Huawei. In such a scenario, the ban could prevent Starbucks from accepting Wechat Pay in China—or force the Apple App Store and Google Play to de-list globally.

• Experts think these scenarios are unlikely, as they would hurt US businesses more than they hurt China.
• Pilarowski wrote in an Aug. 12 paper that a ban on US retailers accepting Wechat is very unlikely. The Wall Street Journal reports that major US retailers are lobbying the president against such a ban.
• If forced to de-list the apps globally, Apple would have no future in the Chinese market. Apple is a beloved brand in China—but Wechat is as essential as oxygen for digital life. Analysts argue this makes de-listing in China very unlikely.
• Since Google Play is already blocked in the country in favor of domestic app stores, this scenario would have much less effect on Google phones.

What options do Tiktok and Tencent have?

1. Sell: Bytedance is in talks with American companies to sell Tiktok. This would save the company from more losses, though it might not be a good deal for the company. There is no sign that Tencent is going to sell any part of Wechat. The company may just give up the US market, where it has roughly 19 million daily active users.
   
   Bytedance has until Sep. 15  to make a deal with an American company. Microsoft already confirmed that it had held talks with Bytedance to buy the American, Canadian, Australian and New Zealand operations of Tiktok. CNBC reported that the deal could costspend Microsoft between $10 billion and $30 billion.
    
2. Sue: Bytedance is also seeking to challenge the executive order in court. The company said it would argue that the executive order is unconstitutional because it did not give the company a chance to respond. Tencent hasn’t yet taken legal action, but a group of American Chinese Wechat users said they would file lawsuits against Trump’s executive order involving Wechat, arguing that the executive order goes against provisions of the US Constitution and the Administrative Procedure Act.

But the courts move slowly, and the chance of rulings before the Nov. 3 election are close to nil. Even if the companies eventually win, Pilarowski said, the bans will accomplish their political goals for the president. “It doesn’t matter if he has the authority to do this, or he doesn’t have the authority to do it, he’s got what he wanted. It’s one more data point in this administration being tougher on China than any previous administration in the United States.”

For Bytedance, the executive order means more than just losing Tiktok.

• Hiving off part of Tiktok’s regional operations means there will be two independent versions of the same social media app. In that case, if Microsoft wants American teenagers to be able to view videos uploaded by Japanese or British ones, it would have to seek approval from Bytedance, which may run into conflict with Trump’s executive order, as The Economist noted.
• For Bytedance, if it has to sell the Anglo-Saxon part of Tiktok, it still owns the European, Japanese, and Southeast Asian markets. India just banned Tiktok, and Bytedance is in talks with Indian conglomerate Reliance for a potential investment to save the app’s operation in the country, TechCrunch reported Wednesday. 
• Bytedance also operates Douyin, which is often seen as the domestic version of Tiktok, in China. The app has more than 400 million daily active users.
• Tiktok’s break-up will also put a dent in Bytedance’s valuation, which reached $140 billion earlier this year. Several investors said the company’s price tag is under “tremendous pressure” as it set to lose part of Tiktok.

Tencent, however, seems sanguine. The company publicly downplayed the importance of the US market to its global businesses in an earnings call Wednesday, as it reported robust second-quarter results.

• “The US represents less than 2% of our global revenue. Within that, advertising in the US should be less than 1% of our total advertising revenue,” James Mitchell, Tencent’s Chief Strategy Officer, said during the earnings call. 
• The executive order only covers US jurisdiction, meaning US companies selling to Chinese markets will still be able to advertise on Tencent’s platforms in China, making it even less likely that the ban will weigh on ad revenue, according to Mitchell.
• The company said its operating profit in the second quarter increased 38% year on year to RMB 37.63 billion ($5.32 billion).
• Industrial observers seem to agree with Tencent’s argument. Shenzhen-based broker Guosen Securities on Monday maintained a buy rating on the Tencent stock. A full exit of Wechat from the US market will have little impact on the company’s revenue and social media ecosystem, said Wang Xueheng, analyst at Guosen Securities.
• But nevertheless, shares of the company have dropped by 8.2% since the announcement of the order last Thursday.

A silicon curtain? The executive orders came a day after the US Secretary of State Mike Pompeo escalated the tech war with a new initiative. He promised to purge US networks from Chinese technology under the “Clean Network” program.

• The US will work to stop Chinese cloud providers like China Mobile, China Telecom, Alibaba, Tencent, and Baidu from storing and processing vast amounts of data from US citizens and companies, according to Pompeo. The State Department aims to keep sensitive personal information and key intellectual property, such as Covid-19 vaccine research, away from Chinese companies, he said.
• Capri also warned that the administration’s “Clean Network” program could target cloud computing next. “The big question is, how far is the administration going to go, and is Alibaba next?” he said. 

The setbacks faced by Bytedance and Tencent also came as Chinese President Xi Jinping is promoting a new strategy to speed up China’s shift toward more reliance on its domestic economy. The initiative, translated as “domestic circulation,” encourages companies to prioritize domestic consumption and markets. Chinese officials said the strategy is gaining urgency as Chinese companies such as Huawei and Bytedance face increasing resistance in overseas markets, according to the Wall Street Journal.

• TechNode reporter Chris Udemans wrote that Chinese corporate investors including Alibaba, Baidu, and Tencent already started to retreat from the US even before the August orders.

But experts say this will not be the end of Chinese tech companies’ global expansion, nor does it mean Chinese companies will have to focus only on the domestic market.

• “The recent developments are forcing Chinese tech companies to change directions when expanding into overseas markets. They may go to Southeast Asia, Africa, and Europe,” said TechNode founder and CEO Lu Gang. 
• Lu suggests that companies with apps that can influence users’ thinking, or collect personal or business data, may face more difficulties in the overseas markets. He says that’s why the US targeted companies like social media app Tiktok and telecoms company Huawei and artificial intelligence firm Iflytek.  He added that people in overseas markets may have more concern for Chinese AI firms because of non-technical factors.

The hostility Chinese tech companies are facing in the US may also have an immediate impact on how startups and venture capital firms raise money, said some VC investors.

• “In the short term, Chinese VC might be more skeptical about startups that tend to expand to US or European markets because of tense international situations,” Xu Miaocheng, investment vice president at Beijing-based VC firm Unity Venture, told TechNode.
• US dollar funds have more pressure, and it’s a difficult time for them to raise money from their backers at the moment, said Xu.

A future of ‘splinternets’? The executive orders against Tiktok and Wechat don’t mean the end of Chinese tech companies’ global expansion, but further restrictions are expected to come. With China’s long-standing Great Firewall, and the addition of the US’ new “Clean Network” program, we are now closer than ever to a world with two different internets.

Read more:

• Understand the law: “POTUS bans Wechat” (Pillar Legal)
• The view from the boardroom: “Corporate America worries Wechat ban could be bad for business” (Wall Street Journal)
• Where is this ‘Clean Networks’ stuff going? “The strategic vision behind the Tiktok, Wechat bans” (Lawfare)

Additional contributions by David Cohen

Across China’s social media platforms, commentators agree on one thing: Bytedance better buckle up, because the US isn’t backing down anytime soon.

That might be their only point of agreement. Some suggest that Bytedance and others should take the high road and still champion globalization, but some others think it’s time to knuckle down. Some don’t rule out a Tiktok sale, and some are adamantly against it.

And they reach for different points of comparison too, some less familiar to Western audiences. What comes to mind when you think about Bytedance’s current predicament? Is it 1980s Japan? How about the Battle of Shangganling during the Korean War?

To give you an insight into what Chinese netizens are sharing, TechNode’s selected and translated some of the most popular Weixin and Weibo posts that have emerged over the past week.

A little déjà vu

For some commentators, what’s happening to Bytedance isn’t new. On microblogging platform Weibo, Ryo Takeuchi, a Japanese film director who lives in Nanjing, received over 100,000 likes for his comment (in Chinese) about 1980s Japan:

In my memory, Sony, Panasonic, and other companies were often chastised, and what we Japanese took for “self-improvement,” Americans took for ‘piracy.’ Afterwards, the US government started to use all kinds of methods to control and critique Japanese companies and the Japanese government. When I saw the news that Microsoft was suspending negotiations on purchasing Tiktok’s US business, I suddenly thought of that Japan, more than 30 years ago.

Meanwhile, Taiwanese comic artist “Lao Pei” saw some parallels with the fates of Alstom and Toshiba, in a comic (in Chinese) shared on Weibo by several users (3,500 likes):

Bytedance’s Zhang Yiming: ‘Too quick to kneel’?

Despite his predicament, Bytedance CEO Zhang Yiming has received startlingly little sympathy, with commentators accusing him of being naïve in adopting an apolitical “Martian perspective,” or of “kneeling too fast” in agreeing to sell Tiktok to Microsoft.

In a Weixin article (in Chinese) on “The frightening Zhang Yiming and his views on friendship!” Li Tongwei also notes a lack of support from Zhang Yiming’s colleagues compared to a 2018 episode with Lenovo (57,000 reads):

In recent days, there has been an unceasing stream of news about Tiktok meeting with unjust treatment overseas, but China’s domestic entrepreneurs have maintained a rarely seen collective silence. 

This is a vast difference from 2018, when Lenovo was accused of being “unpatriotic,” Liu Chuanzhi expressed his fury, and then half of the corporate community voiced their support.

As far as the eye can see, Bytedance seems to have no friends.

One other commentator, Wen Boling, has a bit more compassion for Zhang Yiming. Wang sees Zhang as soft, but typical of his generation’s entrepreneurs. In a Weixin article (in Chinese) “The Tiktok Affair: Scholar Zhang Yiming and Gangster [shehuiren] Trump,” Wen contrasts Zhang’s generation unfavorably with Huawei CEO Ren Zhengfei, and his reaction to his daughter’s detention in Canada (38,000 reads, 1,300 reactions):

Precisely because they knew what they were up against, Huawei and Ren Zhengfei steeled themselves to shoulder the burden till now, becoming heroes in Chinese people’s hearts. Huawei’s phones became patriotic products, and their sales volume steadily rose.

In the Tiktok incident, Zhang Yiming also had his chance to be a hero.

But his repeated concessions willfully cast away this opportunity, so not only does he lose money on his US business, he’s also gained a bad name in China.

‘Abandon your fantasies, and prepare to fight!’

Meanwhile, author “Xiaoxiang Sanren” sees a different generational divide on the other side of the Pacific: one between older doves and younger hawks in the US, which makes growing conflict inevitable. Xiaoxiang Sanren’s Weixin article (in Chinese) is, fittingly, titled “Bytedance: understand the terrain, abandon your fantasies, and prepare to fight!” (13,000 reads)

With the passage of time, there are fewer and fewer “old friends of the Chinese people.” Kissinger is 97 years old, and Bill Gates is 65—aged and marginal.

Long-time anti-China US Senator Marco Rubio is just 50 years old. And Zuckerberg? 36 this year, even younger than Zhang Yiming. You can imagine that Rubio and Zuckerberg will remain active in US government and business circles for quite some time, and their antagonistic attitude toward China will be hard to change.

Better to just get it over with, rather than prolong the agony. With the circumstances too strong to fight, abandoning the US market is perhaps a choice that Bytedance has no option but to confront.

But then, should Bytedance sell Tiktok to Microsoft? Absolutely not, writes “Xiaoxiang Sanren,” because this will threaten Bytedance’s business in China and elsewhere. “Death is coming anyway, so you might as well go down fighting.”

That hardline stance isn’t unique among Chinese commentators, and “The Talented Shui Mujun” goes for an even more military comparison in the most popular Weixin article we found (in Chinese), “The US is robbing Douyin in broad daylight, and the darkest hour is here: you can’t even imagine how much trouble China is in!” (over 100,000 reads, 36,000 reactions).

The article compares Bytedance and Huawei’s predicaments to the Korean War’s Battle of Shangganling, a bloody battle in which Chinese troops successfully repulsed UN forces at the cost of thousands of lives, later mythologized in a Chinese war movie.

Someone once said, “Huawei is the ‘Battle of Shangganling’ of the current US-China relationship. Only if we win a victory in this Battle of Shangganling will the US sign a peace agreement with China.”

Shangganling is just a little hill in North Korea, barely 3.7 square kilometers in size, truly insignificant.

But if you can’t hold onto Shangganling, then what about other mountains?

Should you lose a single inch of elevation, then all that’s left is to retreat again and again in defeat.

‘Stay cool, and don’t be biased’

But there are more moderate voices too. In a more philosophical piece (in Chinese), “Bytedance and Tencent’s Question of Destiny: What is America?” (57,000 reads, 1,700 reactions) blogger Lu Shihan ponders the contradiction between a US that is a “universal beacon” of freedom and democracy, and a US that is a “capitalist country full of discrimination.”

Both are real, Lu Shihan concludes—but lamentably, the first one disappeared thirty years ago. Now, China must ride out the convulsions of a declining US, but stay true to the spirit of globalization that the US once epitomized.

Globalization still brings us benefits, so we must guard against being biased by narrow-minded populism into confrontation and a new Cold War.

In actuality, everyone basically understands that time is on our side, and as long as we keep steady, what comes next will naturally be a new era. But the next few months are the danger zone, and Trump will probably continue to flail rabidly at US-China relations. We must stay cool and not be biased.

From this perspective, I believe that, be it Bytedance, Tencent, or yet another Chinese enterprise, when shut out and sanctioned at the administrative level, it is still inadvisable to play the nationalist card and intensify confrontation.

Put another way: we’ve shouldered this burden for decades. Don’t lose it at the last moment.

For Zhang Yiming and Bytedance, who’ve set their sights so firmly on globalization, the reality of being caught between two countries must be painful.

Surely, though, the most crushing part is the possibility that they’ll disappoint both.

Tencent saw one of the fastest-growing quarters in years in both profits and revenue during the second quarter, largely due to a surge in the mobile games income and despite the Covid-19 pandemic and the US-China tech war. 

Why it matters: Tencent is one of the world’s largest companies, and its second quarter stats show that even geopolitics can’t slow down the juggernaut. The company’s focus on online gaming and investments in multiple regions and sectors helped Tencent defy expectations and increase profits. 

Details: A decline in media advertising revenues weighed on Tencent’s growth this quarter even as popular mobile games brought in the big bucks, according to its earnings release. A US ban on Wechat transactions is not expected to slow revenue from gaming, the company’s biggest source of revenue.

• Tencent’s operating profit in the second quarter increased 38% year on year to RMB 37.63 billion ($5.32 billion), compared with 26% year on year growth to RMB 27.52 billion ($4.00 billion) in the same period a year ago.
• Revenue increased 29% on an annual basis to RMB 114.88 billion ($16.23 billion), well past the $16.00 billion estimate compiled by Zacks Equity Research.
• Online game revenues grew 40% year on year to RMB 38.29 billion, driven by growth in revenue from mobile games including “Honor of Kings” and “Peacekeeper Elite” in both domestic and international markets.
• Social network revenues increased 29% annually, largely due to digital content services like Huya, a game-streaming platform Tencent owns a controlling stake in. 
• Media advertising revenues fell 25% year on year in the second quarter. Tencent cited “lower advertising revenues from Tencent Video as a result of weak brand advertising demand amid the challenging macro environment, as well as delayed content production and releases.”
• Tencent said that it does not expect Trump’s executive order banning Wechat transactions to materially weigh on its future growth. 
• “The US represents less than 2% of our global revenue. Within that, advertising in the US should be less than 1% of our total advertising revenue,” James Mitchell, Tencent’s Chief Strategy Officer, said during the earnings call. 
• According to Mitchell, the order only covers US jurisdiction, meaning US companies selling to Chinese markets will still be able to advertise on Tencent’s platforms in China, making it even less likely that the ban will weigh on ad revenue.

Pinduoduo has rolled out a Wechat-based mini program that focuses on creating an online fashion shopping community for China’s younger consumers.

Why it matters: The new mini program is Pinduoduo’s latest move to increase user engagement by boosting social interaction.

• The platform’s growth is slowing: Active buyers in the 12-month period ended March 31, 2020 totaled 628.1 million, a year-on-year increase of 42% compared with 50% annual growth in the same period a year earlier.
• Pinduoduo is competing with fashion community incumbents in the sector such as Xiaohongshu or Red, Dewu, formerly Poizon, and Nice.

READ MORE: Sneakerheads are China’s latest set of unlikely blockchain users

Details: Shanghai Xunmeng Information Technology Co., Ltd., Pinduoduo’s China-based operating body, rolled out last week Duochao, a fashion and lifestyle mini program on Wechat, local media reported on Monday.

• Duochao is an online community where fashion enthusiasts can post their favorite items via the platform’s central content feed, as well as share their passion for street fashion, from sneakers to clothing and accessories.
• The mini program does not have e-commerce functionality at this stage, though it is widely expected, according to local media.
• Seventeen fashion brands including Nike, DC, Y-3, and Fog have launched official accounts on the platform.
• For now, Duochao does not have a standalone app or website. The program is currently not accessible through Pinduoduo’s main app.
• With the new mini program, Pinduoduo is tapping its popularity with China’s younger consumers. A massive 78% of Pinduoduo users are under 35 years old, according to data from Iimedia (in Chinese). The 24-and-under segment accounts for 24% of the total user base.

Context: Pinduoduo founder Colin Huang just left the board of Shanghai Xunmeng on August 3, one month after he abdicated the position of CEO to focus on the e-commerce giant’s long-term strategies.

US President Donald Trump’s executive orders banning transactions between US citizens and Chinese entities Wechat and Bytedance are about to be challenged in court, with short video platform Tiktok planning to file a federal lawsuit as early as Tuesday while a group of Chinese American lawyers announced it would file multiple lawsuits to challenge the Wechat ban.

Why it matters: Trump’s executive orders, announced late Thursday, aren’t just pitting the White House against Chinese companies: it puts the administration on a collision course with US consumers. It may also be illegal, according to the US Wechat Users Alliance.

Read more: US Wechat ban will mean more than lost connections

Details: Tiktok will argue that the executive order is unconstitutional because it did not give the company a chance to respond, and that concerns about Tiktok as a national security risk are “baseless,” according to an NPR report.

• In a statement released August 7, Tiktok said it was “shocked” by Trump’s order. “This Executive Order risks undermining global businesses’ trust in the United States’ commitment to the rule of law,” the company said. 
• A group of Chinese American lawyers announced (in Chinese) on August 8 that it would file lawsuits after “multiple rounds of discussions” in the close-knit community about the Trump’s executive order involving Wechat. Some of the lawyers formed a non-profit organization, US Wechat Users Alliance, to assist fundraising efforts to file suits in multiple locations. 
• They will argue that the executive order goes against provisions of the US Constitution and the Administrative Procedure Act, according to the announcement.
• Clay Zhu, an attorney at Deheng Law Offices in California who is involved with the litigation efforts, told TechNode that the term “transaction” used in the Wechat order refers to a previous executive order from May 15, 2019. That order, focused on securing the US technology supply chain, defined transaction as “acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service.” 
• If the May 2019 definition of “transaction” is applied to Wechat, Zhu added, it would effectively be a total ban of the app. 
• The group hasn’t yet filed any suits, but California or Washington state are top choices due to their more liberal courts and judges favorable to the issues they will raise, Zhu said.
• “We understand that Wechat is a flawed app. We can choose not to use it, but Mr. President has no right to make this choice on our behalf,” the announcement said. 

“Trump’s reasons for doing this are not well articulated and there’s been no testing of his reasons. He says Wechat violates our national security—how? Where’s the evidence? This needs to be investigated by the courts.”

—Angus Ni, attorney at AFN Law involved in the litigation against Trump’s executive order, to TechNode on Monday

Context: Anti-China rhetoric from the US government is solidifying into plans to keep Chinese tech out of the US. 

• Wechat has 19 million daily active users in the US, and Tiktok has over 100 million monthly users in the country.
• A US State Department-initiated program announced on August 5 dubbed the Clean Network would purge made-in-China tech from US networks. 
• Huawei, a long-time target of the Trump administration, was placed in May 2019 on a list of foreign firms deemed a risk to national security.

Analysts are optimistic about Chinese tech and gaming giant Tencent despite a Huawei-like sanction from the US government imposed last week, with one saying that it may instead end up hurting Apple’s Iphone sales in China.

Why it matters: The lack of detail in the Trump administration’s sudden ban on Thursday of transactions involving Tencent’s mega messaging app Wechat has sowed widespread confusion. But analysts are optimistic about the company’s future performance even considering a worst-case scenario.

• Tencent said it was still “reviewing the potential consequences” of the executive order on Friday. A company representative declined to provide further comment on Monday.

Details: Shenzhen-based broker Guosen Securities on Monday maintained a buy rating on the Tencent stock because it said that the Trump administration’s ban on Wechat will have little impact on revenues from Tencent’s social media business.

• Tencent’s non-gaming revenue in the US only accounted for 0.4% of the company’s total revenue in 2019 and Wechat’s full exit from the US market will have little impact on the company’s revenue and social media ecosystem, said Wang Xueheng, analyst at Guosen Securities.
• The executive order means American companies will be banned from advertising on Wechat and individuals in the country will not be allowed to make payments via Wechat, the analyst wrote in a note (in Chinese) on Monday.
• There is little possibility that Apple will be ordered to remove Wechat from the China App Store, he added.
• Iphone analyst Ming-Chi Kuo of Hong Kong-based TFI Securities said Sunday that the popular Apple Iphone will be hit the hardest as a result of the US ban on Wechat.
• Wechat’s popularity in China is so established that Kuo expects that Apple will see its Iphone shipments decline by 25% to 30% year on year if it is required to remove Wechat from the global App Store. The decline, he added, will primarily be driven by a potential dropoff Iphone sales in China.

Context: The Trump administration said Thursday it would bar individuals and companies within US jurisdictions from making transactions with Tencent and Bytedance, the owner of Tiktok, in 45 days.

• The executive orders come a day after the US Secretary of State Mike Pompeo escalated the tech war with a new initiative. He promised to purge US networks from Chinese technology under the “Clean Network” program.

“I never believed or worried about a Wechat ban,” my mother remarked after sending it to me.

“So why did you send me that guide?” I asked.

“Just in case,” she replied. “I mean, Trump would do anything to better his chances for a reelection.” 

Beneath her feigned nonchalance I noted a familiar anxiety we share. 

Yesterday’s executive order from US President Donald Trump, banning “transactions” with Tencent that relate to Wechat, will certainly change her tone. It’s no longer possible to dismiss these fears and paranoia.

Is a Wechat ban likely?

Over the years, Wechat has grown from a simple mobile messaging app to a sprawling super app on which people conduct business, consume content, make monetary transactions, and live their lives. But at its core, it’s about connections between people.

The first blow to Wechat’s global network came from India. On June 29, the Modi government banned Wechat, along with 58 other Chinese apps, in response to tensions in the China-India border. 

After weeks of deliberation, the US launched its own assault with Secretary of State Mike Pompeo’s newly unveiled “Clean Network” initiative, and a freshly released Executive Order that takes direct aim at Wechat. A potential US-based Wechat ban looms darkly as US-China relations traverse increasingly choppy waters.

READ MORE: Techwar: Trump to end transactions with Tencent and Bytedance in 45 days

While discussions of scrubbing China’s digital presence from American networks are still in the conceptual stages, the legality of implementing a sweeping ban remains dubious. Kevin Xu, a seasoned political organizer and a tech startup advisor based in California, offered a measured perspective on what may come to pass, prior to yesterday’s executive order.

“Chances of some sort of ban on Wechat before the election is higher than 50%, but it will likely be partial, for example, banning all Federal employees and/or contractors who do business with the Federal government. It’s hard to know the legality of such a ban, but it’ll likely be made on national security grounds, which has a wide legal leeway.”

In India, Tencent cooperated with the ban, without arguing about its legality. On July 27, the company stopped providing services to India-based users. Will it behave the same way with the US, or mount retaliatory actions? Right now it is impossible to say.

In whatever form it will take, the Wechat ban stands to make a quick splash in the media cycle, allowing President Trump to claim a hollow victory against China while fanning the flames of nationalism in his desperate bid for reelection. 

The Chinese government would of course be no worse for wear, it’s the Chinese diaspora in the US who would stand to suffer most under this senseless punishment, depending on how the situation plays out.

Wave of anxiety 

Even after reading the new Executive Order from the White House, I don’t really believe a comprehensive Wechat ban will come to pass in 45 days.The dangerous precedent such a move would set will certainly not go unchallenged by lawmakers and business leaders. 

But then again, a few months ago I didn’t think a US consulate in China and a Chinese consulate in the US would be shut down within a week, yet here we are. Perhaps I’m still in denial about the new state of affairs.

A ban on Wechat is increasingly likely, but still a ways off. This hasn’t stopped a wave of anxiety from spreading, not only among members of the Chinese community in the US but the Chinese diaspora elsewhere as well.

On the same day I received my mother’s Wechat backup guide, a family friend who lives in Paris phoned me, frantic that she would lose contact with her family in the US. My aunt in Shanghai, whose only daughter lives in San Francisco, asked me for recommendations on alternative messaging platforms.

As we wait for the boot to drop, we don’t know whether families will lose contact, if precious conversation logs will be lost, or if communities will unravel—all for the sake of a political stunt. 

At a time when international travel is nigh impossible, our digital bonds become all the more precious and vulnerable. For many Wechat users in the US, it is the only thing that links them with loved ones they may not have seen for months, and may not know when they can finally reunite with. It is an extraordinary cruelty to sever these links at a time when we must lean on these technologies that span the distance we physically cannot travel.

A Chinese American researcher who asked not to be named uses Wechat to connect with her large extended family in Beijing, and to update them on her pregnancy. “A Wechat ban would devastate my grandma,” she told me. “She’s already so worried that I will give birth here while the pandemic is not under control.”

In the event of an all-out Wechat ban, users may still find a way around it. Chinese internet users are famously resourceful, owing in no small part to having to navigate the heavily censored digital landscape of China. Using a VPN, or switching to alternative platforms such as Line and Whatsapp are viable contingency options. 

READ MORE: Techwar: US wants to rid its internet of Chinese technology

One may even see a silver lining in all of this. Since Wechat content is regularly monitored and censored by the Chinese government even when users are abroad, switching to a new platform would afford them more privacy and freedom to discuss sensitive topics.

But there’s little point in recognizing the inadvertent upsides for anyone who must involuntarily stop using Wechat, especially given the implications—rising political volatility will bring further infringements upon personal liberties. 

Straddling nationalities 

As the Chinese diaspora’s ability to connect is jeopardized, their relationship with the US grows more fraught. 

For many, there is no end in sight. “What happened to this ‘lighthouse nation’ (referring to the US’ status as a beacon of liberty)? Ban Chinese apps today, ban Chinese people tomorrow?” asked one commenter on CReader.net, a popular overseas Chinese news aggregate and forum.

“Normally I would believe that the government has some kind of bottom line, but Trump doesn’t even care if he is making America a laughing stock to the entire world,” Zhou, a scientist at Columbia University who only gave her surname, told me over Wechat.

The tension between the US and Chinese governments will almost certainly lead to harsh demands for the Chinese diaspora in the US to demonstrate loyalty, something former Democratic presidential candidate Andrew Yang advocated for in the face of growing anti-Asian sentiments. 

But this is an impossible and humiliating choice for those whose lives and identities straddle nationalities, and it would accomplish nothing. If President Trump believes continually demonstrating open hostility to all entities of Chinese origin will win him votes, he will not stop at a WeChat ban.

For now, there’s little to be done except dutifully go through the 17 steps it takes to download Wechat data, and anxiously await what comes next.

Chinese search engine Baidu Search and social media platform Weibo were blocked by internet service providers and removed from Google and Apple app stores in India on Tuesday, the latest of the total 106 total Chinese apps shut down in the country in recent weeks.

Why it matters: High-profile tech bans are escalating political tensions between India and China. Though Baidu Search and Weibo aren’t very popular in India, they are a symbol of the country’s rejection of Chinese tech. The US and Japan are also considering bans against various Chinese apps, most prominently Bytedance-owned Tiktok. 

Read more: Does India need China tech?

Details: The latest app bans followed a similar playbook to an earlier round: With little warning, Indian users are cut off from the platforms. 

• The Indian government publicly released a list of 59 banned Chinese apps on June 29, and announced a second list of 47 Chinese apps on July 27. Wechat and Weibo were on the first list, along with Baidu Map and Baidu Translate. 
• Though the July list has not been made public, the Times of India reported that it contains “clones and different versions of some of the original apps,” including Baidu Search. 
• The ban has yet to be evenly applied. TechNode contributor Hamsini Hariharan was still able to see the Baidu app in the Indian Android app store and use the search engine, but the Weibo app was no longer listed. 
• Baidu once had high hopes for its Indian market. CEO Robin Li visited the Indian Institute of Technology in January 2020 to discuss his desire to “partner with local institutions for innovation.”
• Launched in 2009 by Sina Corporation, Weibo has 500 million global registered users. Indian Prime Minister Narenda Modi joined the social media site in 2015. His account, with over 244,000 followers, was deleted on July 1. 
• Baidu, founded in Beijing in 2000, launched its India office in New Delhi in 2015. Baidu said it had 45 million monthly active users in India across all its products in September that year. 
• Baidu Search hasn’t made the same headway in India as in China where it claimed 68.7% share of the Chinese search engine market as of February 2020. In India, Google is dominant with nearly 100% of the search engine market.

Context: India’s nearly 700 million internet users were once seen as the next frontier for Chinese tech but sentiment from the government towards China’s biggest tech companies has cooled as political tensions heat up.

• Tencent’s Wechat was blocked in India on July 27, stranding both Chinese expat and Indian users. TechNode previously reported that even virtual private networks (VPNs) could not guarantee access to the app. 
• Tiktok was removed from Android and Apple app stores in India, its second-largest market, on June 30. Despite Tiktok’s popularity in India, the ban of Chinese apps followed rising nationalist sentiment in India. 

Chinese online to offline giant Meituan has suspended Alibaba-backed payment tool Alipay as a payment option for some users on its services super app.

Why it matters: While not the first time it has suspended Alipay payments, Meituan’s move highlights efforts to fend off competition from the payment platform, which is moving into the local services sector—the company’s home turf.

• As the competition intensifies, China’s tech behemoths are raising the walls surrounding their respective ecosystems by blocking services from rivals or offering more benefits to ensure user loyalty.

Read more: Explainer: China’s tech ecosystems and the barriers between them

Details: Some Meituan users discovered on Wednesday that they were unable to pay with Alipay when placing orders for food delivery services on the app, Chinese media reported.

• The food delivery giant supports a range of payment options including its proprietary Meituan Pay, as well as Wechat Pay, Apple Pay, and payment services provided by Chinese banks.
• Only one out of around a dozen Meituan users TechNode reached out to on Thursday was unable to use Alipay on the Meituan app. How the company selects users is unclear.
• Meituan did not immediately respond to a request for comment.
• The move could indicate that the suspension will widen to more users, although it appears to only affect a small group of users as of Thursday afternoon.
• Meituan founder Wang Xing asked (in Chinese) in a social media post on Thursday, “Why doesn’t Taobao support Wechat Pay? It has more active users and lower transaction fees” (our translation) in a post on Fanfou, the social media platform he founded.
• An informal online poll in an online news story about the move gauged netizen sentiment on the tactic: 53% out of nearly 12,000 respondents said the move wouldn’t affect their lives, while 47% said it would have a great impact.

Context: Alibaba, which still holds a 1.48% stake in Meituan, was an early investor in the company. But the relationship between the two companies soured after Meituan joined rival Tencent‘s camp in 2016.

• The rivalry heated up after the e-commerce giant acquired food delivery platform Eleme in 2018.
• Alipay parent Ant Financial announced in March a plan spanning the next three years to build a digital ecosystem. The payment app aims to expand beyond financial services into a platform featuring third-party service providers which provide other lifestyle conveniences for its users.
• Ant Group, Alibaba’s fintech affiliate, plans for dual listings on Shanghai’s Nasdaq-style STAR Market and the Hong Kong Stock Exchange, reportedly targeting a $200 billion valuation, in what would be one of this year’s biggest IPOs.
• This is the third time that Meituan has blocked Alipay after two instances in 2016 and 2018. Meanwhile, Alipay rival Wechat Pay, the popular payment service developed by Meituan investor Tencent, holds a prominent spot on the app.

READ MORE: Back to school with Tencent and friends

I wasn’t allowed to return to Xi’an Jiaotong University until May (Chinese), when Shaanxi Province finally approved re-opening. Meanwhile, the Ministry of Education demanded (Chinese) “closed management” of the campus — meaning, in theory, that students aren’t allowed to leave the campus once they return.

To meet those objectives, Xi’an Jiaotong University went with the most fashionable thing in Chinese administration: the school’s Network Information Center developed its own health code system (Chinese), naming it the “Internet+ Epidemic Prevention and Control Smart Platform.” Students access it using Wechat and a campus app.

How the health code worked

Together with big tech companies, governments at all levels in China regulated people’s movements with digital systems during the pandemic. A popular tool is the health code system, that uses mini-apps to assign people a color code based on health risk. That code determines where one can go. There are thousands of these systems run by different entities, yet they don’t seem to work together.

Xi’an Jiaotong’s system was first introduced around February to track students stuck off campus. It asked us to fill out a daily health report in Wechat or the campus app, answering questions like “do you have a fever?” or “have you been to high-risk areas?” At the end of April, the university started coding people as red, yellow, or green risks in preparation for re-opening the campus.

Back to school with a new health code

To go back to campus, we needed two weeks’ of daily health reports. Every day, we were asked to report our status including current location, health code color in local systems, travel record, contact tracing history, body temperature, possible symptoms of Covid-19, and more, using Wechat or the campus app. If you forgot to fill it out or made a mistake, you had to resubmit the record for that day in a separate form and then ask the school counselor to approve the modification.

The school is looking for “risk-free records”: where students (and everyone they are in contact with) hold a green code in their local system, show no symptoms, and have not been to any risky regions.

A risk-free report every day for 14 days gets you a campus green code and an invitation back to campus. Yellow code holders were also allowed back in theory, but threatened with 14-day quarantines. In practice, only green code holders returned, although the school helped some students with yellow codes resolve issues to convert them to green. Red code holders were strictly forbidden to return. On the returning day, code color was strictly checked, and a school counselor checked each student’s status to make sure only green code holders returned to school.  

Getting around the campus

Once back on campus, students are required to fill out the daily health report twice a day at a given time (between 6 a.m. and 11 a.m., and from noon and 5 p.m.) after returning. The campus code turns yellow if one forgets to fill out a report.

But people usually don’t care: though the school said only campus green code holders would be able to move around freely on campus, nobody actually checks the code.

Public places like canteens usually just check temperatures with an infrared thermometer gate; places like the gym sometimes ask for a Xi’an city health code instead. My department created its own half-digital entrance record system, under which I need to register in a mini-program to enter the building, and then write down my information on a notebook hanging on the door of my office.

In short, the campus code is useless inside the campus itself.

Going off campus with a special health code

Closed management is impossible for my university: for one thing, it has four campuses, and plenty of students need to commute among them for different classes. Additionally, many students live off campus, and some students need to leave for job-hunting, internships, or emergencies. So the system makes exceptions with a special “purple code” for students in need to leave and re-enter the campus.

Guards never stopped students from leaving, but in theory you needed a purple code to get back on campus once you left.

It is not easy to get a purple code: first, a student needs to hold a campus green code and their purple code application needs to be approved by their supervisor, school counselor, and the deputy dean of faculty.

Not many people hold a purple code because of the hassle. My undergraduate friends told me that their counselors just don’t want to give them the approval because the bureaucracy is too complex. My own classmates were afraid to apply for one because they were afraid that their supervisors may regard leaving campus as a symbol of being lazy at their studies. 

But in practice, people found other ways to get off campus. The guards only need to see (not scan) the purple code to allow students re-entry — making it easy to fake. 

So students created alternatives. Some students have developed their own mini-program to generate a purple code, some borrow purple code screenshots from others, some pretend to be a university staff member to avoid scrutiny, while some simply physically climb the campus wall.

Gilding the lily

The university’s efforts to control the virus with its health code system are the definition of tech for tech’s sake: the apps worked, but they didn’t really do anything. Not only is the system’s effectiveness questionable, but rule-breakers and excessive bureaucracy also sharply undermined the technology.

The foundational data of this system is what students write in the daily health report. Unlike government agencies and big tech companies, the school cannot easily acquire information such as students’ locations; hence, the credibility of the reports relies on nothing more than students’ honesty. But students can easily lie on their forms.

As for enforcement, few people continue to take it seriously. Since the code’s color makes no difference once one returns to school, many students have already stopped filling out their daily health reports. 

The school has given up checking the purple codes (though they have not officially abandoned the health code system) right now. People now can simply use their campus ID card for entry, which was the pre-epidemic system.

A common sentiment among students is to regard the system as a symbol of bureaucracy, because it assumes college students can’t be trusted. While the staff is free to leave and enter the campus, students cannot even fix their own records without special approval from a school counselor. Once, a counselor even publicly shamed students who failed to submit the daily health report by demanding they handwrite long self-criticism letters in the class chat group.

The system still has some advantages: the school can monitor the situation of students better; it mobilizes plenty of people to work on campus epidemic control; the school’s propaganda about “working as one” (even though the “work” is mostly just filling out a report twice a day) feels more real, and there has been some positive major media coverage. But what it contributes to campus epidemic control is still unclear.

Nationally, the health code system is a must for epidemic control; but a campus version is just gilding the lily. In May, most cities were already accepting (in Chinese) green codes issued by other cities. There was no need for the university to create a separate system in the first place.

Mini programs are an increasingly important growth driver for apps, functioning as an entry point for Chinese mobile users to access online services, according to a recent report on Chinese internet trends in the first half of the year.

Why it matters: These lightweight applications are becoming must-have features for mainstream apps. They offer a diverse range of functions without requiring users to download separate programs or leave the main app.

Read more: Wechat mini programs: the future is e-commerce

Details: Monthly active users (MAU) for Wechat mini programs reached 829 million in June, up 11.6% year on year compared with 743 million a year ago, according to a Quest Mobile report published on Tuesday.

• Mini programs are an important channel for main apps, especially those offering high-frequency services like food delivery, according to the report.
• Eleme’s main app had 45 million MAUs as of June, while its mini program on the Alipay app had 33 million MAUs, with just 1.65 million overlapping users. Meituan’s Wechat mini program meanwhile had 97 million MAUs in June, almost double the main app’s 54 million.
• Mini programs offer a lightweight, convenient way to try out a limited version of a service, and are a crucial channel for apps to acquire new users who want to use the full range of services, the report said.
• Lifestyle services was the most popular category among Wechat mini program users in June, followed by video, shopping, tools, and transportation. Lifestyle services and video also topped the charts for Alipay and Baidu mini programs.
• Users of healthcare services surged more than nine-fold (up 841%) year on year due to the wide application of health codes. Online education, car-hailing, and rental services also saw users on Wechat mini programs more than doubled year on year in June.
• China’s retail sales in June weakened 1.8% year on year, an improvement from the 20.5% year on year decline in February during the country-wide lockdown, though growth slowed on an annual basis from a 9.8% increase in June last year.
• Online retail sales accounted for 25.2% of China’s total retail sales in June, up from 20% in June last year.

Context: First introduced by Wechat in 2017, mini programs have become ubiquitous on many of China’s biggest apps, including Tencent’s QQ, Baidu, Meituan, Alibaba’s Alipay, and Taobao, as well as Bytedance’s Jinri Toutiao and Douyin.

Indian Wechat users said that they have been blocked from the messaging super app starting Saturday, potentially a move from its owner, Chinese tech giant Tencent, to comply with India’s June 29 ban of 59 apps from China.

Why it matters: In addition to messaging, Wechat is an essential payments provider and news platform for Chinese expats in India and people interested in China.

• The sudden loss of Wechat maroons Chinese nationals living in India, employees and students of Chinese institutions, and other users suddenly cut off from their primary method of communication with mainland China.
• Wechat users in India also lost access to message and document history, as well as all money stored in their Wechat Wallets. 

Read more: Chinese tech giants have tens of billions at stake in India

Details: Only users who registered Wechat accounts with an Indian phone number were logged out, according to a report from Chinese state-owned media outlet The Global Times. However, Indian users told TechNode they continue to experience difficulty using the app despite registering with a Chinese phone number, switching SIM cards, and using a virtual private network (VPN). 

• India’s app ban appears to rely on cooperation from Chinese app developers to block users from accessing these apps.
• TechNode contributor Sowmiya Ashok received text messages, but could not reply or use other features of the app. Fellow contributor Hamsini Hariharan registered her Wechat account with a Chinese phone number and was able to log in with a VPN, but was logged out every 10 minutes. 
• Users reported seeing an error message when attempting to log in: “Pursuant to Indian law we are unable to offer you Wechat at this time. We value each of our users, and data security and privacy are of utmost importance to us. We are engaging with relevant authorities and hope to be able to resume service in the future.”

Read more: India ban on Chinese apps explained: Who, how, what now?

Context: Wechat isn’t popular in India, where it has an estimated 6 million to 8 million monthly users as of 2015. Its value lies in easy communication with China. 

Reader, we’re going a little meta this week. Way back in 2017, in TechNode’s bloggier days, the site published a listicle called “Top 15 apps you need for living in China.” This piece became one of our best-performing posts of all time. Three years on, people are still reading it.

So we decided to update the list for 2020, to reflect on how phone home screens have changed — and what it says about the market.

Bottom line: The majority of the list remains the same. 18 out of 22 apps mentioned in 2017 kept their position in 2020. But we’ve added 21 new apps that gained popularity over the three years. The market is still pretty dynamic.

Remember Apple’s iPhone 3G commercial “there’s an app for that”? That slogan never really applied to China. Here, all your needs are packed into a few super-apps—basically, Wechat and Alipay. Wechat accounts for 34% of total mobile data traffic in China in 2018, while Ali­pay leads the Chi­nese mo­bile pay­ments market with a 53.8% share as of Q4 2019.

However, other sectors, like entertainment or transportation, still see vital competitions, innovation, and growth today. One new category — short video — has gone big.

The list: Without further ado, here’s our updated list of the top apps you need for living in China — with the new additions in bold. We’ll post an updated version of the old article to the site this week, with more details about the apps.

1. App of the year: Health code
2. Communication: Wechat
3. Paying for stuff: Alipay / Wechat Pay (via Wechat)
4. Buying anything you could possibly want: Taobao / JD / Pinduoduo
5. Get around: Health code (via Wechat / Alipay)
6. Get food (meals, or groceries): Ele.me / Baidu Waimai / Meituan / Hema / JD Daojia
7. Watching TV videos: Douyin / Bilibili / Tencent Video / Iqiyi / Youku
8. Calling a car: DiDi / Amap
9. Renting a bike: Mobike / Ofo / Didi / Hellobike (via Alipay, Amap) / Meituan
10. Finding your way: Amap / Baidu Maps / Apple Maps
11. Finding new restaurants: Dazhong Dianping / Koubei
12. Finding a home: Ziroom / 58.com
13. Listening to music: Xiami / QQ Music / Netease Music
14. Dating: Tantan / Soul
15. Being understood: Pleco / Baidu Translate / Xunfei Translate / Deepl
16. Travelling: Ctrip / Qunar / Fliggy
17. Finding events: Huodongxing / Gewara / ShowStart / Maoyan / Taopiaopiao

App of the year: Health code

The app of the year is obvious, even though it’s not technically an app: China’s “health code” digital quarantine systems are the most essential software on your phone in China in 2020. For most users, they’re mini-apps embedded in Wechat and Alipay, and there are hundreds of versions created by different local governments.

There would have been no grand reopening without the health code system. Launched first in Hangzhou on Feb. 11, it’s become an essential part of daily life: if you want to travel, go to work, go to a market, or even enter your own housing compound, you’ve probably needed to show a code in the last few months.

At the top of the list, nothing’s changed. Wechat and Alipay are China’s mobile age infrastructure. If anything, they’re more essential than they were in 2017. Almost every QR code you see on a random Chinese street, from cashless payment badges, to health code passes, works only on the two mega apps.

• Wechat’s still the one app that rules them all, with its monthly active users growing from 900 million (2017) to 1.2 billion (2020 Q1).
• Despite Wechat’s overall success, there’s been no revolutionary updates in the last three years. Even mini programs, apps that run inside super apps instead of being downloaded from the app store have been around since January 2017.
• The entry barrier for a new messaging app is sky-high — Wechat challengers like Liantianbao (formerly Bullet Messenger), Bytedance’s Duoshan, and Matong MT didn’t last, either because of weak customer stickiness or failure to meet regulatory requirements.

The two biggest apps have mostly carved out their territory, and stuck to it. Alipay once tried competing with Wechat as a social network, but it dropped this plan in 2017 and focused on inclusive finance.

• Alipay claims 1.3 billion annual active users globally as of March 2020, including users from China, and nine international e-wallet partners from India, Thailand, South Korea, the Philippines, Bangladesh, Hong Kong, Malaysia, Indonesia, and Pakistan.
• In 2018, Alipay recorded 197.5 billion annual transactions, according to Alipay’s official statement (in Chinese).

No more “bucket meal”: When Wechat launched mini programs in 2017, it was seen as a game changer in the Chinese app scene. But predictions that they would replace download apps haven’t quite panned out. I have never uninstalled an app because there was a mini program substitute.

Nevertheless, the idea of the mini program did change the game in other ways.

In the 2010s, Baidu was notorious for a download-one-get-all app promotion strategy. Netizens complained that once you get one Baidu app on an Android phone, it would then secretly download and install all other Baidu apps without the user’s consent. Irate users named the bundle of related apps the “Baidu family bucket meal,” after a particularly large KFC combination meal.

From Baidu to the smallest companies, the “bucket meal” strategy was everywhere, and users were cautious when downloading apps onto their smartphones. 

As of 2020, the combo meal seems to be gone, because there’s no need to inject a series of apps secretly on the phone. They’re all there already, inside one another.

• The latest version of Alibaba’s Amap provides directions and integrates features like lifestyle services discovery (from Koubei and Dianping) and travel services (from Fliggy).
• Didi Chuxing provides car rental, car maintenance, gas station services, and a map service in addition to its core function of ride-hailing.
• Meituan users can call a cab, unlock a shared bike, order takeouts, buy a travel ticket, and even borrow money inside an app originally inspired by Groupon.

Short-video and live streaming are on the rise: These genres didn’t make the list in 2017. Besides Douyin, Kuaishou, and many other players, we see such feature pretty much in every popular social and e-commerce apps, from Wechat, Taobao, and Meituan, to vertical social network Baidu Tieba (a Reddit equivalent), Zhihu (the Chinese Quora), and Hupu (an online sports community). It’s getting prominent positions in these apps, too.

Iresearch, a China focused online marketing agency, predicts that by the end of 2020, China will have 524 million online live streaming users. The total scale of China’s live streaming e-commerce industry reached RMB 433.8 billion (about $62 billion) in 2019, and the figure is expected to double by the end of 2020.

The sold, and the collapsed: We removed four apps from the list.

Baidu Waimai disappears into Eleme: Launched in 2015, Baidu Waimai was one of the three takeout delivery giants in China. Unlike Ele.me and Meituan, which focused heavily on college students, Baidu Waimai started for white collar who prefer quality dining. But when the company doubled down on computing, artificial intelligence, and core technologies, it lost its taste for the highly competitive food delivery market. Sold to Ele.me in August 2017, it was rebranded as the smaller premium service Star.Ele in October 2018.

Ofo’s pride, and fall: Once a poster child of Chinese innovation in the mobile age, Ofo is now remembered as a joke, or maybe a scam. The best thing you can say about them in 2020 is that some of their bikes did not end up in the bicycle graveyard, but now benefit poor communities all over the world as free bicycles.

Anyone remember Mobike? Two other apps from the 2017 list, Mobike and Gewara, were once the biggest names in shared bikes and the movie ticket booking field. Both were acquired by Meituan group in 2018. Gewara, its name inspired by communist icon Che Guevara, saw its movie ticket business merged with Maoyan, a Meituan subsidiary, after its acquisition.

Failing to monetize itself, Mobike chose to go under Meituan’s umbrella. It remained an independent brand until one year and a half after the acquisition, when the yellow Meituan Bikes began to replace the orange Mobike on the streets.This shift marked the second wave of shared bikes in China, in which the new three kingdoms, Meituan (yellow), Alibaba (blue) and Didi (turquoise) share the market in harmony. People still need bikes, but the bike companies don’t want a price war any more. With subsidies cut, fares hiked, free rides are a thing of the past.

What’s going to change by 2023? Compared to the wild old days, things look stable in 2020. The top Chinese apps seem to have grown to the too-big-to-fail stage. But looking at Douyin’s rise, we know there’s always another new killer app. And let’s not forget that apps that didn’t exist when we wrote our last top apps piece, which became a huge phenomenon in 2019, and are now all but gone — like Luckin Coffee. If you look again in 2023, I’m sure you’ll be surprised by what’s new — and maybe by what no longer exists.

Tencent rolled out on Tuesday a mini program-based shop builder tool Minishop on its super messaging app Wechat as the company accelerates its push into e-commerce.

Why it matters: Minishop is among Tencent’s latest efforts to build up its e-commerce product lines. Tencent’s foray into the e-commerce industry is positioning Wechat in direct competition with Alibaba, JD.com, and Pinduoduo.

• Tencent is capitalizing on the popularity of Wechat mini programs, the lightweight applications that run within the super app, to set up its own online marketplaces.

Read more: WeChat mini programs: the future is e-commerce

Details: Minishop, or Weixin Xiaoshangdian, offers basic functions such as product listings, order management, payment, logistics, and after-sales service as well as built-in streaming features, according to a company statement (in Chinese).

• Minishop is a free-to-use mini program that helps merchants create their own merchandising shops on Wechat. 
• The feature supports more than 1,500 product categories, including smartphones, consumer electronics, apparel, home appliances, and pet goods.
• There is no deposit required to open a store, a common practice for other e-commerce platforms including its predecessor Weixin Xiaodian as well as Alibaba’s Taobao. To build up the initial user group, the service is free and there are no development costs for now.
• During the testing period, enterprises can apply for up to 50 stores and household businesses can register up to five stores. The service will open up to individuals in the future.
• The new Wechat-based e-shop mini program will replace Weixin Xiaodian, which the company stopped updating on July 9 and will gradually phase out.
• Minishop is a more online commerce-friendly alternative to Weixin Xiaodian. Its high vendor threshold and lack of flexibility gave rise to third-party software-as-a-service (Saas) solutions.
• Minishop poses a threat to Weimob and Youzan, third-party Saas WeChat store solutions backed by Tencent and Baidu.

Context: Tencent, the backer of Pinduoduo and JD.com, has been taking aim at the online retail sector—rival Alibaba’s home turf—in recent years.

• In April, Tencent launched mini-program Xiao’e Pinpin, a Pinduoduo counterpart that allows users to purchase products at lower prices by forming groups.

Correction: An earlier version of the story referee to Minishop by the incorrect name Westore, and did not make it clear that Minishop is a mini program store builder rather than a centralized store.

We have all dreamt about e-commerce saving the traditional retail business, turning an asset-heavy industry reliant on expensive square meters and armies of ground sales staff into light online front stores managed by a few tech-savvy marketers. 

Has e-commerce saved the retail industry? Hmm… not really. In fact, the industry is threatened by an unprecedented dependency on paid media and platforms.  They may boost sales today, but they are dangerous for brands in the long run. 

Paid media: the necessary evil

Something from the old retail world that remains true today is the “no traffic, no business” golden rule. Online traffic has replaced “foot traffic” as the sine qua non of online shopping. In the eight years from 2010 to 2018, as the industry grew to be worth $4 trillion globally and nearly $2 trillion in China, internet advertising in China has multiplied by over 17 times, from $3.7 billion in 2010 to $65 billion in 2018, according to data from Emarketer.

E-commerce giant Alibaba has become the largest digital ad seller in China. Its advertising revenues account for more than 32% of the market this year. Although Alibaba doesn’t report its advertising revenue separately, the company’s CFO reportedly remarked in 2017 that ad division Alimama produces 60% of its revenue.

With this paid media-powered retail market growing at a steady pace (25.9% yoy growth for 2019 in China), a key issue is the decline of the media’s ability to drive sales. With information overload and the attention deficit of new consumers, even the most creative ads cannot guarantee converting traffic into sales. This phenomenon is well known to marketers, who call it “the great CTR decline.”  

Since the very first online ads were introduced in 1994, the click-through rate (CTR) on display ads has continuously eroded. The most famous early banner, an AT&T ad on Hotwired.com (now the magazine “Wired”) achieved 78% CTR. Nowadays, 2-3% is often considered good.

Marketers have been working tirelessly to counter the “great CTR decline” with more interactive ad formats, precision marketing, native advertising techniques or engaging influencers. But for brands, the unit cost of traffic keeps increasing, year after year. 

The e-commerce platformization

In China, platform-led e-commerce usually accounts for 80% to 90% of a brand’s online sales. Platforms such as Tmall, JD.com, Pinduoduo, RED, or VIP.com drive most business, while direct brand-to-consumer e-commerce is struggling to get traction.

As brands and retailers have become heavily reliant on media spending, they are also losing the war for consumers’ attention downstream in sales. They’re at risk of a standardized shopping experience that locks them into unbalanced partnerships with e-commerce giants, on the platforms’ terms. 

In November last year, Nike pulled its products from Amazon’s website. Is this a new direction for the industry? In China, where brand.com websites get even less attention from users than in the West, regaining control over e-commerce is going to be tricky. But a new form of commerce is emerging, based on media hacking strategies and decentralized commerce.

The era of pervasive commerce

A ubiquitous and frictionless e-commerce utopia is slowly becoming a reality in China thanks to QR codes and mini programs. It is called “pervasive commerce”—a vision for turning every consumer touchpoint into a point-of-sale. 

The QR code economy, which builds digital connections between people, things and places, is not new in China, but it’s still growing. Wechat scanned QR codes 140 billion times between Jan. 23 and May 6, the company wrote in a report on the “2020 Pandemic and the QR Code Economy.” 

There are over 4 million Wechat mini programs, which can be accessed seamlessly across more than 60 different touchpoints within the Tencent ecosystem according to 31ten, a digital agency for Wechat mini programs. They are directly shareable in chats and articles, and can easily be integrated with Wechat features such as membership cards, payment receipts, and coupons. They are used by 450 million active users every day, and to date, 95% of e-commerce brands have already started to use them, according to Tencent. Wechat reports that in February, 26 merchants enjoyed average daily sales over RMB 1 million (about $140,000), and had over RMB 100 million in transactions.

Following the success of Wechat, “10 digital platforms have since adopted mini programs: Kuaiyingyong, Alipay, Toutiao, Douyin, Baidu, Taobao, QQ, Weibo, and JD,” according to the 31ten agency. The luxury house Dior recently launched a Douyin e-commerce mini program for its 520 campaign. Viewers of the “Dior Confession Balloons” video could directly add products to their cart and checkout with Wechat Pay or Alipay without leaving the app. On June 15 this year, the Japanese cosmetic brand Shiseido launched a live streaming shopping experience with Ayanga, a Chinese musical theater actor, singer and songwriter celebrity, also enabled with a Douyin mini program.

Transacting directly with private communities

This pervasive and decentralized architecture, based on QR codes and mini programs, allows brands to turn any medium into an online store. More importantly, it allows them to transact directly with private communities of customers, most often within Wechat groups, bypassing pay-to-play e-commerce gatekeepers such as Tmall.

Also known as private traffic marketing, these marketing techniques reduce media buying costs, improve conversion rates and reduce the dependency on platforms.

Like in many disruptions, small businesses, startups, and new market players are showing the way. The successful China beauty brand Perfect Diary is one of them. Customers are led to follow a personal Wechat account belonging to a fictional lady named Xiao Wanzi, who will then invite them to join a Wechat group, along with other fellow customers. As the community grows, other groups are added and Xiao Wanzi operators (in fact, community managers and Wechat bots) nurture customers with content, tips, and offers presented via dedicated mini programs. Perfect Diary focuses on selling directly to its private community, estimated to be more than a million customers according to Parklu, a Chinese influencer platform.

Ctrip, the online travel agency, is also very familiar with building private communities on Wechat. Travelers are similarly invited to follow a Ctrip personal account from which they can join Wechat groups named “Wei Ling Dui” (Weguide). Each group is dedicated to travelers going to the same destination during the same period of time. Groups are managed by a local travel concierge, usually one of Ctrip’s local travel agent partners, who will assist members of the group with locals tips and exclusive offers through Wechat coupons and mini programs.

Through these “personal accounts,” Ctrip can also access users’ Wechat Moments feed to publish campaigns, deals, and promotions directly and at zero cost.

Wechat Work, the ultimate e-commerce catalyst

How to sell online without e-commerce? In the post-Covid period, many brands have revised their strategy and are looking at turning their sales associates into online sales operators. 

Wechat Work in its 3.0 version is empowering brands such as Perfect Diary to deploy decentralized commerce strategies. New features offer deeper connections with consumers that can be leveraged for consumer acquisition, social selling, and clienteling.

Consumer acquisition

Wechat Work now offers the possibility for sales associates to show branded name cards and branded welcome messages. The name card displays the sales associate’s name and personal profile picture. 

Consumers using Wechat Work can be connected to CRM databases. Sales associates can import CRM tagging but also enrich customer profiles through direct inputs.

Social selling

Wechat Work now allows users to create chat groups of up to 200 users, so sales associates can group consumers based on their interest or status. A welcome message for new members can be configured for group chats. When a new member joins the group chat, the welcome message will be sent automatically.

To avoid losing customers, the company can also reallocate the customer databases of departed employees to existing staff. 

Clienteling

Members can share posts in Wechat Moments to interact with customers. Companies can create content centrally, and after confirming by members, they can post directly to the customers’ moments.

Wechat Work also provides customer relationship management for retaining customers. It can serve as a portable content library for sales associates to choose the brand promotion content and information that match consumers’ needs. Brands can develop their own staff management system, assigning followup tasks to build relationships and creating opportunities for upselling.

READ MORE: Wechat Work will disrupt social selling

A new approach to e-commerce

Because platforms such as Tmall and JD.com are becoming increasingly expensive, it is time for brands to embrace decentralized commerce strategies that leverage private traffic to reduce dependence on platforms and create more intimacy with their consumers.

If Wechat provides useful features, operating multiple private traffic pools at scale is not an easy task. According to the private traffic solution provider PJDaren, “it requires a specific tech infrastructure as well as human-intensive workflow for its maintenance.” A few agencies have already started to specialize in that field.

While privacy and security of Chinese technology have been sources of concern for the Indian government, it was the recent border tensions that triggered Monday’s app ban. After reports of the deaths of 20 soldiers, right-wing activists called for the boycott of Chinese goods. Videos of people breaking Chinese televisions and even burning effigies went viral. All of this happened on the heels of Prime Minister Narendra Modi promise for an “Atmanirbhar Bharat,” or “self-reliant India” as the economic response to the Covid-19 pandemic. 

The last two motivations have little to do with cybersecurity concerns, which is perhaps why the ban comes with unintended consequences: It punishes Indian consumers and deprives Indian entrepreneurs of much-needed capital. 

READ MORE: India moves to block access to banned Chinese apps

On the question of cybersecurity, India, like countries around the world, has raised concerns over backdoors, stealthy data collection, and surveillance by Chinese companies, that in their eyes are linked to the Chinese government. The Indian government could have consulted with various companies about possible security breaches, instead of an outright ban.

What was banned?

Weak alternatives 

While the message to Chinese companies is clear, it is Indian consumers who will have to bear the consequences. Chinese apps command over 60% of total downloads of the top ten non-gaming apps, up from approximately 24% in 2015.

The ban robs Indians of consumer choice, in the short term. The banned apps include many of the most popular in India today. Apps like Tik-Tok, Likee Shareit, UC Browser and Helo have penetrated rural India. They boasted of millions of users posting in multitudes of languages and dialects. The government banned the most popular Chinese apps.

Meanwhile, Silicon Valley’s Facebook, Twitter and Instagram remain the stronghold only of the urban elite. 

Knockoff alternatives like Chingari, Roposo, and Mitron in the video content space hit millions of downloads in the last week alone. Despite their popularity, all of these home-grown apps currently remain glitchy and riddled with bugs. They rely on a long-term ban of Chinese apps to be successful, and don’t have a future if the ban is lifted.

Biting the hand that feeds

India runs a consistent trade deficit with China: its neighbor accounted for 14% of Indian imports and barely 5% of Indian exports in the financial year 2019-2020. 

At the same time, China is a critical source of support for India’s fledgling tech firms. Chinese companies have shown their interest in becoming significant players in the long-term.

In the last five years, they have invested $4 billion into Indian startups, out of $46.5 billion of total investments, data from Mumbai-based think tank Gateway House and India’s National Association of Software and Service Companies suggests. This means that Chinese companies accounted for about 11.6% of the total funding to Indian technology startups in the last five years. Gateway House also noted that 18 of India’s 30 unicorns had a Chinese investors. 

These local tech startups that look to China for funding could bear much of the cost of the government’s desire to signal a strong stance, if Chinese investors choose to pull out of India. 

Misguided protectionsim

The apps’ ban sends a strong signal about how open India’s markets are: not very. India’s comparative advantage—its demographics and services sector – is often undermined by unreasonable state intervention. To set up a company in India, you need 21 clearances from the central government, at least eight from the state government, industry-specific licenses, and monthly bureaucratic checks—which often involve greasing palms. 

The government has also enacted well-intentioned but economically disruptive laws to protect employees. At the beginning of June 2020, the government ruled that private companies must pay all employees in full even if their business were closed, and they could not deduct days off from the employees’s paychecks either. Economists have argued this would lead to massive lay-offs at the end of the pandemic since employers will need to balance the costs during Covid-19.

Modi’s government has shown little restraint when it comes to market intervention. This begs the question: if the Indian government can ban 59 apps overnight, then what stops it from banning others under the guise of national security?

India’s ease of doing business has crawled towards reform since 2014. This ban is yet another deterrent to investors—one that India cannot afford considering the precarious state of its economy. 

Cutting off contact

Another cause of worry is the ban of Wechat. Tencent’s super-app has minimal presence among Indians. To them, it is yet another messaging app. Its primary user base remains Indian students, academics, professionals, and traders, who are in touch with China. 

But to some overseas Indians, it is an everyday staple. In December 2019, approximately 56,000 Indians were residing in mainland China. Wechat’s domination of the Chinese market makes it near-impossible for them to live in the country without it.

By banning Wechat, the Indian government is reducing the window of contact that Indians and Chinese have to communicate with each other. Those who have returned to India, or others that have made connections in China through their diaspora friends, will lose access to their networks in China. This will sever one of the most important touch points between China and India.

This is particularly significant for academia. Unlike other countries which have burgeoning departments of Chinese Studies, such programs are restricted to a handful of Indian universities. By further limiting scholarship, India is preventing its own knowledge production of China, and the lack of informed opinions on China will only hurt policymakers and citizens.

The price of ‘war’ 

Even if the objective is to send a political signal to the Chinese government, negative externalities accruing to Indian citizens are glaring. The Indian government is rightfully worried about the border tensions with China and searching for areas where it can assert itself. But beating China at a game of “digital sovereignty” only harms Indians’ digital freedoms and economy during a global depression. 

The top telecommunications regulator in India has asked telecom operators and internet service providers to block local user access to the 59 Chinese apps banned on Monday, local newspaper Telangana Today reported Wednesday.

Why it matters: The move means users who have downloaded the banned apps before may be barred from using them. Affected apps include Bytedance’s popular short video app Tiktok and Tencent’s instant messaging app Wechat, as well as mobile games Mobile Legends Bang Bang and Clash of Kings.

Details: India’s Department of Telecommunications has asked all internet service providers (ISPs) and telecommunication companies to comply with the order immediately and submit compliance reports, according to Telangana Today, citing anonymous sources.

• Some major Indian ISPs, including Airtel, Reliance Jio, ACT Fibernet, and Hathway, have seemingly stopped providing Tiktok access to their users since Tuesday, according to India Today.
• Some users of Reliance Jio and Airtel, two of India’s biggest telecom operators, said on social media that they were unable to access to Tiktok on their networks, said the India Today report.
• All 59 Chinese apps were deemed threats to national security and were pulled from the country’s Google’s Play Store and Apple’s App Store on Tuesday, according to DNA India, a local news site.
• Tiktok seems to have blocked Indian user access to its service before it is banned by ISPs. Users in India trying to access Tiktok’s website are redirected to a webpage that states that the app is “ in the process of complying with the Government of India’s directive,” according to TechNode’s sources in India.
• The app said it is “also working with the government to better understand the issue and explore a course of action.”
• “Ensuring the privacy and security of all our users in India remains our utmost priority,” said the notice signed by the “Tiktok India Team.”
• Sources in India also said they could use Wechat but they couldn’t load the Club Factory app without virtual private networks (VPNs) as of Wednesday.

Data security probe: Representatives from the 59 banned Chinese apps can appear before a government panel within 48 hours of the announcement to prove that they do not transfer Indian user data to servers in China, according to the Indian newspaper Economic Times, citing government officials.

• The panel, which is likely to meet on Wednesday, consists of officials from India’s home affairs, electronics, information, and law ministries, along with internet security experts, according to the report.
• The committee will conduct a detailed inquiry into the data-sharing practices of these apps. Executives of Tiktok, livestreaming platform Bigo Live, and video-sharing app Likee told the Economic Times that they will cooperate with the government in the probe and they had begun the process.

Read more: Tiktok pulled from India stores in ban on 59 Chinese apps

Context: The Monday ban on 59 Chinese apps came two weeks after a border clash with China left 20 Indian soldiers dead.

• Companies affected by the ban, including Tiktok parent Bytedance and e-commerce site Club Factory, have said they were willing to comply with the Indian government’s privacy standards.
• Tiktok said in a statement Tuesday that it “continues to comply with all data privacy and security requirements under Indian law” and that it had never shared any information of its Indian users with any foreign government, including the Chinese government.

Bytedance’s mega app Tiktok has been removed from Android and Apple app stores in India, its second-largest market, following a Monday ban on 59 Chinese apps on national security concerns. The ban comes two weeks after a border clash with China left 20 Indian soldiers dead. 

Among those blacklisted are popular Chinese apps like Tiktok, Wechat, Baidu Maps, Baidu Translate, Sina Corp’s microblogging platform Weibo, as well as mobile games Mobile Legends Bang Bang and Clash of Kings. Other banned apps popular in India include Chinese-owned e-commerce platforms Shein and Club Factory, Bytedance’s social media app Helo, and Alibaba’s UC Browser. 

A door slammed shut: Losing access to India’s market is a blow for Chinese companies like Bytedance, which aim to ride India’s rapid growth in mobile internet penetration.

• India’s mobile app market is still developing, and rapidly. Smartphone users in India are projected to double to 1.25 billion by 2024 from 610 million in 2018, according to India-based think tank Gateway House. Between 2016 and 2018, the number of app downloads increased by 165%.
• Some companies have made big bets on the Indian market: Alibaba’s fintech arm Ant Financial has invested close to $2.7 billion in seven companies, while Tencent has spread $2 billion across 15 firms.
• A big loser from this decision will be Bytedance, the owner of Tiktok. According to Sensor Tower, 30% of Tiktok’s more than 2 billion global downloads come from India.

The companies react: Bytedance told TechNode that its team of 2,000 employees in India “is committed to working with the government to demonstrate our dedication to user security and our commitment to the country overall.”

• Club Factory, which has more than 100 million monthly active users in the country, told TechNode that it was compliant with privacy practices and had “provided direct employment to hundreds of people in India.”
• “We have always been willing and continue to remain committed to working with the Government to resolve any concerns,” the company added.
• Spokespersons from Tencent, Xiaomi, and Baidu declined to comment. Alibaba had not responded to requests for comment as of publication.

Collateral damage: Many analysts see this decision as a direct reaction to the border clash, bolstered by other factors like protectionism.

• “I would say that it’s more of a nationalist response,” said Hamsini Hariharan, host of the States of Anarchy podcast, which focuses on global affairs and Indian foreign policy.
• She continued, “I think the government wanted to just send a message that they weren’t taking the border lying down, and they figured the Chinese apps were a good way to do it.”
• Deep K. Datta-Ray, visiting senior fellow at the Singapore-based S. Rajaratnam School of International Studies, concurred that the ban was “in the first instance a tit-for-tat response to Chinese actions along the border.”

Protecting our own: However, Datta-Ray added that “these actions are in keeping with a generally isolationist and nativist approach” on India’s part, as seen in moves such as its withdrawal from the mega free trade agreement known as the Regional Comprehensive Economic Partnership in late 2019.

Nationalist tide: The app ban follows a China-India border clash in the Himalayas that left 20 Indian soldiers dead, the first time in nearly 50 years that Indian soldiers had been killed on the border.

• That clash stoked anti-China sentiment in India, with a former Indian ambassador to China calling it a “turning point,” although not a “breaking point,” in Sino-Indian relations.
• In May, an app called “Remove China Apps” rose to the top of India’s Android store amid growing China-India tensions. That app was itself removed from the Google Play store on June 3.
• On June 17, national intelligence agencies in India asked the government to block 52 mobile apps by Chinese developers, informing the current ban.
• People in India “have already been talking about boycotting goods from China,” Hariharan told TechNode, and so “this current ban of the apps is just part of that nationalist wave.”

Swing state, swung: In the context of US-China tech tensions, some analysts have interpreted this ban as a loss for China.

• For China, India “was almost a tech ‘swing state,’” Rush Doshi, director of the China Strategy Initiative at the Brookings Institution, said on Twitter. “But with bans on these apps and new restrictions on Huawei, that strategy is seriously imperiled.”
• In April 2020, Chicago-based think tank Macro Polo compared the top 10 apps from different countries in 2015 and 2019, and concluded that “Chinese apps have taken the lead in by far the largest emerging market: India.”
• In 2015, three of the top 10 apps in India were from China. By 2019, that had risen to six: Tiktok, video-based social media platform Likee, Bytedance’s Helo, file sharing app Shareit, and Alibaba’s UC Browser and video sharing app Vmate.
• Though some of those names may not be familiar, they totaled 982 million downloads combined during the year.
• However, India has swung back and forth on China, and this may not be the closing act. In April 2019, Tiktok was banned in India for two weeks for allegedly spreading pornography, but made a swift comeback upon its return to the app store.

Firewall goes up: It isn’t entirely clear how the ban will be implemented. Some apps have already been taken down from app stores, but actively restricting their use would require additional steps.

• Tiktok appears to have been removed from the Apple and Google stores in India, TechNode sources in India have confirmed.
• However, that won’t stop people who have already downloaded the apps from continuing to use them. Some reports say to expect restrictions from internet service providers that will require virtual private networks (VPNs) to get around. 
• The Indian Express states that this notice “is expected to be followed by instructions to Internet service providers to block these apps,” but it’s unclear when that will be implemented. 
• As of now, TechNode sources in India are able to use apps like Wechat and Cam Scanner without a VPN, and can still access e-commerce websites like Shein from desktop browsers.
• According to Datta-Ray, “India has chosen a low-denomination item, apps, and a masked response… because China is by far, in a stronger position.” At the end of the day, that means despite an intensification “in name,” “business might very well continue as usual.”

Does Tencent have a monopoly on China’s instant messaging market? You might think so. It has nearly 1.2 billion monthly active users, the same company owns QQ, with more than 800 million users. It’s hardly possible to live in Chinese cities without using WeChat to make contact, pay bills, and recently, pass health checkpoints.

But a recent attempt to prove that Tencent is a monopoly in a Chinese court collapsed in January, according to court files made public on April 17.

The failed attempt indicates how limited China’s current antitrust law has been applied to internet firms. The lack of antitrust enforcement in the digital world has also given internet giants the implicit nod to abuse their market power to crack down against competitors, said experts.

A Tencent suit

Zhang Zhengxin, a lawyer at Beijing-based Yingke Law Firm, sued Tencent a year ago for banning WeChat users from accessing links to Taobao, an online marketplace owned by e-commerce giant Alibaba.

Attempts to access Taobao links on WeChat will yield a warning page that asks users to copy “relative links”—links that users tend to visit—to their browsers, even though WeChat provides an in-app browser that allows users to access the web.

The Beijing Intellectual Property Court held a hearing on the suit in December, in which the two sides fell into a standoff around whether WeChat is a market monopoly.

Zhang accused Tencent of “effectively turning down his transaction request” because of WeChat’s Taobao ban and cited China’s Anti-monopoly Law, which bans such behavior. However, the clause only applies to a company when it “enjoys a dominant market position.”

The 2008 law has outlined how to define a company as having such a dominant market position. However, the law came into effect before the internet became a big thing in China and, so far, there were no internet companies in the country that have been identified as a market monopoly.

A recently proposed revision to the antitrust law could give law enforcement agencies and market regulators a better legal basis to take action. The experts we talked to, however, doubt whether regulators really want to rein in the country’s booming internet industry. 

Is Tencent a monopoly?

Zhang, representing himself, filed the lawsuit against Tencent last April over WeChat’s blockage of links to Taobao and Bytedance’s short video app Douyin, known as TikTok in overseas markets, citing the country’s Anti-monopoly Law. He claimed in an indictment to the court that by blocking those links, Tencent is “effectively turning down his transaction request” and that such behavior is banned by the Anti-monopoly Law.

One of the focuses of the hearing in court is whether Tencent is a monopoly in the so-called “instant messaging (IM) service market,” according to court files recently made public.

Zhang claimed that Tencent’s WeChat holds a dominant position in China’s IM market since its market share by user base and usage is far more than 50%. As a matter of fact, the share could be much bigger. According to a report (in Chinese) by Qianzhan Industry Research Institute, nearly 93% of Chinese mobile IM users have installed WeChat in 2018.

Tencent, however, argued that it doesn’t hold a dominant position in the IM market because there is no such market due to the dynamic characteristics of the internet.

The company claimed that the relative market in which a company is deemed to be a monopoly should be inferred from users’ specific demands. Zhang’s demand was to share links of Taobao to other users, so any products that could fulfill such a function should be included in the “relative market,” the company said during the December hearing.

A Tencent representative declined to comment on the case when contacted by TechNode.

A relative definition

China’s current Anti-monopoly Law said companies with more than 50% share of the “relative market” can be presumed to be dominant players. It also requires law enforcement agencies to consider factors of their abilities to control the supply chain and the market access threshold of competitors. 

While in cyberspace, the definition of a “relative market” can be vague—Tencent’s argument is proof of how nebulous they can get. Legal experts have long criticized (in Chinese) the law because it was designed to regulate companies in traditional industries: it hardly took the internet, a more and more important sector to the country’s economy, into consideration.

In January, China’s State Administration for Market Regulation (SAMR), the country’s top antitrust regulator, announced a draft revision of the Anti-monopoly Law, which expanded the definition of what forms a dominant position.

When delimiting whether internet companies enjoy dominant market positions, law enforcement agencies should also take factors such as network effect as well as their scale and ability to deal with data into consideration, said the proposed amendment.

Nevertheless, some have questioned whether the proposed overhaul would really change China’s antitrust enforcement.

Still might not be enough

China’s current legal framework is enough for antitrust authorities to take action against internet companies, but the authorities are just being very cautious because they may be afraid of getting it wrong in what are mostly very dynamic and fast-moving markets, said Adrian Emch, a partner at law firm Hogan Lovells in Beijing.

If China’s market regulators were to decide to carry out more aggressive enforcement against internet companies, then it could be undertaken within the existing legal framework, Emch wrote in a paper published in December.

As a matter of fact, before it proposed revisions to the antitrust law, the SAMR already tried to curb internet companies over potential antitrust violations.

The agency launched in January 2019 what is known as China’s first “internet antitrust investigation” into Tencent Music Entertainment’s dealings with the world’s three largest record labels after rivals complained that Tencent paid excessive fees for the initial rights and then passed those costs along to competitors.

Observers were cheered (in Chinese) that the investigation would open a new era where internet companies also fall into the rule of China’s antitrust law.

However, the SAMR decided to suspend the probe in January, according to Bloomberg. The regulator didn’t disclose how far the investigation went and why it was terminated, but it came after Tencent Music reached a music licensing deal with Bytedance in late 2019.

“If you look at the market, there are many large and competitive internet players in China, so the antitrust authorities may ask themselves how much intervention, if any, is really necessary,” Emch told TechNode in an interview.

“Antitrust enforcement doesn’t take place in a vacuum, but is done against a specific legal and factual background. In China the background is different from, say, Europe where most of the main players in the internet industry are US companies.  In China, the largest internet players are domestic players and the local regulatory and policy framework is different from Europe.”

Zhang said the overhaul of the Anti-monopoly Law is a “cheering step” made by regulators.

“I believe [the revision] will give market regulators a greater legal basis to launch antitrust probes into internet companies and curb their ‘unfair competition’ including blocking links of competitors,” he said.

His challenge to Tencent, however, didn’t see the proposed revision becomes effective.

Case not closed

He applied to the Beijing Intellectual Property Court in January to withdraw the case, according to a court file released on April 17 on a website (in Chinese) maintained by the country’s Supreme People’s Court. 

He told TechNode after the court file was released that he dropped the case because he “felt there was a lack of evidence.”

While Zhang refused to give more details on the lawsuit, he told TechNode in an interview on April 9 that China’s current antitrust legal framework has done little to reach its power to the internet sector.

It looks like internet firms are immune to China’s antitrust law, he said.

The world of WeChat marketing is changing. For years, the super app was the alpha and omega of digital marketing in China, with more than a billion monthly active users and a whole industry’s worth of supporting services. But as user growth plateaus and other social media challenge WeChat’s lock on eyeballs, a report finds that WeChat is morphing from ad platform to a marketing Swiss Army Knife for luxury brands. 

In a report issued April 9, the Digital Luxury Group (DLG) and marketing automation specialists JINGdigital wrote that WeChat is evolving from a broadcasting platform into a broader customer relationship system, even as competing apps eat into its ad share.

Along with a user growth and engagement time slowdown, WeChat saw decelerating WeChat community growth in 2019. The growth rate of luxury brands that have over 100,000 followers on their WeChat official accounts slid to 18% in the first half of 2019 from 38% for the same period last year, according to the DLG and JINGDigital report. Those with less than 100,000 followers saw an even steeper slide to 6% in the reporting period from 31% a year ago.

Meanwhile, users are spending more time on short video and livestreaming, helping apps that lead in these formats emerge as the profitable new forms of marketing. Top luxury brands are trying to leverage the new models, marked by Louis Vuitton’s launch of livestreaming sessions on Xiaohongshu. Livestreaming is gaining popularity with the rise of content-driven e-commerce trends, although the format typically features a less premium shopping experience, akin to a traditional TV infomercial.

The shift in user attention to short video and livestreaming is reflected in the migration of ad budgets from brands, a major source of revenue for tech firms. ByteDance, the creator of Douyin, TikTok and news aggregation app Toutiao, has eroded ad revenue share from older tech peers Tencent, Baidu, and Alibaba.

Back on WeChat, brands are adjusting marketing strategies to focus on what the platform is best at. In addition to moving to a full-service model, they’re also shifting to a more focused, closer relationship with customers through WeChat.

Breadth to depth

“I don’t think WeChat official accounts are losing their attraction for users,” said Kai, chairman and partner of JINGdigital at a marketing webinar held on April 9. “There’s over 10 million official accounts as of last year, a slower growth is expected simply because the base is already very large,” he said.

At the same time, brand marketers are developing a more nuanced view of what WeChat official accounts are good for, Kai said. Until two to three years ago, the number of followers was the most important metric for measuring the success of WeChat accounts. The indicators later evolved to include unfollow rates, and the most recent center of focus has become material business impact—sales boost or conversion rates, he said.

“WeChat has slowly moved from being merely an information outlet towards a full service platform. It’s a pool the brands are trying to channel all their customers into,” said Kai.

Pablo Mauron, Partner & Managing Director China at DLG said that customers are moving from broad to deep brand engagement. “If my expectation towards WeChat is to have daily content that entertains me then I may pay attention to a broad number of brands. As my expectation for WeChat evolves to be a platform to speak with customer services, to buy your products, to make an appointment, my list of fifty brands that I found interesting probably shrinks to five. That does not mean they are less interesting—just that my expectations have changed,” he said.

Post-Covid comebacks

Luxury or not, brands are embracing e-commerce to maintain business during the global epidemic.

Even though the situation is getting better in China, traffic and sales at offline shops haven’t totally recovered. Mauron said that brands are trying to reawaken dormant customers as much as reach new ones.  “Most of the brands that expect revenue to pick up in China focused on CRM and re-engaging with clients, rather than just picking up where they have left before and focusing on acquisition,” he said.

Kai shared one interesting observation from a high-end fashion brand during the outbreak. Among the rising online transaction volume, those that come through tractional centralized channels like Tmall came down, but transaction volume being triggered by those client advisers through WeChat, the mini programs for example, are a lot higher as the private traffic on WeChat. “The brands still need to recruit new followers to enrich the funnel of potential customers… and monetizing through WeChat services is the close loop effort,” Kai said.

More posts

As growth slows down, luxury brands are posting content more often to public accounts. WeChat service accounts, favored by marketers, are allowed to push articles into followers’ inbox four times a month. More brands have hit this limit in recent months.

DLG and JINGdigital report shows that 67.52% of luxury brands on WeChat are using all four pushes per month, up from merely 17% in last year.  

Brands surveyed are changing how they use their pushes, with single-article pushes taking the lead over multiple. Over 78.32% of the brands surveyed choose to release a single article with each push, up from 42% last year. While cumulative engagement of multiple-article pushes is usually higher than single-article pushes, it comes at a cost in content production.

Thursday and Friday evening saw the most pushes but Mauron warns that A/B Testing is still the most reliable method to determine appropriate timelot for WeChat pushes.

WeChat, China’s most used social platform, announced on Wednesday that it is partnering with major technology platforms including Devpost, Facebook and Microsoft to invite developers to a global hackathon in order to help the fight against the coronavirus pandemic with technology.

WeChat is joining with industry peers to launch the COVID-19 Global Hackathon starting March 26, 2020, which invites developers to build locally or globally focused software solutions that tackle the challenges related to the pandemic as identified by the World Health Organization.

The initiative adds to the ongoing efforts by WeChat and its developer community in coming up with creative technological solutions including mini programs and health codes to help billions battle the COVID-19 outbreak in China and shift life online.

WeChat, owned by Tencent Holdings, provides a host of essential services ranging from instant messaging, infotainment to payment within one app. Leveraging its large user base of more than 1.16 billion, WeChat has played a crucial role in promoting public awareness about COVID-19 and digitalizing public services in China rapidly.

 Over 1,000 mini programs in municipal services, healthcare and education were recently generated, while the Tencent Health Code became the most used e-path for verifying health and travel history in China, with 10 billion total visits since February.

Innovators around the world are invited to #BuildforCOVID19 using technologies of their choice, including WeChat’s mini program – a vibrant ecosystem within the WeChat app with more than 300 million daily active users.

Developers are asked to submit their projects on Devpost before March 30, 2020. The major themes inviting submissions include healthcare, vulnerable populations’ daily needs, business challenges, community and social relations, education, and entertainment. For more details, visit COVID-19 Global Hackathon.

A district government in the eastern Chinese city of Qingdao has started distributing coupons to citizens via instant-messaging app WeChat as the country pushes to increase consumption.

Why it matters: While cities in eastern China such as Nanjing in Jiangsu province and Ningbo in Zhejiang province have started to provide government coupons, Qingdao is the first to deploy the vouchers on WeChat.

• WeChat is one of China’s most popular mobile payment tools with a 39.9% share of the mobile payment market in the third quarter, according to market research firm Analysys (in Chinese).

Details: The Chengyang District of Qingdao in eastern China’s Shandong province began issuing RMB 10 million (around $1.4 million) in government coupons to residents on Saturday, according to Chinese newspaper Beijing Youth Daily.

• A total of 198,000 people living in the district will receive coupons that can be redeemed in categories including food and beverages, sports facilities, books, and others, according to the report. The district’s population was around 720,000 as of the end of 2018, according to official statistics (in Chinese).
• Medical staff working in the front lines of the Covid-19 epidemic will each receive a voucher of RMB 200 while members of households that receive minimum living standard welfare payments will be granted coupons worth RMB 100 each, said the report.
• Others will be allocated RMB 40 or RMB 50-worth of coupons by an online lottery system. They can use the RMB 40 coupon when they spend more than RMB 40.01 while the RMB 50 coupons can only be redeemed when they spend more than RMB 100.
• Residents can register on an app developed by the Chengyang District government to participate in the lottery, and coupons will be issued to their WeChat Wallet.
• The function will be rolled out in other localities including Beijing in the future, the report said citing Tencent.
• Tencent confirmed the report but did not respond to requests for detail.

Context: Retail sales in China declined 20.5% year on year in January and February, brought by the Covid-19 outbreak, according to the National Bureau of Statistics of China.

• The central government issued (in Chinese) last month a circular that requires local governments to take measures to “raise residents’ purchasing power.”

Correction: changed sentence to identify Qingdao as a city in Shandong province which had incorrectly stated that it was in Jinan province.

Chinese super app WeChat is adding a dark mode option to its iOS version, finally bringing the the long-anticipated feature to iPhone users. 

Why it matters: The news drew widespread public attention online in China with many social media users speculating that the App Store’s importance to the mega chatting app pushed its decision to acquiesce on a feature it had avoided in the past.

Details: The development of dark mode on WeChat is complete and will launch in the next update, the company said in a post on its Weibo account on Monday, but did not specify a date.

• “In order to optimize the user experience, WeChat has reached a cooperation with Apple to jointly explore the dark mode experience of WeChat in the iOS system,” the company said in the post.
• Apple recently updated the App Store’s review regulations, asking all developers to use the iOS 13 SDK to fully adapt to the iOS 13 system before April 30. The update requires a series of changes including support for dark mode, sign in with Apple, and other features. Apps which fail to comply with the rules will be removed from the store.
• Public discussion (in Chinese) about a possible removal from the App Store for Tencent’s WeChat, which boasts more than 1.15 billion monthly active users, began to catch on as netizens noticed the app’s lack of dark mode on iOS.
• A Weibo user using the handle “Yelaiyuesezhanyi” commented on the announcement post that Tencent “wussed out” under pressure from the App Store. The WeChat responded that they indeed “wussed out” but to user demands.
• WeChat’s pledge to add the new feature was reported by Chinese media as a sign that Tencent succumbed to App Store’s regulations.
• Tencent spokesman Zhang Jun responded in a Weibo post, saying that Apple’s policy addressed all app developers and was not specifically calling WeChat out.

“My eyes are saved.”

— Weibo user “Its2h0u” commented under WeChat’s announcement

Context: WeChat rolled out dark mode for Android version in a December beta update.

• Apple has been ceding ground to Chinese competitors including Huawei, Oppo, Vivo, and Xiaomi.
• The US company shipped 27.5 million smartphones in China in 2019, accounting for 7.5% of the market in 2019 compared with 8.7% market share in 2018, according to research agency Canalys.
• WeChat has also been losing its share of user attention to intense competition from short video platforms, particularly Bytedance’s Douyin and Tencent-invested Kuaishou.

Back a couple of years ago, WeChat seemed like an unstoppable force. It was completely dominating the Chinese social media landscape, was beating Alibaba in payments and was making forays into e-commerce.

Back 10 years ago, Facebook would frequently revamp its interface, each time creating an uproar among its users. Yet it kept going at it, constantly refining its user experience and design.

That’s something that WeChat didn’t do. The result: WeChat’s moments interface seems old fashioned compared to its Western competitors.

The app barely uses the phone screen, keeping pictures cluttered and forcing users to click in order to see them. Engagement buttons are also hidden in a sub-menu, making it harder for users to like photos or comments.

Facebook takes a very different approach, displaying engaging full-screen pictures and prominent actions calls to like and comment.

The truth is that WeChat has been innovating quite a bit: they launched payment, Mini-programs, and many other disruptive features that have changed the behavior of both users and businesses.

But WeChat has been looking down at small incremental changes. Tencent was apparently too afraid to make any modifications to its hit product which might anger or confuse users.

Too proud to steal

“Good artists copy; great artists steal.” Many businessmen (such as Steve Jobs) have shamelessly implemented this famous quote from Picasso.

When Douyin came up with its amazingly intuitive swiping interface that got users watching an endless stream of videos, competitor Kuaishou didn’t wait too long to copy it.

We find the same qualities as the Facebook interface: full use of the screen and prominent action calls. But most importantly: a simple swiping motion to move from one video to the next.

However, when WeChat released its own short-video feature, WeChat Channel, it couldn’t bring itself to copy the Douyin interface. Instead, it had to come up with its own, arguably inferior user experience.

The result is a disappointing and unengaging experience. In fact, WeChat Channels would be a great UX… for the WeChat timeline. In many ways, it looks more like the Facebook timeline than short-videos Apps such as Douyin and Kuaishou.

Too top-down to empower the masses

Another flaw of the WeChat approach is that it was and stayed a top-down content ecosystem. A few popular WeChat Official Accounts create the content which might become viral on the platform.

User-generated content can’t really go viral on WeChat: it is only visible to your own friends, and user-generated videos and pictures can’t easily be shared further.

Douyin takes the opposite approach: it creates accessible tools for users to generate beautiful content. This approach was first pioneered by Instagram in the West, which helped its users generate more engaging content with filters.

This content can easily go viral, driven by Douyin’s algorithm.

In contrast, WeChat makes it difficult for users to apply for a content-creator account. WeChat Official Accounts require a special application, and creating content on them is better done on a desktop computer. Newly launched WeChat Channels also require special authorization from Tencent (although WeChat will likely simplify the application after this initial testing phase is over).

Too shy about curating content

Another drawback of WeChat is that, because it doesn’t insist on user interactions with the content (likes, comments), it also distributes content chronologically.

Almost any other modern social network takes a very different approach: Weibo, Douyin, Instagram, Facebook, and Kuaishou will all feature content which is getting the most likes and comments. Boring content that people don’t look at or interact with will be hidden for most users.

Instead, WeChat is not doing any content curation. Instead, it simply displays content chronologically on WeChat Moments. The result: you are much more likely to bump into boring food pictures than any piece of content you would actually be interested in.

WeChat recently added a new section called “Wow” or “Top stories” in order to counterbalance this trend. Top Stories is one of the only sections that ranks content in the order of likes clicked by the user’s friends.

This shows, once again, a lack of boldness of WeChat to implement changes within its Moments section. Instead, it created a completely separate section that most users do not visit frequently.

Moreover, only 0.1% of readers of an article click “like” after reading it. Many WeChat articles take more than 5 minutes to finish reading. Thus most users won’t read to the end to click on the like button.

The fact that WeChat makes it difficult to “like” articles means there is not enough data to rank articles in the Top Story section. Very few articles reach the critical number of “likes” necessary to separate boring articles from the ones that would actually of interest (because the algorithm focuses on likes from direct friends, so the number is bound to remain small)

Conclusion: too little, too late

In the end, WeChat is doing too little and too late to fight off the competition from Douyin and Kuaishou.

Of course, the social network still has a lot going for it: it remains pretty much the only messaging platform in China. The WeChat Mini-program ecosystem is booming. WeChat Payments are stronger than ever. And some pieces of content (such as this article) are still much more suitable for WeChat than for short-video platforms.

Yet, Douyin is moving fast into Tencent territory, such as gaming. There are no guarantees that it won’t move into messaging or payments.

If WeChat doesn’t react fast, it might just become another Renren.

What do you do when you’re stuck at home with family for a month? Lots and lots of games. This year, writes Zhao Lei at Ran Caijing, users are turning to WeChat’s mini-app platform for simple, easy-access games. Here’s the key points of the article:

Every year during the Spring Festival, online board games experience a brief wave of interest, quickly falling off after the holiday. In normal times, the user base of these games is relatively fixed. The only way to get users is to win them away from other games.

The Covid-19 epidemic has brought a large wave of new traffic to chess and card games. This year, the normal habits of visiting relatives and friends, gathering for dinners, and playing real cards have significantly reduced. Brick and mortar chess, card, and mahjong rooms have also been closed. 

So, the games have gone online. In WeChat mini games, chess and card games have seen eye-catching growth. Daily active users (DAU), spent time per user, retention, and other metrics are far higher than usual.

Brain teasers

In addition to chess and card games, all-ages and casual-oriented mini games also exploded during the epidemic. According to Aladdin Index statistics, over the Spring Festival holiday the mini games ranked No. 1 on the daily list have consistently been brain-teasers: 

• “I’m Not a Pig’s Head” (Wo bushi zhutou). 
• “Rescue Little Treasure” (Jieqiu xiaobao).
• “Brain Hole 2020” (Nao Dong 2020).

Surprise!

The epidemic has taken everyone unprepared. A high number of small game companies couldn’t respond the increase in demand. However, the operation and distribution level of some companies has been enough to enact effective measures (that encompass servers load, distribution channels and customer service capabilities) that have made sure to seize opportunities and achieve short-term growth. 

Covid-19 will pass. Thus, in the long run, good creativity and quality are the foundation of small game companies.

State of boredom

In this long holiday, boredom has become a common problem for people of all ages in China. Today, the Internet provides people online entertainment methods: videos, singing, games, online social networking, online reading.

The epidemic has given birth to one of the longest holidays in the history of the Chinese Spring Festival. A QuestMobile report shows that the number of daily active Internet users and the average length of daily user use reached a record high in each segment: short videos, games, online social network, with news and information services benefiting the most, due to the public’s attention to the epidemic information and the health of relatives and friends. WeChat, QQ, Weibo, Jinri Toutiao, Tencent News, and Douyin have funneled most of the traffic.

Are you a pig head?

The brain-burning puzzle game “I’m Not a Pig’s Head” is a great example. The core gameplay promises to improve your intelligence level by solving puzzles, while the monetization strategy relies on users watching in-app advertisements to get tips for solving the levels. 

During the Spring Festival, it constantly dominated the Aladdin mini games list, even surpassing longtime champions such as “Happy Poker.” The producer of “I’m Not a Pig’s Head” said that this product peaked at 13 million daily active users, far exceeding usage during the same period last year.

Eyeballs up, ads down

On the one hand, due to the epidemic, the overall macro economy has slowed down threating small games that rely on advertising to generate revenues. As a result, even though many products have increased data such as DAU, stickiness and retention, they have struggled to bring about the corresponding revenue growth.

On the other hand, the income of online board games during the Spring Festival holiday has grown consistently. According to a person in the industry who spoke with Ran Caijing, during this period the number of users has skyrocketed. Many users came spontaneously more than doubling from the best time in the past year in just the Spring Festival single month.

Keep the ball rolling

The question for the industry is how to keep the snowball rolling after short-term dividends from the epidemic have passed.

The producer of “I’m Not a Pig’s Head” believes that the Spring Festival was a flash in the pan for the gaming industry. Although the epidemic caused extended holidays, the overall market still has limited users, and users’ time is limited. 

For small game companies, the longest holiday only slightly extended their window period to become a hit. To seize this opportunity, it was necessary to accumulate product and operating capabilities overnight, which include server power, customer service etc.

When “I’m Not a Pig’s Head” appeared on the market, there were several competitors but, with good game quality, comprehensive data collection, and all-round promotion preparations in the early stages, including private domain traffic, cross-platform promotion, etc., “I’m Not a Pig’s Head” reached tens of  millions DAU at its peak.

This was way beyond anything company CEO Huang Jialong expected. He projected peak of 4-5 million DAUs, but in a few days the game reached more than 10 million, forcing the team to upgrade their servers in a matter of hours. However, it was still not enough, and excessive server load cramped the growth of the product, and a large number of data statistics were left behind, non-computed. 

Be ready

The creation of new games is a good thing, but the decisive factor for success is their own quality and iteration. This requires strong support from technical and operations teams. In other words, it requires accumulation and preparation on ordinary workdays, to be able to seize opportunity when it strikes.

Springboard mini-app games

The essence of most mini games is to become a springboard—to guide users to more targeted games, e-commerce platforms, etc., and encourage them to consume, thereby generating value.

Under this logic, the core of a good mini-app game is very simple: 

• Simple and easy-to-use game design, allowing more people to quickly enter the game, stickiness in game design, and then diverting them out.

This is also the reason for the success of popular puzzle games. The main reason for the popularity mini games is the fact that most are universal, easy to play, and easy to operate, and it’s easy to get a certain sense of achievement through them. Such simple games can achieve a very large number of users.

Between the lines

The covid-19 epidemic may convert some non-game users into game users. 

But this substantial increase in users is offset by the problems in the macro economy, with the biggest uncertainty at present being the change in the advertising market in 2020. This will have a huge impact on all casual games. 

As long as the products metrics are good, traffic is high and purchase prices low, there are still opportunities for these companies to seize the last wave of dividends. Although they may earn slightly less, the number of users will skyrocket, thus strengthening future monetization capabilities.

Watch out though: this opportunity is reserved for games that are ready to respond when lightning strikes.

TikTok owner Bytedance said Saturday that Tencent’s popular instant messaging platform WeChat has started blocking links to its enterprise messaging app and productivity tool Feishu.

Why it matters: The dispute signals intensifying competition between the two companies as Bytedance expands its businesses to instant messaging and gaming, segments that Tencent has dominated for years.

• WeChat has a history of blocking links inside its app that belong to its competitors including Alibaba’s e-commerce platforms Taobao and Tmall, Bytedance’s short video apps Douyin and Huoshan, and Baidu’s short video offering Haokan.
• Feishu, known in overseas markets as Lark, was officially launched in April and is a rival to WeChat’s enterprise productivity app, WeChat Work.

Details: WeChat began to block links from Feishu on Friday afternoon, making links to the app’s website and online conferencing tool inaccessible when linking from within the messaging app, Bytedance said in a statement sent to TechNode on Sunday. The company first aired its grievances on its popular news aggregator platform, Jinri Toutiao, on Saturday.

• The warning webpage which originally displayed in WeChat when users try to access Feishu links said that “many users complained” about the links because they contained “content that lures users into sharing and following,” and thus “access has been blocked to maintain a safe internet environment,” according to the statement.
• “WeChat’s behavior has severely impacted on our users’ work efficiency and experience at a critical time as enterprises resume operations,” Bytedance said.
• WeChat told TechNode that the warning page had been updated. The new message now reads much more neutrally: “If you want to browse this page, please copy the following url and use your browser to access it,” followed with the relative link for users to click.
• The blocking of Feishu links is related to a WeChat external link management rule (in Chinese) the platform last modified in October, according to WeChat. The rule bans webpages that incent users to share on WeChat by providing awards, or that obtain users’ personal information without consent.

Behind the scenes: The blocked links were first reported by Chinese tech news outlet 36Kr on Saturday. However, the article has now been taken down from 36Kr’s website.

• WeChat threatened to ban 36Kr’s official account on the platform after the tech media outlet published the report, according to a statement signed by Yang Jibin, a senior director at Bytedance, the company confirmed.
• A WeChat spokesperson told TechNode that Yang’s claims were “not true” and that 36Kr’s official account was suspended because it had “repeatedly violated the platform’s rules.”

Context: WeChat has a history of aggressively defending its interests, and has engaged in a number of legal battles with rivals.

• On Friday, WeChat also permanently banned the official account belonging to News Lab, a popular blog, maintained by Fang Kecheng, an assistant professor of journalism and communications at the Chinese University of Hong Kong and a veteran journalist.
• In April, a Chinese lawyer sued Tencent under the Anti-Monopoly Law of China over WeChat’s practice of blocking links from other apps, according to Abacus.
• The lawyer said that by blocking those links, Tencent is “effectively turning down his transaction request” and therefore infringing on his communication rights.
• Tencent argued in a December hearing at the Beijing Intellectual Property Court that the terms and conditions in its user agreements allow it to decide which kind of links can be presented in the app.

Updated: The story has been updated with comments from WeChat in the “Details” section.

Alibaba’s enterprise communication app Dingtalk has added a suite of new features in its latest update including “Circle,” a WeChat Moments-like social feed.

Why it matters: Dingtalk is looking to capture new users by expanding its offerings beyond enterprise clients to small businesses and shop owners.

• The app received thousands of one-star reviews on the App Store, backlash from discontented users — namely office workers and students forced to rely on communication tools to resume work or study remotely after the prolonged Spring Festival ended.
• The high demand for online communication tools like Dingtalk during the outbreak has opened up opportunities. Dingtalk added an online classroom feature at the end of January, which 50 million students used when classes resumed.

Details: The newly updated version 5.0 comes with a suite of virtual office features including online collaboration tools, document editor, and storage space, the company announced Tuesday during an online press conference. However, the most noteworthy update is the new social feature called Circle, which bears resemblance to the popular Moments newsfeed feature in mega chatting app WeChat.

• Like Moments, Circle allows organizations and enterprises to create a private circle for social media posts, allowing them to “like” or “comment” on members’ posts.
• It is not only for internal use within companies, the company said. Business partners, students and teachers, platform and merchants, and fans can also create their own Circle.
• For example, teachers also can use Circle to post homework, announcements, and photos. And platforms like Alibaba’s Taobao can create a Circle with shopowners that sell on its e-commerce platform.
• There are four types of Circle: “internal” for enterprise and organizations and its members, “online education” for teachers and students, “business exchange” for business partners, “community operation and management” for fans.
• The Circle function is free of charge for enterprises and organizations.

Context: Emerging internet services including online education and online enterprise services are seeing an upside due to the Covid-19 outbreak.

• Alibaba and its affiliated company Ant Financial have also expanded into enterprise services. The fintech firm launched a work collaboration tool called Yuque in December.

More than 100 cities in China have adopted the QR code health rating system developed by mobile payment platform Alipay, one version of an app that is expected to be rolled out across the country next week.

Why it matters: The health code system is the quick answer the government was seeking to help contain the spread of the Covid-19 epidemic, though some loopholes remain.

• The system enables the government to track at-risk individuals and keep a close eye on everyone else as businesses resume operations.
• The system will also allow more mobility. Some cities have been locked down over the past month, barring visitors or even residents without the proper paperwork. Many have imposed measures such as travel restrictions. Workers all over the country have found themselves stranded in their hometowns, unable to return to work.

Details: Alibaba’s fintech affiliate Alipay said on Wednesday that all cities in eastern Zhejiang, southwestern Sichuan, and southern Hainan provinces have adopted the health code system it developed.

• The platform, versions of which are developed by Alipay, Tencent, and other tech firms, produces colored QR codes based on user responses to questions about travel over the past 14 days, and whether the individual has traveled to virus-hit areas or has come into contact with infected cases.
• To determine contact with infected individuals, the government launched an app two weeks ago that allows people to check whether they have been in proximity to an infected case. However, the parameters used to define “proximity” is unclear.
• To register, individuals provide their name, ID number, phone number, and answer a series of questions including physical health and travel history. Public data is used to verify self-reported information.
• Residents can now show the QR codes at community or highway checkpoints.
• Hangzhou, the capital of Zhejiang province, became the first to adopt the QR code system on Feb. 11. According to Ant Financial, 15 million people registered with the system in Zhejiang alone.
• Sichuan province officially adopted the system on Tuesday.
• Chongqing municipality launched the health rating system on Wednesday with the help of Alipay and Tencent, according to a government announcement.

Context:  Alipay said on Sunday it is ramping up development of the health code system in time for launch next week.

• The system generates green, yellow, or red code based on answers to a few basic questions. Individuals with a green code are allowed to move around the city freely, yellow codes require a seven-day quarantine, and red requires a 14-day quarantine.
• Yellow and red codes can be converted to green after individuals complete quarantine periods with daily check-ins on the app.
• WeChat owner Tencent also rolled out a similar health code system now being used in Shenzhen that will soon be adopted by more cities in southern Guangdong province.

As the Covid-19 epidemic that has killed over 1,500 people spreads across China, so do rumors.

Ever since Chinese officials confirmed human-to-human transmission of the novel coronavirus late last month, rumors about it have appeared on China’s social media and gained circulation. They include bogus suggestions that smoking or drinking alcohol can help to kill the virus, some Chinese medicines could cure the illness, or cats and dogs can be infected by the virus, which leads to massive abandonment of pets in some cities.

These rumors are spread via online groups on WeChat or posted by bloggers on Weibo or as videos on Douyin, as well as other online platforms. 

While the central government has called for “full transparency” about the epidemic that has sicked 72,528 and killed 1,870 as of Tuesday, online platforms have been struggling to balance between containing rumors and giving the public the right to know.

Online platforms such as microblogging site Weibo, instant messaging app WeChat, and short video app Douyin have stepped up efforts to contain misinformation and fake news. But there is also growing concern that they may have silenced people who tried to spread the truth.

Getting the facts straight

Some online platforms, such as Dingxiang Doctor, a popular health information exchange app, have been trying to set the facts straight as rumors become rampant.

Dingxiang Doctor has published over 100 articles fact-checking statements related to the outbreak.

One article examined claims that taking antibiotics can prevent people from being infected by the virus. Dingxiang Doctor deemed it to be false and said that the medications are designed to destroy or slow down the growth of bacteria and that it has no therapeutic effect on Covid-19 infections.

The app also publishes numbers of confirmed cases, the death toll, and their trends on a daily basis. The database and the column have been viewed more than 2 billion times as of Tuesday.

To refute rumors circulating on the app, WeChat has launched a mini program that collects that clarifies false statements. The mini program cites sources from professional institutes such as the China Academy of Sciences and official agencies such as cyber police departments in different cities.

Weibo has been using a feature since 2012 to label unconfirmed information on the platform. Questionable posts will be marked below it by labels such as “controversial” or “false.” The social media site said (in Chinese) on Feb. 10 that it had labeled 6,123 untrue posts related to the Covid-19 outbreak.

By comparison, the platform marked only 1,811 posts in 2018, according to its disclosure documents (in Chinese).

Accounts banned

The Cyberspace Administration of China (CAC), the country’s internet content watchdog, said in a notice (in Chinese) published on Feb. 5 that it had ordered short video app Pipi Gaoxiao pulled from app stores because it had published videos that “spread panic” related to the outbreak. The department didn’t say whether the removal is permanent or temporary, but in previous cases, removed apps have been able to return to the app store after completing “rectification” plans.

The CAC said it had also launched a campaign to directly supervise companies including Weibo, WeChat parent Tencent, and Douyin owner Bytedance.

WeChat, the most popular social media app in China, said on Jan. 25 that it would suspend or permanently ban (in Chinese) accounts that spread rumors about the epidemic.

Douyin, which has 400 million daily active users, said in late January that it had removed (in Chinese) some 24,922 videos from the platform that spread fake information on the disease outbreak and that the app had deleted or suspended accounts that posted those videos.

The true ‘rumors’

However, the content affected goes beyond rumors about home remedies.

Li Wenliang, the whistleblower doctor who died earlier this month because of the virus, warned fellow medics on Dec. 30 about the spread of a “SARS-like disease” in Wuhan, when local authorities were trying to downplay the seriousness of the disease.

Four days later he was summoned to the local police station where he was told to sign a letter, admitting that he had “posted false remarks” online and that they had “severely disturbed the social order.” 

Li’s death sparked outrage on China’s internet, with many users believing that local officials’ efforts to cover up the public health crisis in the initial stage had let the best opportunity to halt the spread of the disease slip.

Politically incorrect information is often deleted under the rubric of “rumor,” said Jo O’Reilly, a data privacy expert at digital privacy advocacy group ProPrivacy.

A report suggesting a higher death toll published by Caijing Magazine on WeChat’s Official Accounts Platform, a blog-like feature, was deleted within one day after publication. 

The story, which amassed more than 100,000 views on the platform before it was taken down, claimed that some people in Wuhan died after showing symptoms of Covid-19 but were not included in the official death toll because they passed away before their infection of the virus was finally confirmed.

WeChat said on the webpage that hosted the article that it had “violated the Management Regulations on Online Public Accounts,” a rule issued by the CAC in 2017 that demands bloggers regulate their content. The app, however, didn’t give details about which clause of the rule the article had violated.

“There definitely appears to be a concerted effort underway to restrict the spread of genuine information for the purposes of deterring panic,” said O’Reilly.

However, panic is not gone. It is unclear whether the authorities have achieved its goals of containing rumors despite all the efforts. Both plausible and preposterous rumors are still circulating widely, in a sign that people are still skeptical about the government’s commitment to transparency.

On a Weibo post of a state media article that warns people spreading rumors may have their accounts banned, one user commented: “If the rumors were finally proven true, can we seek compensation from the state?”

Tencent’s mobile payment platform WeChat Pay and online insurance platform WeSure are offering financial support to small merchants hospitalized for novel coronavirus treatment.

Why it matters: The coronavirus epidemic has taken more than 560 lives in China and infected thousands. Small- and medium-sized sellers are among those hit the hardest in the country as the transport of goods has become increasingly difficult with traffic restrictions. Meanwhile consumers, wary of human contact, remain at home.

Details: As reported on our sister site, TechNode Chinese, merchants can apply for financial aid via WeChat’s payment platform. Applicants eligible for the aid will receive RMB 1,000 ($143.5) per day for up to 30 days, and are not required to repay the funds.

• Merchants qualify for the coronavirus financial aid as long as they have earned at least a single point from WeChat Pay’s merchant incentive “Gifts Upon Payment” program.
• Merchants covered by the insurance can receive a payout of RMB 1,000 per day for up to 30 days if diagnosed with the disease and admitted to primary or secondary public hospitals or certain treatment centers for novel coronavirus patients.
• The financial aid plan is valid until Feb. 29.

Context: WeChat said in July that its payment network connected more than 50 million merchants and businesses in China and processed a billion transactions daily. A large percentage of small merchants on WeChat Pay are restaurants, fruit and vegetable sellers, hardware stores, and grocery stores.

• Gifts Upon Payment is a merchant engagement program that WeChat rolled out in January 2019. Small- and medium-sized merchants can earn points for every QR code transaction they receive, RMB 1 for 1 point. Merchants can exchange points earned for benefits.
• Chinese tech companies have stepped up to support small and medium-sized businesses during the coronavirus outbreak. Ant Financial-backed online commercial lender Mybank has reduced interest rates for business loans by 10% for 1.8 million small business owners in Hubei, the epicenter of the outbreak. Tencent, Bytedance, and Alibaba have made some online business conferencing and collaboration features free of charge for smaller enterprises.

Monday marked the first day back to work after an extended Spring Festival holiday in China, causing temporary paralysis for business productivity platforms like DingTalk and WeChat Work due to the sheer volume of traffic generated by the hundreds of millions working remotely.

Why it matters: While most businesses in China resumed work on Monday, many took precautionary measures to prevent spreading the current novel coronavirus and required employees to work from home.

• Companies are relying heavily on virtual workspaces and conferencing tools as they await the return of normal operations.

Details: The unprecedented surge in traffic for popular apps including Tencent’s business communication and office collaboration tool WeChat Work and Alibaba’s virtual workspace app DingTalk caused temporary issues on Monday. Many users complained about connectivity problems on the first day back to work.

• DingTalk said its video conferencing traffic reached a historical high at 9 a.m. on Monday. The surge caused some connectivity issues and glitches but it recovered momentarily, the company said on its official Weibo account. More than 200 million employees of tens of millions of Chinese businesses worked remotely on Monday, according to the company.
•  WeChat Work also issued a statement to address connectivity problems that many users complained about on Monday. WeChat Work announced last week that it had ramped up the capacity for its audio and video conferencing tools to allow up to 300 participants per meeting.

Context: Enterprise-facing technologies such as messaging and productivity tools are increasingly prevalent in China. The coronavirus outbreak and the unprecedented number of workers forced to work remotely became a stress test.

• The jump in remote workers, even temporary, has also created an unexpected opportunity for service providers to acquire new users. DingTalk, WeChat Work, Bytedance’s Feishu, and Huawei Cloud’s WeLink have all made some of their communication and video conferencing features available free of charge.

WeChat is testing a new feature that allows users to post videos to an audience beyond their social circles in a bid to boost user engagement as competition from rivals Douyin and Kuaishou intensifies.

Why it matters: WeChat has released a series of updates in recent months, signaling that the most popular social media app in China is stepping up efforts to lock in more users and boost growth.

• The Channels feature, which allows selected users to post videos or photos to random audiences, resembles the app’s Moments newsfeed, where user posts are only visible to their contacts.
• With WeChat’s more than 1 billion monthly active users, Channels could potentially lure influencers and content creators from short-video platforms such as Bytedance’s Douyin, known as TikTok internationally, and Tencent-invested Kuaishou, as well as photo-sharing apps.

Details: Channels allows users to post videos up to one minute or up to nine photos at a time plus a link, said Jiang Hongchang, an editor at Miniapp.com, a site that was allowed to participate in the beta test.

• In a call for influencers to participate in the test published on the WeChat Team official account, the app asked applicants to provide “proof of influence,” including follower count on other social platforms.
• “We are going to explore whether the feature could become a new means for us to obtain followers and engagement,” said Jiang.
• WeChat said in a statement to TechNode that Channels is still under an “A/B testing” and that the feature is the company’s “ latest exploration” in “providing users with creative ways of expressing themselves.”
• It is unknown whether WeChat will grant all users access to the feature to view and post. The company said in the statement only that it could be “available more widely.”

WeChat mini programs: the future is e-commerce

Context: WeChat’s monthly active users reached nearly 1.2 billion as of September, according to parent company Tencent’s Q3 earnings report.

• The app last week announced a new feature that allows publishers on its Official Accounts Platform to add paywalls to their posts.
• Earlier this month, WeChat announced several retail-friendly features for its mini programs, sparking speculation that it is trying to build a vast online marketplace to compete with rivals such as Alibaba, JD.com, and Pinduoduo.

WeChat announced Wednesday it is testing a new feature which allows publishers on the social media app to add paywalls to their posts.

Why it matters: WeChat is becoming one of the few online content platforms in China to move into paid content, still a niche business for the Chinese internet users.

• WeChat official accounts have become one of the most important channels for Chinese internet users to get information online since it was released in 2012.
• WeChat’s Official Accounts Platform houses millions of subscription accounts run by individuals, news organizations, enterprises, and government agencies. The newsletter-like format allows account owners to push a series of articles to their subscribers.
• Most Chinese media don’t use paywalls to block readers from their advertising-based business models.
• Analysts have said that Tencent, which owns WeChat, is trying to rebalance its financial structure by growing WeChat’s revenue after its gaming business was hit hard by tightened regulations.

Details: WeChat is testing a paid content feature for some official accounts and will give access to some “qualified” accounts owners, a WeChat spokesperson confirmed to TechNode on Wednesday.

• The feature allows account owners to add paywalls to selected or all content they publish, and readers have to pay to unlock articles or subscribe to the account for a recurring fee.
• Android users can pay with WeChat Pay, the app’s mobile payment method. iOS users, however, have to pay through Apple’s in-app purchase service, meaning that the Cupertino, California-based technology giant will take up to 30% as commission for each transaction, a fee known as the “Apple Tax.”

Context: WeChat, the most popular social media app in China with 1.15 billion monthly active users as of September, has stepped up efforts to monetize its services with a series of major updates.

• The app announced last week several retail-friendly features for its mini programs, sparking speculation that it is trying to build a vast online marketplace to compete with rivals such as Alibaba, JD.com, and Pinduoduo.
• WeChat Work, the app’s enterprise communication and collaboration platform, rolled out last month a feature called Moments, a move that observers expect to disrupt the social selling space. The feature allows businesses to post into their customers’ personal WeChat feeds.

With contributions from Emma Lee

WeChat rolled out a series of updates last Thursday, laying bare Tencent’s ambitious plans for mini programs—to build a vast online marketplace for traders and sellers. The move puts China’s most popular social media app on a collision course with Alibaba, JD.com, and Pinduoduo in the e-commerce space.

The new changes include a customer review mechanism, tools for brand protection and shipping, as well as a consumer protection platform, among others. The features bring the these WeChat sub-applications closer to resembling an online marketplace.

“It definitely looks like WeChat is setting up features to create an online marketplace,” said James Hull, professional investor and co-host of the China Tech Investor podcast (powered by TechNode). “They’ve tried e-commerce before, so it’s safe to assume they want to get into the space,” he added.

E-commerce’s rising star

WeChat mini programs are lightweight applications that run within the super app. Users don’t need to download or upgrade them via app stores. Some 2.4 million mini programs already operate on WeChat as of August, according to a report (in Chinese) from mini program service provider Jisu App.

WeChat’s monthly active users hit 1.2 billion at the end of September, according to parent company Tencent’s third-quarter earnings report. By comparison, MAUs of Alibaba’s e-commerce apps were 693 million for the same quarter.

Online shopping transactions made up just shy of one-third of the total trade volume for WeChat mini programs that use Jisu App’s services for the first half of 2019, according to a company report.

WeChat can leverage its copious amounts of user data, its business-to-consumer ecosystem, as well as its advertising operation to build an e-commerce platform, said Hull.

“As we’ve seen with Pinduoduo, social e-commerce is powerful and it doesn’t get more ‘social’ in China than WeChat,” he said.

E-commerce-friendly features

Tencent’s goal for mini programs in 2020 is to “help developers build their own business closed-loop,” said Du Jiahui, deputy general manager of WeChat’s Open Platform, at an event keynote speech in the southern city of Guangzhou last week. Du’s team is responsible for mini-program functions. 

To get there, he announced plans to add more e-commerce friendly features to the mini program platform. They include:

• Improving WeChat’s search function to include items sold in e-commerce mini programs in results.
• Introducing a brand protection platform for companies to verify brands they own and help consumers to distinguish authentic items from counterfeits.
• Rolling out a shipping solution that provides merchant services from couriers and helps customers track packages.
• Most significantly, setting up a trade protection platform this year to unify order management in different mini programs and deal with disputes. Its purpose is to “make customers shop more safely,” according to Du.

Additionally, WeChat said it would open up mini program developers with three modules—live streaming, QR codes for goods, and technology for cameras to recognize objects—that could enhance their ability to engage with customers. 

Live stream e-commerce took off in China in 2019 and the market is worth an estimated RMB 440 billion ($83.8 billion). During last year’s Singles Day shopping event on Nov. 11, Taobao Live from Alibaba racked up sales of RMB 20 billion. The live streaming-based sales made up 7.5% of the group’s overall sales.

WeChat’s plan to develop more e-commerce and retail-friendly features is a “natural reaction” to new business models in the e-commerce sector, according to Sheryl Shen, analyst at market consulting agency ChinaSkinny. Adding live streaming “will be the standard practice to boost traffic and revenue given the sales numbers we saw from the past Singles Day,” she said.

Kickstarting Tencent’s C2C ambitions

Tencent is trying to rebalance its financial structure by growing its WeChat revenue, Shen said. The firm derives a huge chunk of revenue from gaming and was hit hard when the government froze new title approvals in 2018.

The whole consumer-to-consumer (C2C) landscape is shifting because of changes to regulatory policies, especially after the new e-commerce law came into effect in early 2019, she said.

The law requires most online vendors to gain approval from authorities before selling and was a huge blow to China’s daigou shuttle sellers. The merchants typically buy goods abroad and import them for resale online back home.

WeChat has carried out “the strictest yet” policy to crack down on personal shoppers who mainly use WeChat and other social media, Shen said. The platform “is also preparing the way for its future development in e-commerce and retail mini programs to eliminate potential competitors,” she added.

WeChat announced at last week’s event that the total transaction value from mini programs on the app exceeded RMB 800 billion in 2019, a 160% year-on-year increase.

Though the figure is a fraction of Alibaba’s fiscal year total transaction value of RMB 5.72 trillion, WeChat’s massive user base could pose a threat to the established e-commerce player, according to Hull.

“It would take some time before it could challenge Alibaba’s dominance, but all the companies already on the WeChat Open Platform and with mini programs give them a jump-start,” he said.

Aurelien Rigart is a co-founder and vice-president at digital production firm IT Consultis. The company provides strategy and tech solutions on WeChat Work, mentioned in this article.

Tencent is poised to disrupt the social commerce landscape once again, this time by leveraging WeChat’s sister app—WeChat Work. WeChat Work has undergone a constant stream of upgrades in recent months. With the latest update on Dec. 23, WeChat Work rolled out a long-awaited function—Moments. Those moments can be shared not only with colleagues on WeChat Work, but consumer WeChat users. And this is why this is so powerful.

Tencent introduced WeChat Work in 2016 as a dedicated tool for business communication. Over time, the app has evolved to serve social commerce better.

The platform provides an instant messaging with internal company functionalities, similar to those of Slack, and also connects seamlessly with other non-work chat apps. Tencent connects the app to WeChat to maximize interaction and minimize friction and, more importantly, create a champion in social selling. By utilizing the platform, employees can engage with everyday WeChat users, while administrators maintain a high degree of control over the relationships they build. In this way, WeChat Work is a dream tool for social commerce.

Social media are growing increasingly important to sales in China, as customers prefer to buy products recommended by a familiar face. What we call social commerce includes livestreamers, brand-focused networks like Little Red Book, and brand participating in social media to drive sales. One of the best ways to reach consumers is to get your customers to add you as a WeChat friend.

Why are WeChat Work Moments a big deal?

Before the latest update, the lack of Moments was one of the biggest complaints that brands had about WeChat Work: sales reps often shared pictures and company content on their WeChat moments to keep customers up to date. They also often shared their private, more human side with WeChat contacts to establish a relationship beyond a product purchase. With the new WeChat Work Moments, brands not only have the feature they requested, but they can prepare posts and updates on behalf of sales reps to maintain consistency across the communication spectrum. This update closes the gap between the app and WeChat.

Why WeChat Work, and not WeChat, is ideal for social commerce

WeChat Work improves on WeChat capabilities when it comes to engaging in social commerce. Brands have leveraged WeChat social commerce by having some of their employees connect directly with customers via direct conversations, or by adding them to group chats where discounts and company news were shared. This method can be successful, but has drawbacks:

• The sales reps are in control of the relationship with the customers, not the brand itself. When the sales reps leave the company, they take away their client database and the associated revenue.
• Brands have no visibility into interactions between the customer and the employee.

Leveraging WeChat Work for social commerce

With WeChat Work, brands keep control of the relationship with the customers. Brands can leverage WeChat Work in three main ways:

Acquisition and Connection

WeChat Work provides brands the ability to get insights into the salespeople’s activities and retain customer data after salespeople leave. Customers can use their own WeChat to scan the salesperson’s WeChat Work QR code and be connected immediately, while all sales staff activity on WeChat Work can be easily tracked by managers. When a sales rep leaves, the brand can easily reassign these customers to a new salesperson in case of employee turnover.

Social CRM

Using the app, salespeople and brands can get a full knowledge of customers by integrating social customer relationship management systems (CRMs), so that they can learn when to engage with the customers at the right time with the right content, and easily track all the selling progress from a centralized KPI dashboard. The sales team can now connect directly to their KPI system and track real-time their progressions. This gives a substantial boost in terms of motivation and, therefore, sales.

Building long-term relationships with key customers

WeChat work can build a 360-degree customer profile so that brands can create more behavioral-based tasks for salespeople to drive better conversion rates. Beyond that, the sales manager can oversee the selling progress on a macro level by tracking the number of chats or response time.

Which industries can benefit from social selling the most

Any industry can make use of social selling. One of the most notable examples would be the luxury industry, which can leverage WeChat Work’s capability to create long-term relationships and personalized experiences. Retailers can also benefit from WeChat Work O2O capabilities. Other industries can benefit thanks to the flexibility and scalability of the platform’s ecosystem. Brands can build customized apps and Mini Programs and integrate them into the app, enhancing the customer experience and streamline the sales process. The B2B sector will also see huge growth in the upcoming months in those areas.

WeChat Work’s goal

The end goal of the app is to give brands a tool to achieve a sales concept known as “whole team sales”: having all your team aligned on one platform with a consolidated marketing strategy, and capable of driving more sales for your brand. To achieve this, Tencent is once again disrupting social selling by enabling companies with a fine-tuned tool at the center of brands’ omnichannel ecosystem. This way, Tencent can drive more traffic away from marketplaces and redirect it into private traffic channels where brands can maximize revenue and nurture relationships with customers, ensuring long-term growth.

A version of this post by Thomas Graziani first appeared on WalktheChat, which specializes in helping foreign organizations access the Chinese market through WeChat, the largest social network on the mainland.

Digital marketing in China used to be all about WeChat. Therefore, Tencent could rest on its laurels for a while. WeChat got lazy about making WeChat Official Accounts a good way to access content, it missed the boat on the explosion of online videos and provided a sloppy search engine.

But Tencent is now paying for staying too idle for too long. ByteDance has grown into a content behemoth that is stealing user attention away from WeChat, and the largest social network in China now needs to fight back.

#1: Related content in WeChat articles

The first feature has the obvious ambition of making WeChat more of a content platform: related articles.

The idea is simple: after reading a WeChat Official Account article, users are offered a suggestion of another article to read.

This is the first step for WeChat to catch up in a fight for user attention. ByteDance (the group that owns Douyin) did a great job at keeping users engaged across its different Apps. Toutiao offers five suggestions at the end of each article, while Douyin provides an endless loop of short videos.

In fact, ByteDance has always promoted itself as an AI-focused company. The artificial intelligence at the center of its recommendation engine is the key competitive advantage of the company.

WeChat is still far from this user-customized approach. In fact, only a fraction of WeChat articles currently provide a related article recommendation. The recommendation is also the same for all readers.

The move is nonetheless a step in the right direction for WeChat in order to increase the engagement on WeChat articles and videos.

#2: Integrating WeChat mini-programs in Tencent’s short-videos app

WeChat recently enabled users to link Weishi videos to WeChat Mini-programs.

Weishi was a short video platform launched by Tencent in 2013. It didn’t receive much traction, and was eventually shut down in 2017. It was not until 2018 that Tencent re-launched Weishi as a defensive move against Douyin. Re-directing traffic from other Tencent products such as QQ, QQ browser and Tencent news, it quickly grew Daily Active Users (DAUs) to 7.5 million in June 2019. However, it still doesn’t stand a fighting chance against Douyin.

Tencent recently improved the Weishi experience by including WeChat mini-program integration. For instance, a video featuring a product can include an e-commerce link to a mini-program store selling the product.

A subtle hyperlink first appears, which is then replaced by a more obvious description of the product after a few seconds.

Clicking the link takes users directly to the WeChat Mini-program. They can also go back to the video with one tap.

The UX is very very similar to Douyin—it is likely that Tencent took some inspiration from ByteDance’s product…

Tencent recently announced a target of reached 50 million DAUs for its short videos App by the end of 2020. As a comparison, Douyin claimed 320 million DAUs as of July 2019.

#3: Improved search feature

As WeChat is trying to become more of a content platform, it needs to make content more accessible. A big part of this task is improving its search feature.

The search feature has been renamed and can now filter results between categories such as WeChat Moment Posts, Products, News, WeChat Official Accounts, Articles, WeChat Mini-programs, Videos, Books, Music, Q&A posts (for instance from Zhihu), and even WeChat Stickers.

No matter if you’re looking for a product from Prada, a video of Chanel’s latest catwalk or a cute cat WeChat sticker, the new search feature can help.

There is, of course, a long way to go before WeChat becomes more of a search engine. Improving its search feature is however an important step in becoming a more user-friendly content ecosystem.

Conclusion

WeChat is facing its biggest challenge to date: competing against ByteDance.

This new fight might, however, help WeChat. The competitive pressure is forcing Tencent to look into features which had been neglected up to now.

The largest social network in China is now innovating again, sometimes taking inspiration from its adversary. Will WeChat be strong enough to steal back a share of the short video market? This remains an open question.

Some of China’s biggest technology companies including Bytedance and Kuaishou may find themselves increasingly accountable for content on their platforms with the release of finalized online content regulations on Friday.

Why it matters: Authorities are likely to come down heavily on rule-breaking content after the March deadline and may suspend or shut down offending platforms.

Details: China’s Cyberspace Administration has issued finalized “regulations on ecological governance of online content” (in Chinese) on Friday following draft rules released in September.

• The regulations ban exaggerated, rumor-laden, sexually provocative, and dangerous content which may incite copycats. Also prohibited are acts which infringe on personal privacy, use of new tech to engage in illegal acts such as artificial intelligence-powered face swapping, buying traffic, and use of the Communist Party or state symbols in marketing campaigns.
• The rules encourage “positive energy” content that promotes Xi Jinping Thought, highlights economic development, and shows the world “the real, three-dimensional China.”
• Platforms using personalized recommendation algorithms must include controls for manual intervention and user choice.
• Advertisements are considered online content.
• The regulations encourage platforms to create content versions suitable for minors.
• The rules will be implemented March 1, 2020.

Context: While not a high budgetary priority at present, Chinese online platforms may find their content moderation policies require more attention as the stakes rise.

• Content moderation procedures and staffing lack clear directives and support, according to an employee at a large, livestream video platform TechNode spoke with. Companies are unwilling to spend, so staff turnover is high due to irregular hours and low salaries, he explained.
• Consistency is difficult to ensure because of the high turnover rate. Platforms fire moderators that regularly fail to recognize problematic or dangerous content but “when hands on deck are few, everyone is welcome,” (our translation) the livestream platform employee told TechNode.
• “Many companies are already doing most of what these regulations require but it’s not clear how far they must go,” he said.
• Platforms are finding themselves in the hot seat for content that they disseminate. The death of barehand climber Wu Yongning in May, for example, sparked public debate over platform responsibility for user behavior. Huajiao, one of several apps Wu used to broadcast his escapades, paid RMB 30,000 to his family.
• Regulators pulled social shopping app Xiaohongshu from app store shelves for illegal advertisements in July. It took nearly three months for the app to return to stores.

Russia-based Alrosa, the world’s largest diamond producer by volume, has launched a WeChat mini program in partnership with UK-based technology company Everledger to allow consumers and jewelry retailers in China to track diamond sources and ownership.

Why it matters: WeChat operator Tencent has been exploring blockchain applications in a wide range of areas, including supply chain finance, gaming, and invoicing for transportation.

• The latest move applies blockchain technology to online-to-offline retail in the luxury e-commerce market.

“We are delighted to support this WeChat Mini Program with Everledger, as it reinforces our pursuit for guaranteeing the origin of our products. We believe that this collaboration with the most popular social media platform in China will help us to further strengthen our sales there.”

—Pavel Vinikhin, head of diamonds at Alrosa

Details: The new WeChat mini app will allow retailers to track their diamonds including the origins and ownership history stored on the blockchain.

• The Russian diamond producer expects blockchain technology to help track the source of the stones and bring more transparency, often lacking in the diamond supply chain.
• Consumers can check diamond certification via the WeChat mini program and purchase stones in the app using WeChat Pay. Diamond owners can also verify their ownership through the Everledger blockchain platform.
• Alrosa will provide information on their diamonds mined in Russia, allowing consumers to trace the exact origin of each stone.

Context: In September, Tencent led Everledger’s $20 million series A round and, as part of the investment deal, is represented on its board of directors.

• Numerous companies in the diamond industry have adopted blockchain to help to weed out fake and conflict diamonds.

A version of this post by Thomas Graziani first appeared on WalktheChat, which specializes in helping foreign organizations access the Chinese market through WeChat, the largest social network on the mainland.

There is no shortage of providers of WeChat stores (WalktheChat is one of them!). But, whether we like it or not, we all have to admit that there is one leader in the market: Youzan.

Let’s take a closer look at the largest WeChat store provider in China.

We also wrote a step-by-step guide on how to create a WeChat shop using Youzan.

What is Youzan?

Youzan is the largest provider of WeChat stores in mainland China.

If you want to set up a store for your brand on WeChat, you need to find a solution provider to help out. Unlike Tmall, WeChat doesn’t have a single interface to set up stores. Instead, WeChat provides a toolbox for many service providers to design their own offerings.

Most providers (including WalktheChat) provide two versions of the WeChat store: an HTML5 store which works also outside WeChat, and a WeChat Mini-program version which is specific to WeChat.

Youzan provides a Software-as-a-Service (SaaS) solution to set-up a WeChat store, which can be managed either via their website or via a native App.

The Youzan platform is used by major brands such as Dell or Walch, and by top influencers such as Becky Li.

In a recent conference, Youzan revealed that traffic to merchants’ WeChat mini-programs was mostly coming from swipe-down access from the WeChat home page (27%), official account menus (15%), and official account articles (14%).

Youzan claims to serve more than 300,000 merchants. It also boasted a Gross Merchandise Volume (GMV) of RMB 33 billion (about $4.7 billion) in 2018.

GMV for the first three quarters of 2019 was RMB 38 billion.

The GMV of Youzan has been booming over the last few years, with a YOY growth rate of more than 200%.

This GMV, although significant, remains tiny in comparison to pure e-commerce competitors such as Taobao. Taobao generated RMB 2.69 trillion of GMV during fiscal year 2018, 81 times more than Youzan.

These figures show that, although WeChat stores drive large volumes of sales, large marketplaces do remain the main channels for e-commerce sales in China.

The group has also been struggling to turn a profit. In fact, its losses widened to HK$839 million (about $107 million) in 2018.

Most Youzan revenue comes from subscription fees to its WeChat store platform. The company charges between RMB 6,800 to 26,800 per year for access to the platform. More expensive plans give access to more advanced features (CRM, multi-level marketing, electronic invoices, additional data, etc.).

Some specific features, such as WeChat mini-programs, also require merchants to pay additional fees.

These SaaS subscription fees make up for more than half (52%) of Youzan revenues. Another 28% comes from transaction fees.

In contrast, Youzan’s competitor Weimob managed to grow its advertising revenues to account for 66.6% of its business. Weimob thus displayed better financial performance than Youzan, reporting a profit during H1 2019.

There are a lot of cards left to play for Youzan to keep expanding and reach profitability.

The company benefits from support from Tencent. In April 2019, Tencent invested HK$1 billion into Youzan, giving it a 6.5% ownership stake in the company. This support from Tencent is of course game-changing for Youzan, given the reliance of the platform on social sales.

Youzan has also struck a deal with Baidu. In August 2019, the two firms launched a joined venture named Qima. This collaboration will enable better integration between Youzan and Baidu’s own mini-program system.

Innovation has also been coming to the WeChat Ecosystem: WeChat now supports live-streaming, which promises to increase GMV and exposure for merchants.

Youzan also partners with Kuaishou, one of the largest short video platforms, enabling users to add an e-commerce link to their videos. However, most of the top influencers on Kuaishou still choose to link to Taobao stores.

Zhu Ming, the founder of Youzan, is generally known as “Bai Ya.” Bai Ya has shocked the media all across China in January 2019 by supporting 996 culture. Since then, Bai Ya has claimed it was a misunderstanding and that 996 is not a mandatory policy of Youzan.

996 is the expectation that employees will work from 9 a.m. to 9 p.m., six days a week. Youzan also requires employees wanting to take more than three days of leave during a national holiday to file an application directly with the CEO.

These statements have triggered controversy, but they are not so outlandish in the Chinese tech world. Alibaba’s founder Jack Ma has called 996 a “huge blessing” in April 2019. Richard Liu who runs JD.com, along with other tech founders, has expressed a similar sentiment.

Bai Ya is also a thought leader in the tech and SaaS community. He shares his own take on business-related topics on his personal WeChat blog. Some of his popular articles covered SaaS valuation models, company culture, leadership, and product design principles.

Youzan has managed to stand out as a leader in the very competitive market of WeChat stores. The company’s revenue and GMV are booming. Youzan has also managed to find powerful allies such as Tencent.

The platform, however, is not out of the woods yet. Its losses are growing faster than its revenue, and its work culture has attracted controversy and might make it harder to attract talent.

Youzan will have a tough fight against competitors such as Weimob and LOOK, and against substitution offers such as Tmall or JD.com. But given what has been achieved so far, there are reasons to be hopeful.

Editor’s note: A version of this post by Thomas Graziani first appeared on WalktheChat, which specializes in helping foreign organizations access the Chinese market through WeChat, the largest social network on the mainland.

WeChat has just released its most rigorous policy to date on regulating incentivized sharing and external links. The policy will ban some of the most common campaign tactics. Here are some of the highlights:

• Group buy campaigns to be heavily regulated
• Incentivized app downloads to be banned
• Editing or re-using a user’s profile pictures or user information to be banned
• Sharing a link that contains users’ profile picture and username to be banned
• Providing a service similar to WeChat features to be banned

While the purpose of the regulation is to improve end-user experience and protect users’ privacy, it could be a deadly trap for companies trying to acquire marketing leads.

Here are some of the biggest updates. The full regulation is accessible here (in Chinese).

General incentivized sharing rules

These rules are not specific to the new regulation (they were already in place previously), but it is good to have a refresher on them as the new regulation suggests they might be enforced more strictly:

• It is forbidden to give any incentive to a user (including but not limited to red envelopes, coupons, vouchers, points, credits, data, content) so that they perform an action on WeChat (share, like, read, comment, etc.)
• It is forbidden to offer any incentive to a user (including but not limited to red envelopes, coupons, vouchers, points, credits, data, content) that they will have to claim outside of WeChat (in another App or website)
• It is forbidden to use any strong language when asking user to share content (“You’re not Chinese if you’re not sharing this”, “You must share this right now!”, etc.)

Group buying is heavily regulated

Group buys are a great way to spread your marketing messages to the direct contacts of your customers. Many merchants took it a step further, spreading false or misleading information to trick users into purchases.

This is now explicitly prohibited by WeChat:

• Fake group purchase events, where … the amount paid by some group participants is obviously not equivalent to other participants
• Group purchase events of a lottery nature
• Group purchase events with no clear and definite rules, or the rules are not publicized to the users in an obvious notice

For example, the above group buy is considered to break the new term since the group-buy rule is not clearly displayed in a visible space. It also contains a lottery feature that could mislead users to make an unintended purchase.

Other information that needs to be clearly displayed includes whether the customers are able to receive a refund if the group buy deal did not meet the target.

Incentivized sharing 2.0

As we mentioned, WeChat has always been strict on incentivized sharing, meaning giving any kind of incentives (red packet, coupon, points, information…) to encourage users to share content. And the updated WeChat regulation takes the incentivized sharing ban to another level.

For example, the most common e-commerce practice of Pinduoduo called “share to bargain” is now banned. Pinduoduo was able to grow its user base among older users who live in lower-tier cities with the “share to bargain” campaign. Users can “bargain” down the price by asking friends on WeChat group to participate in the campaign.

Another common tactic that got banned is asking your friend to help you increase the chance of winning a prize. Ticketing companies have been using this strategy to get more users to register for membership or to download apps.

Download an app to win a prize

Be careful about the content you put in the app download landing page. A common tagline such as:

• “Download the App to get XXX RMB red packet”
• “Invite a friend to receive XXX amount of coupons”
• “Get a data package of XXX if you download the App”

Privacy & data protection 

Have you ever seen campaigns using the user’s profile picture as the thumbnail picture? This is banned as well!

Brands will not be able to use users’ profile picture or WeChat name in any kind of first-layer sharing previews to increase the click-through rate.

Brands will need to explicitly inform the user and acquire specific permission if they want to store or use any kind of user information, such as phone number, open ID, Chinese ID, date of birth.

 

Above are two viral campaigns that added a filter/icon on a user’ profile picture. Both campaigns were banned by WeChat. Previously Toutiao got itself into a lawsuit with Tencent by trying to re-map a user’s contact map and use the user’s profile picture. As WeChat sees a user profile as an important asset, it’s not something any third party can reuse.

Competition with WeChat

Any kind of feature build that competes with the existing features of WeChat is not allowed. A list of companies that were or still are blocked by WeChat includes Douyin, NetEase Music, Xiami Music, and Alibaba, among others.

WeChat is a perfect platform to promote physical products or traditional services. But it remains very defensive toward other applications that might attempt to steal its user base.

Effective date

The new regulation will take effect as early as Oct 28th, 2019.

What might be the punishment if you infringe on the above rules?

Potential sanctions for violating the WeChat terms of use include:

• Blocking the website or IP address
• Limiting or blocking the traffic to the content on WeChat Moments
• Partially or fully limiting features of the Official Account
• Temporarily blocking or event permanently deleting the account
• Banning the company from using the WeChat system

Usually, WeChat will give the account a warning before completely blocking the account. But in the case of a viral campaign, the harshest punishment could apply on the first strike.

As is often the case, WeChat has a relatively vague approach to infringement and punishment. This strategy forces companies to remain as far as possible from violating the rules (as it’s not clear where is the line that will get the punished)

The direction of WeChat is clear: anything that affects user experience on WeChat shall not be allowed. Content should only be shared if the user likes voluntarily wants to do so.

WeChat has introduced a new payment feature that allows users to send and receive money using a mobile phone number.

Why it matters: Tencent’s WeChat Pay is one of the most popular payment methods in China, with access to the messaging app’s billion-plus users. The payment giant frequently locks horns with rival Alipay, operated by Ant Financial.

• Tencent has been focusing on its fintech push since late last year. According to the company’s first-quarter financial results, fintech and enterprise-facing services was its second-largest division, behind only online games.

Details: WeChat users can unlock the new feature from the messaging app.

• The sender can transfer money to the receiver by entering a phone number. The funds will be automatically deposited into the receiver’s WeChat wallet.
• Both the sender and the receiver’s WeChat account are required to be linked to valid mobile numbers.
• The sender can transfer money to any WeChat user, even those that are not a friend, as long as the mobile payment feature is enabled.
• The feature is currently available only on iOS.
• Some Chinese netizens questioned the security aspect of the payment method. “What if I entered the wrong phone number?” a Weibo user commented on a Sina Tech post about the new feature. “It should at least add another verification step to make sure the name of the receiver is correct,” another user said.

Context: The Alibaba-affiliated Alipay rolled out a similar payment feature back in 2012, which allows money transfers using only a mobile number or an email addresses.

• Several other major banks in China have also introduced a mobile phone number-based funds transfer feature, including Bank of China, China Merchants Bank, and Industrial and Commercial Bank of China.

WeChat has banned external links that require users to invite clicks from contacts in an update to its external link policies on Friday.

Why it matters: The new rules may prove to be a heavy blow for companies that rely on WeChat for customer acquisition. However, WeChat users responding to a Weibo post about the news overwhelmingly welcomed the change, saying that they are increasingly bombarded by unsolicited spam messages.

• The high cost for user acquisition is a major pain point for Chinese internet companies. The popularity of similar WeChat-based marketing features highlights the app’s status as a major traffic source.

Details: WeChat has updated four items in its guidelines on external links concerning social sharing features and user avatars. The new adjustments will take effect on October 28, according to the statement.

• WeChat has banned posts that require users to ask contacts to repost, like, or click to open a link within the post to qualify for a discount or participate in a marketing scheme.
• Another new rule forbids companies from making unauthorized edits to user avatar and nicknames.
• Operations that require users to open another app or download a new app in order to obtain monetary rewards, physical prizes, and virtual prizes are also banned.
• The update also widens its ban on fraudulent activity to include group-buying links, including lotteries or sales of goods with an obvious disparity in price and product value.

“It’s the most annoying thing when a WeChat contact, who I haven’t talked to for a hundred years, [gets in touch] to ask a favor for a discount or to ‘like’ a WeChat Moments post” (our translation).

—Weibo user Love Avril on Monday morning

Context: WeChat, China’s most ubiquitous social media app with more than 1 billion active users, has a number of restrictions on external links, primarily concerning content or the source of the link.

• WeChat has also long been known for blocking external links to rival platforms such as Alibaba’s e-commerce platform Taobao. Competitors frequently criticize the company for “monopolizing behavior.”
• WeChat’s extended ban on audiovisual links in May 2018 drew public outcry. The firm removed the policy just three days later.

China Tech Talk is an almost weekly discussion of the most important issues in China’s tech. From IPOs to fake data, from the role of WeChat to Apple’s waning influence, hosts John Artman and Matthew Brennan interview experts and discuss the trends shaping China’s tech industry.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

After an extended hiatus, John and Matt are back! This week, they look at the increasingly effective trend of private traffic. Powered by WeChat and its mini programs, marketers and brands are increasingly creating and driving organic traffic to their shops. Like owned traffic in the West, this is a direct response to the rising costs of reaching fans and followers. Matt delivered a presentation on the topic during the ChinaChat 2019 conference and they take a deep dive into the phenomenon this week.

Key questions

• What is private traffic?
• Why are brands resorting to this method?
• How does private traffic work?
• How do WeChat and Tencent view private traffic?
• What are traditional e-commerce platforms like Taobao doing to combat private traffic?

Links

• TechCrunch Shenzhen Nov 11-12
• Presentations from ChinaChat 2019
• China Tech Talk 83: Podcasting and why the open web is dead in China with Rio Zhan
• China Tech Talk 10: [Interview] Influencers in China and the future of brands with Elijah Whaley
• China Tech Talk 37: Weibo’s KOL woes with Elijah Whaley
• Become a member of TechNode Squared

Hosts

• John Artman, @knowsnothing, TechNode
• Matthew Brennan, @mbrennanchina, ChinaChannel

Editor

• Peter Isachenko

Podcast information

• iTunes
• Spotify
• RSS feed
• Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

Bytedance’s short video platform Huoshan Video has rolled out a mini-program feature, enabling users to access mini games within the app, media outlet TechPlanet reported.

Why it matters: Bytedance has been actively building its mini-program ecosystem to take on Tencent’s WeChat, which recently expanded the ad formats it offers on mini programs.

• Huoshan Video is the third Bytedance app to include mini programs. Content aggregator Jinri Toutiao launched its mini programs in November 2018 and short video app Douyin launched the feature in February 2019.

Details: Users can access mini programs on Huoshan Video in the “Mini Games” tab under “My Profile.”

• The tab currently includes nine mini games such as Gobang and Tetris.
• All nine mini games are featured in the “Recommended” area of the “Mini Games” tab, but do not show up in search results within the app.

Context: Bytedance’s mini program ecosystem has not enjoyed smooth sailing. Bytedance took down the mini program function on Jinri Toutiao on iOS devices in January, citing adjustments to the platform. Douyin has just one self-made music-themed mini game on iOS.

• As of Monday,the mini program tab on Jinri Toutiao on iOS is still unavailable, and mini programs do not appear in search results on the app. Android users are not affected.

Tencent is incubating a new consumer financing product tentatively called “Fen Fu” that allows approved WeChat users to pay in installments for purchases, Chinese media reported on Thursday.

The online credit payment product is similar to Ant Financial’s Huabei and JD Finance’s Baitiao.

Why it matters: The internet giant’s new credit payment product could ignite a new battle between China’s largest fintech service providers, namely Alibaba, Tencent, and JD.com.

• Consumer loan services became popular in 2016, especially among China’s younger tech-savvy consumers. However, such services are fueling China’s climbing household debt, especially for generations born post-1990, which is becoming a growing national concern.
• According to financing services firm Rong 360, 50.2% of consumers born post-1990s borrow for their daily consumption. Over half of young consumers resort to online lending services, excluding credit cards, Alipay’s virtual credit card Huabei, and JD’s online credit product Baitiao.

Details: According to Chinese news reports, Fen Fu is a new credit payment service operating under WeChat Pay and is expected to launch in the fourth quarter of this year.

• A WeChat Pay spokesperson told TechNode that the team has not received any information about Fen Fu and declined to comment on whether Tencent has plans to roll out similar consumer loan products in the near future.
• Similar to consumer lending product Wei Li Dai from Tencent’s digital banking arm, WeBank, Fen Fu would provide loan service in cooperation with banks and financial institutions under the syndicated loan or loan facilitation model.
• Tencent is reportedly still in the process of negotiating terms with banks and licensed consumer finance institutions.

Context: Tencent operates WeChat Pay, one of the largest mobile payment services in China, and started the country’s first digital bank WeBank.

• The internet giant’s fintech business is growing rapidly. In Q1, revenue from its fintech arm outpaced other core business units like mobile gaming.
• Other Chinese tech giants including Ant Financial have been expanding their fintech service ecosystems into peer-to-peer payments, cross-border payments, and consumer lending.

Editor’s note: A version of this post by Thomas Graziani first appeared on WalktheChat, which specializes in helping foreign organizations access the Chinese market through WeChat, the largest social network on the mainland.

Once upon a time, there were very few social networks in China. Renren was dying out, Weibo was getting kicked in the gut by WeChat growing double and triple digits.

Fast-forward to 2019, those days are long gone. There is now a plethora of social apps to choose from. Is WeChat still growing in this new Chinese Internet?

The beginning of the end for WeChat?

There are certainly some clouds in WeChat’s sky. A recent report by QuestMobile indicates that the time spent inside WeChat dropped by 8.6% between December 2018 and June 2019.

Although WeChat continued to grow its user base, the increase of 3.2% of Monthly Active Users (MAU’s) during the same period did not offset the loss of engagement.

The decrease of engagement on WeChat is mostly due to competition from ByteDance (mostly via Douyin and Toutiao).

Become a member of TechNode Squared to get in-depth analysis on how Bytedance is changing China’s internet. Here’s a preview of what you’ll get.

Other smaller apps also have taken market share from the Chinese Internet giants, leading to a less concentrated market.

Deceleration of advertising growth

On the financial side, advertising revenues have disappointed analysts’ expectations.

YOY growth of Tencent advertising has reached a low of 16% for Q2 2019. The growth of Tencent’s ad revenues follows a steady downward trend for the last year.

This decrease was likely the result of a fiercer competitive environment (especially with competition from ByteDance) and challenging macroeconomic context.

James Mitchell, chief strategy officer at Tencent, stated in an earnings call:

“Our assumption is that the macro environment will remain difficult for the rest of the year and that the situation of the heavy supply of advertising inventory will continue for the rest of the year and potentially into next year.”

The silver lining of WeChat mini-programs

The growth of WeChat advertising revenues is decelerating, and the increase in MAU’s has been sluggish. But WeChat has one thing going for it: mini-programs.

While time spent on WeChat decreased by more than 8% in 6 months, time spent on WeChat mini-programs actually increased by more than 23% during the same period.

The number of MAU’s of WeChat mini-programs also boomed. It grew 52% YOY to 746 million MAU’s.

Conclusion

With more than 1.1 billion monthly active users, WeChat remains the main social network in China.

But WeChat is also an app which was too slow to seize some major opportunities: it missed the switch toward video and is still lagging behind in terms of advertising compared to Western competitors such as Facebook.

WeChat mini-programs also enabled the app to keep an edge over competitors by becoming more of an ecosystem, and are proving to be a winning bet for Tencent.

It is, however, undeniable that we now live in a much more fragmented digital ecosystem than we did two or three years ago. WeChat is still a must-have social channel. Brands are also looking beyond it for the right mix of other platforms to complement their digital marketing footprint.

Changan Automobile will begin delivering a new version of its best-selling CS75 SUV model equipped with a voice-operated version of WeChat in the third quarter this year, making it the first mass-market passenger vehicle equipped with the ubiquitous Tencent app.

Why it matters: Tencent is accelerating its entry into the connected vehicle sector, readying for what many see as an uphill battle for market share with Baidu and Alibaba.

• Baidu is expected to lead the voice-enabled auto assistant segment with 260,000 units installed next year, according to Chinese market research firm Gasgoo Institute. Tencent is expected to follow with 190,000 units.
• Baidu has installed its DuerOS voice assistant in 300 models covering more than 60 auto brands to date. Tencent said on Monday that it is working with 21 OEMs to deliver connectivity solutions on 45 models.
• Alibaba installed its AliOS solution in 600,000 Roewe RX5s through an exclusive partnership with China’s largest automaker SAIC as of June 2018.

Detail: After delaying its release for nearly a year amid safety concerns, Tencent unveiled on Monday a voice-operated version of its popular instant messaging app WeChat for drivers as part of its collaboration with Chinese automaker Changan at an event in the southwestern Chongqing municipality.

• Developed specifically for use while driving, in-vehicle WeChat allows drivers to check and send messages as well as make calls using voice commands or using buttons on the steering wheel. It also features Tencent Map’s navigation service.
• The social and gaming giant claims the tailor-made version can be entirely controlled by voice and steering wheel controls, minimizing distraction for drivers while on the road.
• Pre-sales of the WeChat-equipped Changan SUV began on Friday at a starting price of RMB 127,900 (around $17,900). Deliveries will begin in the third quarter.
• The collaboration between Tencent and Changan began in April 2018 when the two firms set up connected vehicle joint venture Phoenix Auto Intelligence.
• This is the second such partnership between a Chinese OEM and a tech giant after Alibaba and SAIC formed Banma Network in 2015.
• WeChat for drivers will be one of the core capabilities of Tencent’s Internet of Vehicles solution and will also be open to other automakers, said Tencent Vice President Zhong Xiangping.

Context: Changan is pinning its hopes on the partnership to bolster falling sales of its vehicles in a flagging market.

• The Chongqing-based firm’s CS75 deliveries fell 7.8% year on year to around 76,000 units in the first seven months of this year. It ranked 12th in domestic SUV unit sales behind Great Wall Motor’s Haval H6 and Geely’s Boyue, according to figures from the China Passenger Car Association.
• Changan shares closed 1.2% higher at RMB 8.28 in Shenzhen on Tuesday after rising nearly 3.7% on Monday.

WeChat Pay showcased a new payment device, the “Frog Pro,” at the Chongqing Smart China Expo on Monday in a bid to upgrade its offline payments. The new point-of-sale (POS) machine allows shoppers to pay by scanning their face at checkout.

Why it matters: China has been quick to embrace facial recognition technology, which is already being used for making payments at supermarkets and checking in at hotels. Face scan payment is becoming more prevalent as companies increasingly integrate online and offline retail as a tool to drive marketing initiatives.

• WeChat Pay rival Alipay rolled out facial recognition payment system Dragonfly late last year, which has been deployed in more than 300 cities across China.

Details: The Frog Pro is equipped with 10.1-inch double-sided screen, a 3D depth-sensing camera for the facial recognition payment function, and a QR code scanner.

• WeChat Pay also introduced new features including one that allows shoppers to join a membership program by simply scanning their face, which has been tested at retail chains such as Jiatian and Meiyijia.
• The double-sided screen allows businesses to push promotions more easily, according to the company. The cashier can display the QR code of its official account or new product information at checkout on the back screen.
• Frog Pro is integrated with different WeChat features such as mini-programs, wallet, official accounts, and group chats. The company said the Pro version is further opening up offline use case scenarios for payments.

Context:  WeChat Pay has been quietly testing facial recognition payment solutions at retail outlets in China. However, Alipay launched its facial recognition system two years ago.

• According to a Chinese media MPayPass, WeChat has been promoting early versions of WeChat Frog and testing thousands of devices at different retail locations.
• The company has not disclosed when WeChat Frog will launch, and did not immediately respond to TechNode inquiries on Tuesday.
• Aside from the WeChat Frog Pro, the payment giant has introduced two other versions of WeChat Frog suited for different retail scenarios including WeChat Basic for shops with limited physical space and the portable WeChat Frog Mini for businesses like restaurants.
• WeChat Pay says it processes a billion transactions daily, connecting 50 million merchants and businesses in China.
• Ant Financial’s Alipay launched the “Smile to Pay” facial recognition system in September 2017 for commercial use. The company is planning to spend RMB 3 billion (around $448 million) in promoting the POS face-scan payment system alone.

WeChat and Samsung announced a new partnership which allows users to directly access WeChat mini-programs on Samsung smartphone home screens without the need to open the main messaging app.

Why it matters: WeChat has recently been unveiling features so it resembles more of a mobile operating system (OS) for Chinese netizens, which, until now, have been only within its own app. The Samsung partnership grants users a gateway to directly access WeChat’s ecosystem and move it a step closer to becoming a mobile OS.

• WeChat mini-programs, lightweight apps that run from within WeChat on any operating system without the need to download, positions parent company Tencent in competition with companies like Apple which earn revenue from app downloads.
• The super messaging app rolled out an update earlier this year allowing users to search for and use mini-programs within the app more easily in an interface similar to an operating system.
• The partnership with a smartphone maker in creating a direct gateway for mini-apps is a first for the messaging platform.

Details: Without opening the main app, users can swipe right on the phone’s home screen to find their five most recently used mini-programs, or swipe left from the edge of the screen to see up to 10 favorite mini-programs.

• Samsung pre-installed the features in S8, S9, and S10 models that are sold in China as well as the Note8 and Note9. Future models will also include the function.

Context: Launched in January 2017, Tencent says WeChat mini-apps boast 840 million users.

• Other apps including Alipay, Douyin, Taobao, and Baidu have all launched their own mini program ecosystems.
• In March 2018, a group of Chinese smartphone makers jointly launched a unified standard, Quick App, in a bid to lessen WeChat’s grip on mobile traffic. The partners in the alliance include major smartphone makers such as Xiaomi, ZTE, Huawei, Gionee, Lenovo, Meizu, Nubia, OPPO, Vivo, and OnePlus.
• Already operating 900 Quick Apps, Huawei said in August that it will officially launch its “Quick App” in September.

China is a unique market. For luxury brands, a WeChat-focused strategy is a crucial step to gaining a foothold.

While China’s social landscape is complex and highly segmented, WeChat remains the go-to place for brands to acquire, communicate with, and maintain customers. The superapp has gained a reputation as being a center for brand marketing (luxury or not) thanks to its more than one billion users and plethora of services.

While the luxury market is centered on offline sales, online marketing, and digital communication with users significantly influences purchasing intent among customers. By using WeChat features, brands can engage with users and send content to followers while also giving access to loyalty schemes and promotions.

Digital Luxury Group (DLG) and marketing automation specialist JINGdigital have jointly released their WeChat Luxury Index 2019 report. Shedding light on how brands can leverage the platform to build lasting relationships with clients, the study looks at 24 brands with community sizes ranging from 3,000 to 3 million.

Inactivity is expected

Despite the lengths brands go to tap WeChat users, less than half of followers actually interact directly. In fact, a mere 8.2% of a brand’s community interact with them every month.

Engagement Rate of WeChat Official Account Followers (Image credit: DLG and JINGdigital)

“They are not necessarily fake fans, but they are definitely inactive fans,” Aaron Chang, founder and CEO of JINGdigital, told TechNode. “This is not necessarily a bad thing because the function of WeChat is to interact with people when they are ready to interact,” he added.

Followers will often engage via WeChat official accounts to access brands’ loyalty programs, seek out answers to specific questions, or if they plan to make a purchase, the report noted.

Scheduling articles, events, and promotions around seasons and special occasions like Valentine’s Day, Spring Festival, and Mother’s Day is a common tactic to boost user engagement. For instance, Louis Vuitton chose a pig motif in its campaign for this year’s Spring Festival—the Year of the Pig. Many luxury brands like Burberry, Channel, and Balenciaga launched special campaigns for Qixi, China’s version of Valentine’s Day earlier this month.

Making use of chatbots for authentic and conversational message replies or live customer chats is also an efficient way of boosting engagement. Brands, however, have a lot of room to improve in this area as two-thirds of inquiries sent via WeChat chat windows are not answered, the study found.

Shareable forms and interactive quizzes with prizes or free trials help brands to collect more detailed data from customers, in turn, helping them create tailored content.

“Personalized content is the future for the WeChat experience, but unfortunately one size does not fit all,” said Kun Hsu, Partner at JINGdigital. “Only when followers get content tailored to them will the brands receive a sustained boost in engagement.”

The 48-hour window after a user initially follows a brand is the most crucial stage for engagement and inspiring return visits, the report said. A user will be the most active within the first six weeks of following. Activity peaks in the first week and sharply drops off by the second week, before gradually declining over the next month.

Besides offering general brand information, Swarovski includes clear calls to action in its welcome journey, directing users to its loyalty program, gift ideas, and store locations.

Room for growth on WeChat

Official accounts on WeChat remain most effective as customer relations management (CRM) tools for luxury brands, although Tencent has been trying to bolster e-commerce functionality.

The report shows that a little over half of all actions carried out by users are CRM-related, including retrieving membership information and contacting customer services. Some 30% of engagements were focused on seeking out information about the company, events, or products.

Engagement Type of WeChat Official Account Followers (Image credit: DLG and JINGdigital)

E-commerce represents only 17% of these actions, indicating that most brands still struggle to gain traction with WeChat e-commerce strategies. Most sales that happen on WeChat are campaign-driven at present, and it is a challenge for brands to create a steady and sustainable stream of business from the platform.

WeChat is also a major tool for offline stores to maintain customers. Stores and salespeople send out messages to consumers to drive purchasing decisions. Over one-fifth of respondents in the McKinsey Luxury China Report 2019 considered WeChat messages an impactful offline channel for their decision-making, after suggestions from in-store assistants and trying products on-site.

WeChat is rolling out a new service enabling business clients to use unique QR codes on every single one of their products, allowing them access to more specific data on their individual customers, reported SinaTech.

Why it matters: The expanded offering is the latest move by Tencent to focus more on business clients, rather than users.

• The Shenzhen-based recently unveiled new initiatives for third-party vendors of WeChat mini-programs to help more businesses establish a presence on the Chinese lifestyle platform.
• The firm has been expanding services for enterprises this year, while rival Alibaba has taken similar steps to support small and medium-sized enterprises.

“Through the “one object, one code” system, brands can connect every product and consumer, send product info, bring users into official accounts, provide anti-counterfeit services, send out red packets and targeted marketing, as well as carry out user and data management.”

—WeChat announcement

Details: The service will allow companies to better track offline consumer behavior with data gathered and sent in real-time. Brands can also use the code to interact with customers.

• Chinese dairy Mengniu, liquor brand Jiangxiaobai and herbal tea brand Wanglaoji have already tested the service. Wanglaoji reported that sales grew by more than one-fifth after it started printing the unique codes on its products, according to Sina Tech.
• Retailers can sign up for feature via the WeChat official account platform and design their own customized codes themselves or by using third-party developers.
• A unique QR code system has been mooted in the new retail sector for some time. Walmart and MAC have previously attempted to use such a campaign but it largely failed to gain traction.

Research published this week has brought to light the novel methods Tencent uses to censor and limit the proliferation of “sensitive” images in realtime on popular messaging app WeChat. The report claims that users are unknowingly contributing to a database of blacklisted images.

Why it matters: Chinese companies are required to police content on their platforms to avoid government censure. The methods these firms use to filter content are largely complex and clandestine.

• Realtime categorization of images is computationally intensive and more complex than analyzing text sent within a chat.
• Tencent has found ways to minimize processing times, with users of WeChat not even realizing that a photo failed to be delivered.
• Some companies employ thousands of content moderators but are also using technology to automate the process.
• WeChat claims to have more than 1 billion daily active users worldwide.

“Tencent implements realtime, automatic censorship of chat images on WeChat based on text contained in images and on an image’s visual similarity to those on a blacklist.”

—Citizen Lab researchers Xiaong Ruohan and Jeffrey Knockel

A Tencent spokesperson refused to comment when reached by TechNode on Wednesday.

Details: The report, published by University of Toronto’s Citizen Lab, claims that users who send images on the app help to populate a blacklist of sensitive photos that are categorized and given a unique “hash” fingerprint.

• When a user sends an image, WeChat checks to see if an image’s fingerprint, which is the same for identical images and is easy to compute, has been included on a blacklist. If it has, the image is prevented from reaching the intended recipient, according to the researchers. The process is completed in realtime.
• If the image is not on the blacklist, it is sent to the recipient. However, the image is then retroactively analyzed for sensitive content.
• Text in a photo is analyzed using optical character recognition. The image’s likeness is also compared to others on the blacklist for so-called harmful content. This process takes a longer time to complete.
• If unwanted content is found, the image’s fingerprint is added to the blacklist.
• WeChat’s Newsfeed-like feature Moments and group chats are typically more heavily scrutinized that one-one-one conversations, the researchers found.
• WeChat’s censorship is reactive to big news events, the researchers said, including the arrest of Huawei CFO Meng Wenzhou in Canada earlier this year, China-US trade tensions, and US elections.

Context: Regulator-imposed cleanup campaigns of the Chinese internet have become more frequent and far-reaching in recent years. Companies that do not comply are held liable through suspensions of their operations and fines.

• Late last year, WeChat pledged to strengthen its censorship mechanisms in order to crack down on pornographic and vulgar content on social media accounts.
• The move formed part of a campaign spearheaded by the National Office Against Pornographic and Illegal Publications, which began in April 2018.
• Administrator of group chats can be held responsible for the content shared in the groups they operate.

Last June, we reported that longstanding Bytedance app Jinri Toutiao had launched “Jinri Games,” its version of WeChat mini-games, or lightweight games which run on WeChat’s platform.

Within Toutiao’s selection of in-app mini-programs—another adaptation of a WeChat innovation—Android users could for the first time choose from a variety of casual games.

Since then, mini-games have become available in Bytedance’s humor app Pipixia and most recently, Douyin. The additions allow independent gamemakers to adapt or develop 10-megabyte programs for each platform.

These moves preceded Bytedance’s March acquisition of gaming company Mokun Technology. That could mean that the $75 billion startup will begin releasing homegrown offerings which could rival those of Tencent.

But it faces stiff opposition in doing so, not only from WeChat’s parent company but also from other major platforms like NetEase or Steam, not to mention China’s strict internet regulators.

Mini-games for developers

When Douyin launched its mini-game ecosystem in February, certain aspects made it a potentially more attractive choice for developers compared to WeChat.

First and foremost, its revenue split was more generous. Douyin allows developers of small- and medium-sized games to collect 60% of mini-program income. Developers of larger games with a daily advertising revenue exceeding RMB 1 million receive 50%. First-time mini-program developers gain an extra 10% income across the board.

Douyin revenue model

In comparison, WeChat only offers revenue incentives for mini-programs it deems “original,” whether in terms of game mechanics, artwork, storylines, or background music. From November 2018 through May 2019, developers earned between 30% to 70% of game revenue, depending on their originality and advertising income as well as in-game purchases.

On June 1, WeChat revamped its revenue structure, giving more “original game” developers the chance to receive 70% of ad revenue. In addition, advertising revenue share for other developers were adjusted to 50% across all categories. The new changes helped to level the playing field with Douyin.

WeChat revenue model

However, Douyin still holds some advantages. For one, the app makes it easier for developers to get extra benefits. Compared to WeChat’s “original game” certification process, which requires applying for approval, qualifying to be a first-time developer on Douyin’s platform is relatively simple.

In addition, Douyin’s capacity to spawn viral videos could give games a publicity boost. WeChat only allows users to send mini-programs to friends and group chats; on Douyin, the home of short-video stars, games can be shared more broadly across audiences with less effort, provided the related videos are catchy enough.

The same may be true for games on Toutiao. Due to its AI-powered content sorting, the news app may help trending mini-programs gain traction more quickly than word-of-mouth.

Finally, both WeChat’s and Douyin’s revenue structures still fall short of what is offered by popular platforms such as Apple’s App Store or Google Play: a solid 70% cut of ads and in-app purchases. However, the barrier to entry for mini-game developers is significantly lower on Douyin and WeChat due to their small size.

Homegrown games

Bytedance has been busy doing more than just creating platforms for games. It’s also been inventing offerings of its own, including a Douyin title called “Music Jump Ball,” set to viral video songs and reminiscent of the landmark WeChat mini-game “Jump Jump.”

In March, Bytedance spent an undisclosed amount to acquire Shanghai-based Mokun Technology, which had previously developed a mobile game distributed by Tencent. As of last month, Bytedance had formed an 100-person team to focus on game development, Chinese media outlet LatePost reported. The team became the company’s third game-focused division, joining existing teams for casual games and mini-games.

In China’s current media environment, however, content creation carries potential pitfalls. Tencent and other gaming-heavy platforms suffered heavy losses last year when authorities, citing concerns over the health of minors, stalled the release of licenses for new titles for nine months.

Nor is Bytedance a stranger to content controversy. Its app Pipixia was originally released to replace the defunct Neihan Duanzi, which ran afoul of rules banning vulgar content. And the popular Toutiao has been censured multiple times for, among other things, hosting pornographic content and mocking a Communist martyr.

The upbeat

Highlights from recent headlines

Product launch and product removal

• Tech Planet: Bytedance is internally testing a short-video-based English-learning app named “Tangyuan English,” leveraging its existing advantages in the short-video vertical to push into the Chinese education landscape.

By pulling English-teaching videos from Douyin, Tangyuan English could leverage traffic from the viral short-video platform and substantially reduce the cost of user acquisition, which reportedly exceeds RMB 1,000 per user for some online education companies. Prior to Tangyuan English, Bytedance had launched six education products; two of those are English-learning apps that are struggling at the moment.

• TechNode: “Bytedance’s new social app Feiliao, also known as Flipchat, has been removed from Apple’s App Store fewer than two months after its release.”

As of July 16, the app had been restored on Apple’s App Store. As Bytedance’s newest experiment in the social app market, Feiliao’s performance has been lackluster. The app only has 543 reviews on Apple’s App Store and an average score of 3.9, with a number of users complaining about excessive restrictions on content, as well as slow responsiveness.

User base numbers

• Caixin Global: “ByteDance, the parent company of popular short-video platform TikTok, said Tuesday it now has 1.5 billion monthly active users globally across its portfolio of apps.”

Bytedance’s global monthly active users (MAU) rose sharply over the past half-year, growing 50% compared with the figures from January. However, the gap between the company’s combined daily active users (DAU) of 700 million (as of the end of June) and its MAU indicates that users still do not use Bytedance products as frequently as apps like WeChat.

Meanwhile in Russia

• Reuters: “The Chinese video app TikTok will store Russian user data locally to comply with Russian law, the communications watchdog Roskomnadzor said on Monday after a meeting with the company.”

Russia’s requirements are similar to those being implemented in China, which require companies like Apple to hand over all data collected on Chinese users. Apple sends all Chinese iCloud data to the state-owned Guizhou-Cloud Big Data Industry (GCBD). Storing data locally is not without its risks. After the iCloud transfer, many iOS users in China reported a dramatic increase in the number of spam messages, though whether this is related to GCBD is unknown.

Investigations and allegations

• Pandaily: “UK regulators are investigating ByteDance‘s short-video application TikTok on how they handle the personal data collected from younger users, and whether it prioritizes the safety of children on its social network.”

TikTok has already revised its user agreement to limit users under 13 to an ecosystem where only curated, age-specific videos are available. However, it seems that these nonbinding restrictions have not done enough to satisfy UK regulators.

• Economic Times: Two Indian parliamentarians alleged that short-video app TikTok shares user data of Indians with China’s government and helps spread “fake news” and “malicious content” in India, just days after another member of parliament made a similar claim.

Despite the allegations, Indian courts are not likely to ban TikTok unless it finds solid proof of illegal data collection and transfers. In response to one of the claims, TikTok stated that it abides by the laws of the countries where it operates. In April, TikTok was banned in India for two weeks for spreading pornography and encouraging predatory behavior.

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On June 18, Facebook announced the Libra cryptocurrency, a solution to their P2P payments conundrum. As to be expected, this move has gotten a lot of attention. In China, that attention has taken the form of comparing Libra to Tencent’s breakthrough Q Coin as well as how WeChat has integrated payments.

Key questions:

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• What’s the difference between a virtual currency and a cryptocurrency?
• What is the relationship between Libra, Calibra, and Facebook?
• Will China ever have something like this?

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• Can Facebook’s Libra replicate WeChat Pay’s digital payment dominance?
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• FACEBOOK’S CALIBRA IS A SECRET WEAPON FOR MONETIZING ITS NEW CRYPTOCURRENCY
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• Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

Tencent today unveiled a raft of new initiatives for third-party vendors of WeChat mini-programs to help more businesses establish an online presence on the Chinese lifestyle platform.

The company will accelerate approvals for mini-programs going forward as part of the plan, Tencent announced at the WeChat Open Course event in Shanghai. The firm will also partner with third-party service providers of mini-apps to hold training courses centered on the public transportation, catering and fashion sectors.

“WeChat will help service providers to upgrade from technical supporters to become comprehensive solution providers,” WeChat executive Kero Zheng told TechNode. “Customization, specialization, and collaboration are going to be the label of professional services providers in the future,” he added.

First launched in 2017 as stripped-down versions of apps that run within WeChat, mini-programs have become a major source of traffic for many services in China with over 2.3 million such apps serving more than 681 million active users per month, according to QuestMobile data.

WeChat’s maturing mini-program ecosystem is increasingly attracting attention from third-party companies providing services including mini-program development, logistics, payments, customer relationship management and digital marketing.

The number of WeChat mini-program service providers has jumped to 8,200 from 5,000 over the past year, according to data released at the event. Mini-apps provided by third-party firms account for almost one-third of the platform’s 630,000 mini-apps added this year. Local services, catering and tools are three of the most popular fields among more than 150 industries covered by such vendors.

On top of that, the daily volume of payments made via WeChat mini-programs has more than tripled over the past year, Tencent said.

Enterprise tech is picking up pace on platforms run by China’s tech giants. Tencent’s new programe is part of the Shenzhen-based company’s efforts to expand beyond custumer-facing services to the B2B business. Rival Alibaba has taken similar steps over the past year to support small and medium-sized enterprises.

WeChat may be the most prominent platform for mini-programs but it is far from being the only one. Monthly active users on such apps on WeChat, Alibaba’s Alipay, and Baidu are in excess of 1 billion, according to QuestMobile.

搜狐社交产品“狐友”正式版上线 张朝阳称其为搜狐的未来 – Bianews

What happened: Chinese internet portal Sohu has formally launched a new social networking app named Huyou to target China’s younger users. An offshoot of its news aggregation app’s social networking feature, Huyou offers typical tools such as blogs, photo-sharing features, and online games. The service has been undergoing testing as an independent app since May 2018 and now has around 2.5 million users.

Why it’s important: As one of the earliest tech giants in China, Sohu offers a variety of services including a search engine, advertising, news, online multiplayer gaming, and video streaming. The company had a fair share of China’s pre-mobile social networking market with products like Facebook-like ChinaRen and Bai Shehui, which targeted white-collar users. Left behind in the transition to mobile internet, Sohu’s social networking services were overtaken by the likes of WeChat and QQ. With the launch of Huyou, Sohu is joining a number of other internet companies that have recently taken aim at WeChat’s ongoing dominance with new products. Three new social media apps were launched on January 15 to challenge WeChat: Bytedance’s video-messaging app Duoshan; Smartisan parent company Kuairu Technology’s Liaotianbao, an updated version of the once-popular messaging service Bullet Messenger; and Shenzhen-based Ringo.AI’s Matong, an anonymous social media app. However, these initiatives could be short lived: Liaotianbao is reportedly facing the axe after Smartisan’s sale to Bytedance, and Matong was taken down from app stores because of regulatory noncompliance.

「看一看」改版，微信离张小龙想要的「社交推荐」更近了 – 36Kr

What happened: Mega messaging app WeChat is testing on a limited group of users a new feature on “Top Stories” page, which lists the most popular articles from WeChat official accounts they follow. Test users get new personal pages which show all the articles that they tapped “Wow” on for the past seven days. The pages showing each user’s “Wow”-rated articles are viewable by any other WeChat friend, who can simply click the link shown on the “Top Stories” page to access. “Wow” was initially translated in Chinese to to “Like,” then “Worth Reading” and now “I’m Reading” in WeChat, and is located at the bottom of content posted to the platform.

Why it’s important: WeChat launched “Top Stories” to compete with Jinri Touiao, the top news aggregator in China with 239 million monthly active users (MAU) as of December, according to data analytics firm QuestMobile. The platform wants to use “social recommendations” to encourage users to read what their friends are reading. However, critics say that pushing users to expose their interests to WeChat friends may increase peer pressure on the platform. The comment below 36Kr’s WeChat version of the article that received the most “Likes” said, “Since WeChat changed Likes to Wow, I hardly click it. I don’t like people to see what I am reading even though there is nothing I need to hide.”

At a company conference yesterday, Tencent Auto Intelligence (TAI)’s vice president Zhong Xuedan announced that it will launch voice-enabled WeChat services in its connected vehicle ecosystem this year, ifanr reported (in Chinese).

The planned features include only chat, calls, and GPS navigation for now. All aspects will be voice command-enabled, purportedly to reduce driver distraction and risk of accidents.

Using the TAI system, drivers will be able to hear WeChat messages read out loud to them and dictate responses, initiate conversations, and find contacts without taking their hands off the wheel. When receiving calls, drivers will also be able to accept or reject calls with voice commands. In addition, after receiving a GPS location pin from a WeChat friend, drivers will be able to easily launch directions to the place.

In the future, in the hardware department, Tencent also announced that a custom steering wheel will have a button that enables users to turn on WeChat while driving, or switch between different vehicle apps. In addition, using a Bluetooth-phone connection, the car’s WeChat system will be able to switch on and off as the driver enters and exits the vehicle.

As of publication, a WeChat representative had not yet responded to TechNode’s request for comment on the risk that in-car WeChat features pose by distracting drivers.

While the announcement to roll out the features this year is new, Tencent unveiled the concept of TAI last month, with the aim of connecting auto companies, developers, and consumers. According to its official website, the ecosystem has already partnered with major auto brands including Mercedes-Benz and BMW, as well as Chinese companies Nio, BYD, and GAC.

腾讯黄铁鸣：已有1.7万家合作伙伴加入企业微信 – 36Kr

What happened: WeChat Work, the productivity version of social networking app WeChat, has more than 17,000 third-party partners in its ecosystem, vice president of Tencent’s WeChat business group Huang Tieming revealed on Tuesday at Tencent Global Digital Ecosystem Summit held in Kunming of southern China’s Yunnan province. The partnering entities offer services including staff training, survey platforms, online contract signing, and more. To support these services, more than 4.5 million application systems have been integrated into the app, which now offers 231 application programming interfaces (APIs).

Why it’s important: Tencent’s WeChat is known for offering a unified social networking experience. WeChat was a fusion of everything that mattered, blurring the boundary between the work and personal lives of its users. To address the issue, Tencent rolled out a standalone version of the app for business entities in China three years ago. The app had 1.5 million corporate entities registered on its platform and 30 million active users as of May 2018. Despite the huge success of WeChat, WeChat Work is playing catch up with Alibaba’s mobile workplace tool Dingtalk, which had 400 million users as of September. Competition in the productivity services market is heating up as Chinese tech companies shift their business focus to enterprise-facing services.

Use of Chinese digital wallets banned in Nepal – The Himalayan Times

What happened: Nepal’s central bank, Nepal Rastra Bank, has banned the use of WeChat Pay and Alipay in the country. The bank reasoned that use of these apps was causing a loss of tourism dollars from Chinese visitors making transactions with Chinese vendors running businesses in Nepal by bypassing the Nepali financial system and keeping the payments in Chinese currency and on Chinese networks. As a result, Nepal cannot register this spending as foreign income or enforce taxation. According to The Himalayan Times, at least two Nepali companies are interested in working as intermediaries for WeChat Pay and Alipay in Nepal.

Why it’s important: Tourism is one of Nepal’s largest industries, with the country aiming to attract 2 million visitors by 2020. Chinese tourists make up a sizable portion of the visitors, too: in 2018, the number of Chinese traveling to country increased by nearly 50% from 2017 to 153,602. According to The Global Times, Ant Financial encouraged Alipay users to comply with local laws following the ban. Meanwhile, Nepali authorities have yet to ask telecom companies to block the services, so effective enforcement of the ban seems difficult, and Ant Financial and Tencent have little incentive to limit user access to their products.

WeChat Pay’s European Flagship Smart Airport to open at Amsterdam Airport Schiphol accelerating spread of WeChat ecosystem overseas – CISION

What happened: Chinese internet giant Tencent and Amsterdam Airport Schiphol have jointly launched the first flagship WeChat Pay Smart Airport in Europe. Chinese tourists will soon be able to use WeChat to pay for goods in shops at Schiphol Airport, as well as to place orders and make purchases via the airport’s mini program. Coupons for preferred currency exchange rate and discounts will also be offered to WeChat Pay users at the airport.

Why it’s important: The move comes as Tencent’s messaging app expands its mobile wallet and cross-border payment business in Europe. Tencent stated in its 2019 first-quarter results that fintech and cloud computing helped offset weak revenue from its gaming business. WeChat’s payment wallet has been a key growth driver for Tencent’s fintech business. Chinese payment giants have been eager to cultivate an overseas presence as their home market becomes increasingly saturated. Ant Financial’s Alipay, WeChat Pay’s main rival, also made further inroads into Europe earlier this year as its expansion efforts face more challenges in the US amid escalating political tensions.

欧派营销竟推“共享爸爸” 律师：既违法还挑战公序良俗 – Eastday

What happened: A WeChat mini program named “Dad Sharing” has gone viral on the mega chatting app after its release on Tuesday. An accompanying five-minute video advertises a service that allows busy users to rent another, more “professional,” father figure when the actual parent can’t be there for important family moments. Key moments shown in the video include childbirth and parent-teacher meetings. Chinese furniture maker Oppein, the company behind the mini-program, clarified later that this is only a “well-intended” marketing tactic aimed at promoting family values. It sparked online controversy and at present the mini-program cannot be accessed.

Why it’s important: The ride-sharing boom in China has triggered a “sharing economy” craze in the country where nearly everything became shareable from bikes to basketballs, washing machines, umbrellas, and even beds. The dad-sharing model received mixed reactions online. While some netizens sympathized with the parenting dilemma reflected in the video, others felt cheated that the company wasn’t actually offering a dad-sharing service.  A lawyer from Chengdu, Sichuan province told local media that the advertisement likely violates relevant provisions of the advertising law for promoting a service that it’s not offering. At the same time, the concept also challenges public morals.

Tencent announced first quarter 2019 profits of RMB 27.9 billion ($4 billion), posting 16% growth year on year driven by strong earnings from the company’s fintech and cloud businesses. However, revenue growth was the slowest on record as the titan struggles to recoup losses from increased gaming regulations in China.

Tencent grew its revenue 16% year on year to RMB 85.5 billion in the first quarter. RMB 21.8 billion came from fintech and other businesses including payment services and cloud computing, which posted strong 44% year-on-year growth.

Fintech and cloud revenue momentum helped offset a disastrous period for games due to increased regulatory oversight. The company released only one new mobile title—Perfect World Mobile—in the first quarter. Smartphone gaming revenue fell 2% year on year as a result, to RMB 21.1 billion, though it rose 11% sequentially, showing the catastrophic effects of the government’s crackdown on new gaming licenses.

In the second quarter the company plans to release “several” games, according to its official release. It also has plans to implement a paid season pass system, similar to systems in overseas titles Fortnite and PUBG Mobile. The season pass will apply to domestic games including Cross Fire Mobile, Honour of Kings, and QQ Speed Mobile. During the earnings call on Wednesday, Tencent CSO James Mitchell said that the move could aid future monetization since “players who buy the season pass generally engage with the game more.”

On the recent controversial transformation of China’s PUBG Mobile into Game for Peace, CFO John Lo said, “For a new game it’s actually a very successful launch,” adding that “at the current time we are much more focused on making sure we retain customers” than monetization. On Monday, analytics firm Sensor Tower reported that the game had racked up $14 million in revenue within 72 hours of its launch.

Tencent’s online advertising revenue grew 25% year on year in the first quarter to RMB 13.4 billion. The slower rate of growth compared to last year was attributed to a difficult macro environment.

Social and other ad revenue rose slightly faster at a 34% growth rate, reaching RMB 9.9 billion. Tencent attributed the rise to increased monetization of mega app WeChat’s Moments newsfeed and mini-programs, and QQ’s Kandian.

While total monthly active user (MAU) count for WeChat worldwide remained relatively stable at 1.1 billion users, Tencent’s older social network QQ saw something of a renaissance in certain user segments. QQ’s Q1 MAU figures reached 823 million, including double-digit year-on-year growth among “young users.”

Tencent’s WeChat blocks learning apps from incentivising users to spam, saying it breaks rules – South China Morning Post

What happened: On Monday, WeChat reiterated its rule against companies offering rewards for users to share advertising-related content, naming educational apps in particular. WeChat said that repeated violations would result in accounts being shut down, citing examples like English-language learning applications Mint Reading and Liulishuo. Both offered incentives, through tuition specials for instance, for users to share links to their services on WeChat’s Moments newsfeed feature. The promotions harmed user experience, WeChat said.

Why it’s important: Although the rule against incentives already existed, the recent reminder could be a wake-up call for educational companies which depend on WeChat’s word-of-mouth advertising. Barring rewards for users who share links may require marketing spending to be diverted into other channels. Previously, WeChat has made other moves to protect successful features from becoming too commercialized; for instance, it sued app operators as well as an Android app store over a tool which automatically “snatched” virtual money on WeChat. Tencent’s flagship social app has also long been known for blocking external links to rival platforms such as Alibaba’s e-commerce giant Taobao or Bytedance’s short-video app Douyin—moves which have led to monopoly claims by competitors.

WeChat Banning Crypto Trading is Not a Bad Thing: Binance CEO – News BTC

What happened: WeChat pay’s ban on crypto trading activities may not be a bad thing in the long run, according to Zhao Changpeng or CZ, CEO of crypto exchange Binance.

“It is inconvenient for people short term, and they take a hit. But long term, it is precisely this type of restriction of freedom that will push people to use crypto,” Zhang wrote in a Twitter post, adding that the new restriction may create new opportunities for other crypto companies. On Tuesday, WeChat updated its payment policy restricting merchants from participating in illegal transactions including crypto trading and token fundraising. The policy will come into effect on May 31.

Why it’s important: WeChat Pay and Alipay have become popular among crypto traders for payment processing. While the ban can be viewed as a positive change in the long term, some worry that it may have a significant impact on liquidity in the region. This is not the first time WeChat has moved against cryptocurrency trading. Earlier this year, WeChat Pay and Alipay reportedly asked cryptocurrency exchange Huobi to remove their payment methods from its OTC trading desk.

Failed anonymous chat app is pivoting to social shopping – South China Morning Post

What happened: Toilet, an anonymous messaging app that launched in January, has rebranded itself as a social e-commerce platform. It’s also changed its name to Haoji. Similar to popular app Xiaohongshu, users can share photo or video reviews of various products. Users can also add purchase links to their posts.

Why it’s important: Toilet launched roughly around the same time as two other apps which were spun as potential WeChat-killers: smartphone brand Smartisan’s Bullet Messenger and Duoshan, owned by valuable AI content startup Bytedance. Despite brief bursts of popularity, both apps saw their profiles slide in ensuing months. In March, after criticism of inadequate security and salacious content, the team behind Bullet Messenger was reportedly dismantled. Duoshan, meanwhile, is still regularly ranked within the top 20 of the Apple App Store’s free social app category, but has steadily dropped in overall rankings. However Toilet’s rebirth as an e-commerce app plays out, its pivot shows that it may still be too soon to challenge industry titan WeChat.

A version of this article first appeared on Azoya’s WeChat blog. Azoya helps global brands and retailers access the China e-commerce market through WeChat and other channels.

As we wrote last week, WeChat mini-programs are emerging as a key part of e-commerce branding strategies. They give retail brands an opportunity to set up an official brand e-commerce store without having to rely on Tmall/JD.com, and WeChat’s social nature makes it easier to share content and promotions, potentially lowering customer acquisition costs and avoiding the need to spend on low-ROI ads.

But to succeed with mini-programs brands have to incentivize customers to share by creating engaging content and promotions. Today, we’ll see how four brands we examined in a recent report have created highly customized mini-programs to do this.

UGC (User-Generated Content): YSL Members Club

YSL Beauty’s mini-program incentivizes users to post selfies and tag products in a Little Red Book-like fashion. Users receive points that can be redeemed for discounts, and they can also use those points to purchase items directly within WeChat.

In China’s crowded retail market, consumers rely on content to help them decide what to buy. But many of the reviews online are fake or overly commercialized. Thus, users struggle to find a place where they can find quality content from peers they trust

Social commerce platform Little Red Book, which consists primarily of Pinterest-like posts where users can write about their shopping experiences and tag products, was able to scale to >100 million users partly because it started as a content platform first. By incentivizing users to post content using its mini-program, YSL Beauty is trying to create a platform of engaged customers. WeChat Pay enables customers to make easy purchases when they’re finally ready to, creating a direct link between content and e-commerce.

Social Gifting: Dior

Dior’s gift card mini-program lets users buy and send virtual gift cards to their friends on WeChat; the cards can then be redeemed in WeChat or select offline stores. WeChat’s sharing features and WeChat Pay make it so easy that users can do this with just a few taps of the finger.

Gift-giving is a major tradition in China, and luxury brands have become adept at tapping into it. Users are already used to giving gifts on WeChat, using the “red envelopes” virtual money function. Chinese WeChat users sent each other over RMB 47 billion (about $7 billion) in virtual red envelopes to during the six-day Chinese New Year period in 2018.

Dior’s mini-program takes things one step further in allowing customers to send virtual gift cards to one another. From the brand’s perspective, this creates better customer engagement. The mini-program also allows them to single out certain items for sale and track consumption data for gift-giving purposes.

Personalization: Longchamp

Handbag maker Longchamp’s mini-program enables customers to customize their own bags. Users can select colors and features and place an order without leaving WeChat.

Luxury brands have long struggled to recreate the luxury experience online since there are no trained attendants nor plush leather seats to make customers feel special. Additionally, many consumers go online to shop for discount deals—whereas many luxury brands have been loath to discount their goods for fear of hurting their brand value and proposition.

Offering personalization, a service that is typically reserved for VIP customers at offline luxury retail stores, to mini-app users rewards brand engagement with a taste of luxury.

Online-to-Offline: DFS Group

Chinese tourists flock to DFS stores in Hong Kong, taking advantage of the city’s absence of sales taxes (except on alcohol and tobacco) to purchase luxury and cosmetics goods. DFS Group’s mini-program lets customers browse and order duty free goods online before they get to the store, offering multiple locations to collect purchases.

Duty free shopping can be crowded and chaotic. By nature, it can’t go online. Often gray market daigou (shuttle trader) sellers line up at stores at the crack of dawn to snap up popular products—leaving tourists frustrated when their favorite items are out of stock.

From the retailer’s perspective, it’s also hard to market and sell to Chinese tourists who have a million items on their to-do list when traveling.

Using WeChat Moments ads and this mini-program to target tourists before they even arrive in Hong Kong allows physical stores to compete with e-commerce convenience.

微信漂流瓶正式下线 视频动态可搜索歌曲设置背景乐 – 新浪科技

What happened: WeChat’s latest update released May 5 on Apple’s App store enables background music for short video posts and comments on other users’ videos. Absent in this update is the social “drift bottle” feature, where users could write voice or text messages and throw them into the “sea” of WeChat users to be viewed by anyone on the app. The company had announced late last year it would remove the feature over concerns that it was being used to circulate pornography. The Android version of the update was available beginning mid-April.

Why it’s important: Over the years, WeChat has experimented with a number of different social features, including a “shake” function that allows users to add people nearby as friends. The quiet elimination of “drift bottle” may be an acknowledgment that users no longer see WeChat as a way to make casual social contact; instead, the app appears to be focusing on creating new ways of connecting with existing friends. The push towards making social video posts more interactive also seems to point in that direction. In addition, it makes the relatively new function more similar to scripted offerings featuring musical accompaniment on hot short-video app Douyin. Douyin, too, may be moving closer to WeChat with a recently announced promotion for more personal vlogging content.

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

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It’s crossover episode time! Ell and James sit down with Jordan Schneider from the China Econtalk Podcast to discuss livestreaming fashion in China, Facebook vs Wechat, and the risks of stock-picking.

Please note, the hosts may have interest in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• iQiyi
• Xiaomi
• JD.com
• Pinduoduo
• Meituan-Dianping

Guest:

•   Jordan Schneider – @jordschneider1

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• Elliott Zaagman – @elliottzaagman
• James Hull – @jameshullx

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A version of this article first appeared on Azoya’s WeChat blog. Azoya helps global brands and retailers access the China e-commerce market through WeChat and other channels.

The biggest brands in China are trying to reduce reliance on shopping mega-platforms like JD and Tmall, channeling consumers to branded mini-programs on the all-in-one messaging app Wechat. According to data provider ALDZS, 230 million daily active users access one of Wechat’s 2.3 million mini-programs every day. E-commerce comprises the largest category—approximately 18% of the mini-programs on the market are dedicated to e-commerce.

For most brands, mini-programs are supplements, not substitutes, to large shopping platforms. Some use them as a secondary sales channel, listing only hot items on it because they sell quickly through group buying or flash sales promotions. Others use them more as a branding tool. In this article, we’ll explain why mini-programs are becoming a key tool in a China brand strategy. In a follow-up, we’ll offer how-to tips based on our research into mini-program e-commerce.

WeChat gives brands independence from e-commerce platforms

While leading e-commerce platforms Tmall and JD.com offer brands large organic user traffic, they come with a number of drawbacks, leading brands to look for alternative sales channels:

• Tmall or JD.com each host tens of thousands of merchants, giving each one limited website space and time to communicate unique brand value. Each customer is likely to only spend a few seconds on one brand or product page before jumping to another page.
• Price competition is much more intense on a centralized platform, where it’s easy for customers to compare prices. This is especially the case for Singles Day, where brands are often forced to discount their goods by >50% to drive sales.
• Competition also drives up ad costs. On Tmall or JD.com, customers are likely to log onto the site with certain keywords or brands in mind; merchants bid for those keywords, driving up advertising costs and making it difficult for smaller players to compete. Some estimate that the customer acquisition costs on these platforms have risen to 200-300 RMB (about $30-45) per person.

In short, brands selling on a platform run the risk of becoming a commodity.

Driving customers to official brand channels mitigates this risk. WeChat is one of these options. As an app within an app, a mini-program is limited in size, built on top of WeChat’s existing IT infrastructure, and can be developed within a relatively short amount of time and at a fraction of the cost of a normal app.

Mini-programs stores are generally used as a supplement to a brand website or Tmall store. They usually don’t carry a brand’s entire product line, often only a handful of products such as a new limited edition collection of sneakers, a fall fashion line or a new collection co-branded with a celebrity. They often focus on special, exclusive or flash sales—the goal isn’t necessarily selling products, but engaging with customers to make them feel special.

Brands also use WeChat as a customer relationship system, as users can log in automatically with their WeChat user IDs. Brands have more access to customer data and can develop loyalty programs to keep customers coming back for more.

WeChat lets customers discover and buy new products all in one platform

WeChat’s closed-loop transaction process makes it much easier for brands to engage, cultivate and sell to customers over the long run.

On a mini-program store, the user journey is very different to an e-commerce platform. Users likely do not start out planning to buy something, and are not inputting keywords into a search engine to find a product. They begin either by messaging friends or browsing content posted by friends and official accounts.

Often, users discover new brands or products through the brand’s official account or friends and family. Sharing accounts for 35% of e-commerce mini-program access points, whereas official accounts account for 14%, according to ALDZS data.

When the user journey starts with content and is shared by friends, discovery and engagement is much more natural. This is important because trust is a big issue in China e-commerce: customers need to digest a lot more information about a product to make a decision than Western peers—that is why product pages are three to four times longer in China.

While the customer may not make a purchase right away on WeChat, brands can push content to followers over the long run. Mini-programs allow content to link directly to a checkout page; WeChat Pay makes it possible for customers to make a purchase without ever leaving the app.

Driving traffic on WeChat remains a challenge

And yet driving traffic to WeChat stores remains a challenge for all brands, big and small.

• WeChat is still a relatively closed network; users cannot interact with strangers they are not connected with nor view content posted by non-friend users.
• WeChat ads have notoriously poor ROI, owing to weak targeting and customer segmentation technology
• Many brands use key online influencers to drive traffic, but KOI promotion is becoming increasingly expensive

Bigger brands may be able to drive traffic from other channels, whether it be their official site, KOIs and celebrities, offline retail stores or popup stores. Last year French cosmetics brand L’Oreal used a mini-program to livestream Chinese celebrities and promote products during the Cannes Film Festival. Brands with existing WeChat fans may be best advised to target these loyal customers instead of trying to start from scratch with new ones.

Small brands starting from scratch generally have to spend on KOIs because WeChat’s ad options for smaller companies are so limited; nonetheless, it is a good option for new brands that can’t get on major platforms like Tmall and JD—far easier than driving traffic to a brand website.

Brands have to get more creative and make their mini-program stores so compelling that they inspire customers to share content with their friends.

Sneaky tobacco ads show smoking as chic lifestyle – China Daily

What happened: A report by the Beijing Center for Disease Prevention and Control released Monday revealed 51,800 tobacco promotions spread out across 14 online platforms in the first half of 2018. Many of them circumvented a 2016 law against online tobacco ads by integrating the content into lifestyle posts. Social shopping review site Xiaohongshu alone contained 90,000 references to tobacco, some of which referred to specific products or purchase methods. Microblogging site Weibo, however, had the most disguised tobacco ads by far, making up 80% of all uncovered posts.

Why it’s important: The deputy director of Beijing’s CDC pointed out that the majority of users for certain platforms, including Xiaohongshu, are women, potentially putting female online users at more risk of targeted advertising. Notably, of all ads discovered, 15% were part of stories related to family or relationships. Xiaohongshu has also faced criticism in the past for allowing fraudulent posts to interfere with its function as a hub for non-promotional, fairly ranked product reviews. More broadly, the CDC’s study also shows the difficulty of maintaining online order amid marketing innovations and massive user platforms. Weibo alone gained 28 million more daily active users in 2018, reaching 200 million as of December.

案件快报 | 腾讯公司起诉“微信自动抢红包”软件运营者构成不正当竞争 – 知产北京

What happened: Beijing’s intellectual property court has accepted a case from Tencent against the operator of an app that automatically grabs cash from WeChat’s social red envelope feature, known as hongbao, as well as a platform that hosts the app. Tencent argued that the app has harmed the value of the WeChat feature, which normally requires users to physically tap a hongbao to receive money. Using the software, users can “snatch” cash without opening WeChat. By monitoring chat logs for mentions of red envelopes, as well as the circulation of money in-app, the software violated user privacy, Tencent added. The tech titan demanded that the software’s operators and Android app store Wandoujia stop publicizing and allowing downloads of the app, publish apologies in various media outlets, and pay RMB 50 million in compensation.

Why it’s important: In arguing that the app harmed the value of hongbao, Tencent made the case that the feature has game-like aspects: since the red envelopes contain a limited amount of money, users often must compete against each other to receive a share. That argument hearkens back to Tencent’s long-running campaign against cheaters on various game titles like “League of Legends.” Given the popularity of its offerings, Tencent’s entertainment empire may be fighting a never-ending battle: as long as competition is fierce, incentive to game the system will persist. In addition, some experts argue that certain cheating behaviors in gaming fall into a legal gray area, and may be difficult to prosecute. If it wins the hongbao case, Tencent may set new precedents for internet companies’ ability to punish those perceived to infringe on their virtual property.

WeChat announced on Monday  (in Chinese) that tagging is now available for all advertisements in the social app’s News Feed-like Moments section.

Users can alert their WeChat friends in the comment section below individual ads by tapping an ‘@’ symbol followed by a friend’s name. Those tagged will receive a notification in Moments identical to that in normal posts or comments.

According to a post on WeChat’s ‘s ad helper official account, the function is now automatically available for all paid ads on Moments. Prior to the public release, some brands–including KFC in a Valentine’s Day campaign and Tencent itself–had already made use of the feature.

Ads on Moments were launched in 2015, and have slowly grown in function as well as accessibility for advertisers since then. In January 2017, an upgrade allowed brands to advertise in more interactive ways with multimedia-enabled ads. Due to WeChat’s wealth of user information, advertisers can also choose to target users based on their location, gender, age, industry, marital status, education level, and behavior, according to web agency WalktheChat.

On the whole, however, WeChat has been cautious to clutter up Moments’ social aspect with too much commercial activity. Compared to offerings like Facebook’s News Feed or Instagram, Moments hosts a relatively smaller proportion of branded ads. However, in part due to its ubiquity in both business and social life within China, WeChat’s Moments page has long been used by small-scale retailers for informal, social-powered advertising of various goods.

Editor’s note: A version of this post by Thomas Graziani first appeared on WalktheChat, which specializes in helping foreign organizations access the Chinese market through WeChat, the largest social network on the mainland.

A few days ago, WeChat announced the release of a new logistics API enabling WeChat Mini-programs to connect with 3rd party logistics providers (developers can find the documentation here). The solution has already been implemented by companies such as the American skincare brand Kiehl’s (part of L’Oréal group) and is now being made available to the public. But is it any good?

The new WeChat Logistics API enables developers to create orders with major Chinese logistics providers. Merchants can:

• Create a new shipping order with their logistics provider via the WeChat API
• Track the order in real-time via the WeChat API or a PC tool provided by WeChat
• Offer customers easy access to shipping information via WeChat

Users receive notifications from a “Service notification” (服务通知) folder informing them of their delivery’s status.

What are the benefits?

WeChat claims that this new API offers several benefits:

• Easily integrates merchants system with logistics providers
• Enables convenient integration with multiple logistics providers
• Provides a centralized way for users to get notifications and shipment information

But you might ask: weren’t you always able to track your order’s delivery, no matter the platform you were ordering from? So what’s new here? The answer is: not much. In fact, many existing logistics APIs, such as Kuaidi100, already offer integration with multiple logistics providers through a centralized API.

And of course, mini-programs such as JD.com’s have long been able to integrate such data directly within the WeChat Mini-program interface. Such features do not require a specialized logistics API. WalktheChat also integrated its own tracking system inside its Mini-program, supporting shipping codes from more than 1,000 carriers. Moreover, WeChat Mini-programs can already message users with logistics notifications via their “template message” features.

WeChat Logistics API therefore doesn’t provide much compared to already existing solutions. But it also comes with several drawbacks: it’s limited to WeChat, and only supports a small number of logistics providers.

The main drawback of the WeChat logistics API is of course, that it only works within WeChat. The creation of a new order requires the “OpenId” of the WeChat user (an ID obtained via WeChat log-in), so any order happening outside WeChat can’t leverage the API. This is problematic as, of course, most vendors don’t use WeChat Mini-programs as their only channel. They will be interested in using one single shipping API across their channels—and as we mentioned, there are already APIs in the market offering this service.

The WeChat Logistics system interfaces with only nine logistics providers so far: BEST, EMS, OTP, PJ, SF, YTO, YUNDA, ZTO, DB. This may seem like a lot, but it covers a tiny proportion of the fragmented shipping market. In comparison, Kuaidi100 API interfaces with more than 1,000 shipping providers.

The WeChat Logistics API might be good for small businesses who want to focus solely on WeChat Mini-programs for online sales and are looking for a quick solution for shipping integration. However larger brands with multi-channel approach will likely want to directly integrate with a provider that will work across channels, or directly with their shipping provider’s API.

The WeChat Logistics API is an interesting step for WeChat in the more “downstream” side of its e-commerce ecosystem.

However, the solution is a latecomer in an already mature and competitive market. The WeChat API is taking a very… WeChat-centered approach. It is therefore unlikely to replace mature cross-platform solutions which have already gained significant market share.

微信被指根据文字聊天精准推送广告，回应：从未监控聊天记录 – The Paper

What happened: In response to a Southern Metropolis Daily report (in Chinese), WeChat issued a statement on Tuesday that it does not use chat log data to better target ads. The article cited a WeChat user who reported receiving an ad about Spring Airlines flights to Osaka, Japan, only minutes after a family member messaged him about exactly that topic. WeChat said that user clicks may affect the information displayed inside the app, but that it doesn’t monitor the content of private chats. Representatives also suggested that such coincidences may be a result of advertiser ability to target specific demographics when placing ads.

Why it’s important: Although WeChat denies monitoring chat logs, its privacy policy has long stated that the app collects other user information, including names, phone numbers, email addresses, credit card info, IDs, and location-related data. In response to European GDPR regulations last May, it added some new privacy protections for the international version of its app. However, the changes haven’t trickled down to the domestic version. In addition, a recent massive leak of user data from platforms including Tencent’s WeChat and QQ, which may have been linked to government databases, shows that privacy fears may be grounded in fact.

On Monday, Tencent’s WeChat app launched a logistics interface for its popular mini-program feature that it says could save time and money for online retailers.

Given its competition with established e-commerce titan Alibaba, which has spent years strengthening its own logistics network, Tencent’s update may appear to be too little, too late. Outside of strategic investments in platforms such as Pinduoduo and JD.com, its homegrown businesses have largely failed to rival those of Alibaba.

However, according to at least one expert we spoke with, WeChat’s goal isn’t necessarily to surpass Taobao. Instead, the social platform is pushing forward innovation more in line with its strengths, which include a 1 million-strong ecosystem of mini-apps, lightweight programs that run within WeChat.

Lowering the barrier

With the new add-on, WeChat mini-program developers can directly connect to logistics companies such as SF, ZTO Express, and YTO Express. In addition, customers who purchase items will be able to receive notifications and track their packages directly through a centralized “WeChat logistics assistant.” Previously, users had to enter the mini-program for each online store to check on their shipments.

The process of linking a mini-program to the logistics option requires developers one week on average, according to WeChat (in Chinese). In its official release it cites two major sellers, including American skincare brand Kiehl’s, who have saved on costs and improved customer experience using the new feature.

However, one marketing professional expressed doubt that the change will help all retailers equally. The update could lead to a marked improvement for “really well-developed companies” with an established customer base, says Jason Blondeau, director of marketing and sales at Shanghai-based web agency QPSOFTWARE. Relative newcomers to mini-program e-commerce, however, may not benefit much from a logistics upgrade until sales pick up.

Still, Blondeau told TechNode, mini-programs in general can be “very useful” for brands when combined with a “proper marketing plan.”

In addition, the latest update seems to fit with Tencent’s aim to make mini-programs easy to use. It’s “very much in line with what they said they would do,” says Matthew Brennan, co-founder of China Channel.

“The whole mini-program initiative is about helping startups, helping more businesses,” Brennan told TechNode. That applies to e-commerce as well. Just a few years ago, WeChat “wasn’t a very natural environment” for online shoppers, said Brennan. Now the whole in-app retail experience has become much smoother thanks to pushes from Tencent.

Brennan doesn’t see the company’s e-commerce initiative as a direct competitor to Alibaba. Instead, like the “runaway hit” platform Pinduoduo, WeChat is finding new models “to let social e-commerce flourish.”

And fast-growing mini-programs, launched in January 2017, happen to be a convenient tool for alternative means for growth. As of the second quarter of 2018, Tencent reported that WeChat hosted over 1 million mini-programs on its platform, a 72% jump from the same period in 2017. Total users reached 600 million, with close to one half accessing them four to six times a day.

In its fourth quarter report for 2018, Tencent said that mini-program user daily visits have grown 54% year-on-year. Daily active users have also increased “rapidly,” although the company did not release a specific figure.

Their popularity has caused such ripple effects as small food and drink sellers using mini-programs to improve in-store experiences, rather than remain in an increasingly crowded online food delivery market. The feature’s success has also led multiple other companies, from Baidu to Bytedance, to emulate Tencent’s formula of driving in-app “stickiness.”

Logistical battle

While WeChat may be taking a different tack towards e-commerce, recent years have seen Tencent and online retail titan Alibaba expand aggressively into each other’s home turf. The Chinese social and gaming giant saw some progress with investments in Alibaba competitors like Pinduoduo, Vipshop, and JD.com, of which Tencent is the largest shareholder. However, its own e-commerce businesses, including the likes of C2C marketplace Paipai or Yixun, have achieved little success in a crowded market.

As a result logistics, a primary driver for the e-commerce boom in China, has never been a key focus for Tencent as it has been for Alibaba or JD.com.

Alibaba began tapping into the sector as early as 2013 with the establishment of Cainiao Logistics, which has pledged to support same-day delivery in China and 72-hour delivery around the world. Cainiao now stands at the heart of a broader logistics network that leverages the capacities and capabilities of several large, high-profile partners. The e-commerce giant already holds minority stakes in three of the country’s top logistics companies: ZTO Express, YTO Express, and STO Express.

In comparison, Tencent’s integration of logistics features into its WeChat mini-program ecosystem might be viewed as a necessity in a world where online shoppers are accustomed to same-day—or in some cities, 30 minute—deliveries.

In addition, while the field of e-commerce is already highly developed, it’s still expanding. China’s express delivery market has recorded sharp growth over the past few years, handling 50 billion parcels in 2018, up 26% year-on-year, according to data from the State Post Bureau.

With additional reporting by Emma Lee.

Correction: This article previously incorrectly stated Jason Blondeau’s title. He is director of marketing and sales at QPSOFTWARE, not marketing and sales manager.

腾讯直播内测推进，公众号粉丝可通过微信小程序看直播 – TechNode

What happened: Tencent, which previously acknowledged ongoing development of a live-streaming feature for WeChat public accounts, has moved forward in the internal testing process. Account operators are now able to apply to test the product by filling out a questionnaire about their content and followers. Development is headed by Tencent’s live-streaming team rather than WeChat. Reportedly, official account operators will be able to broadcast via Tencent’s live-streaming app; users will be able to sign up and watch via a WeChat mini-program link rather than downloading the app itself. Currently, the feature does not support paid content, monetary gifts for live-streamers, or external links in mini-programs.

Why it’s important: The new feature comes amid a two-year trend of declining views for WeChat public accounts, the social app’s media ecosystem. WeChat founder and president Zhang Xiaolong acknowledged the decline in the platform’s annual January announcements. He also discussed a new, short video feature for WeChat intended to tap into growing user preference for more visual communication. In pushing forward live-streaming efforts, however, Tencent faces an uphill battle. Bytedance announced this month that it will combine staff from its three popular short video apps—Douyin, Xigua, and Vigo—to build a larger platform for its live-streaming business. Smaller game live-streaming company Panda TV also confirmed its bankruptcy in early March after sinking into RMB 1 billion ($149 million) in debt amid cutthroat competition.

WeChat Pay to reportedly take on Google Pay and Paytm in India later this year – The Next Web

What happened: Tencent is eyeing the increasingly saturated payment market in India with a UPI-based (Unified Payments Interface) WeChat Pay app. Tencent executives met with the National Payment Corporation of India (NPCI) to discuss obtaining a license, according to Indian internet media Entrackr. The Chinese tech giant is reportedly planning to launch the payment service as early as May or June.

Why it’s important: The UPI payment system’s monthly transaction volume on average exceeds Rs. 1 trillion ($14.47 billion) over the past three months, according to NPCI statistics. While WeChat Pay holds a dominant market share in China, it will be up against tough rivals in India such as the government-owned BHIM, Alibaba-backed Paytm, and Google Pay. Last week, Chinese smartphone maker Xiaomi also announced its entry to India’s payment market with UPI-based app Mi Pay. However, Tencent could leverage its popular mobile game PlayerUnknown’s Battlegrounds (PUBG) to gain an edge over its competitors in India by enabling in-app purchase via WeChat Pay.

关于打击微信个人非法信贷贷类行为的公告 – WeChat Security Center

What happened: China’s most used messaging app, WeChat, has shut down over 2,500 user accounts and more than 1,000 group chats since the beginning of the year over illegal credit and loan activities, according to an announcement posted on the official account of WeChat Security Center.

Why it’s important: The move is a response to the recent complaints from WeChat users about increasingly prevalent illegal lending behavior, and is part of a wider crackdown on illicit activities in the messaging app. Earlier this month, WeChat made a similar announcement announcing its progress on the sale of illegal and contraband products. Online lending has experienced rapid growth in China in recent years, but the sector is rife with fraud and illegal activities, largely due to a lack of oversight. WeChat, which has become a hotbed for fraud, has been trying to curb such behaviors especially as authorities tighten rules on online lending.

Browse Chinese e-commerce site Taobao long enough, and you’ll come across any number of strange things—including the recent trend of hiring “praise givers.”

For a wide range of prices, users on messaging platform WeChat can hire a group of “professional praisers” to throw complimentary messages at a person of their choice for a prearranged amount of time.

One Taobao seller’s page features a screenshot of an apparently satisfied customer’s post, including the line “spent [RMB] 40 for one hour of happiness.” A sample of service contains compliments from “That’s awesome” to “Remember to contribute to a sperm bank, I hope my child is as excellent as you” (our translation).

Another shop advertises a premium product: praise givers who are humanities students from top schools, such as Peking University, Tsinghua University, Fudan and Shanghai Jiaotong. It charges RMB 80 for five minutes of nonstop compliments.

Based on Baidu’s search index, the rise in popularity of “praise groups” has been sudden. On Sunday, there were no searches for the Chinese term, kuakua qun. As of Thursday, searches had surged to more than 14,000. Meanwhile on microblogging platform Weibo, views of the hashtag “praise group” have soared to well over 23 million as of Friday afternoon.

A report by Chinese media outlet Ifanr links the origin of praise groups to a longstanding online forum on social entertainment platform, Douban, which is called, “mutual praise group.” Established in 2014, the 100,000-strong group features threads by various individual posters asking to be complimented or encouraged. Two top threads created in late February and early March, however, complain that a recent upsurge in popularity has diverted its purpose.

“The original intent of the group was to discover truth, kindness, and beauty, and encourage each other… and not to praise a bunch of junk,” wrote one user with the handle, KiyoTakahashi.

If its top Taobao purveyors are to be believed, however, kuakua qun are indiscriminate in distributing praise. The same seller who advertised the sperm bank line also featured a screenshot where a “praise” recipient apparently posted a troll face emoji. Responses included “God, this emoji is so enchanting,” and “You are definitely a funny girl.”

On Taobao, praise groups are also linked to another phrase, “caihong pi,” or “rainbow fart.” The term refers to the showering of compliments that fans bestow on celebrity idols, according to Baidu Baike.

A self-described “humor blogger” on Weibo linked the two concepts in a post that was shared over 1,000 times. “Praise groups, they’re basically large-scale sites for caihong pi” or rainbow farts, he wrote alongside screenshots of over-the-top praise.

Besides doling out comfort, praise groups seem to serve as a source of entertainment. “Yesterday I joined a [praise] group,” one commenter wrote. “I laughed out two new crow’s feet.”

When Facebook’s Mark Zuckerberg outlined plans to merge Whatsapp, Instagram, and Facebook’s flagship platform into a small group-focused network, it immediately drew comparisons to WeChat.

“With all the ways people also want to interact privately, there’s also an opportunity to build a simpler platform that’s focused on privacy first,” Zuckerberg wrote in a post titled “A Privacy-Focused Vision for Social Networking.” He claims that in addition to a digital “town square,” people “also want to connect in the digital equivalent of a living room.” Facebook is trying to address concerns about privacy and misinformation on the platform—but small groups do nothing to improve the quality of information users share.

Just look at WeChat to see small groups in action. Allen Zhang, the founder of WeChat, built most its multitude of functions out of intuitions about how groups on the platform work. Zhang, a user-experience design obsessive, recently gave a four-hour speech on his design philosophy, in which he talked about cultivating a space as friendly and familiar to users as “an old friend.”

WeChat has a misinformation problem of its own: friend-sourced content isn’t necessarily factual, objective, or higher quality. Zuckerberg’s assumption that a digital living room will stop misinformation is misleading. This change will simply hide some of the present information problems, as WeChat’s own problems show.

Neither Zhang nor Zuckerberg seems to understand the political and cultural spaces that they’ve created. Neither Facebook nor Tencent are government agencies—but both corporations handle information, data, and decisions that are increasingly political.

Lies in living rooms

According to a report by the Tow Center, 79% of US-based WeChat users use it as a primary source for political information. In political campaigns with candidates of Chinese descent, WeChat has also become a political clearinghouse that can foster “digital intimacy” between candidate and voter, and can personally field voters’ policy questions within politics-related group chats. Most of these fast-paced, strongly worded conversations are difficult to find out and track without group membership.

Chinese government regulators censor all WeChat data. But even after content goes through censorship filters, information on WeChat remains siloed within groups.

WeChat’s most active communications channels are person-to-person and group chats, as opposed to more public-facing walls that fueled Facebook’s rise.

Within these groups, members pass along viral articles, allowing rumors to spread just as quickly as in a Facebook news feed. For example, a news item about a driver with an expired visa fatally hitting a Chinese jogger quickly turned into the misleading headline “Kill a Chinese person, get a green card.”

Given Wechat’s current content standards, stories like the traffic accident headline wouldn’t necessarily register as a high-priority information problem. Wechat prioritizes content deemed politically sensitive to Chinese authorities, and sensitive current events, including critical excerpts of U.S. lawmaker speeches.

Self-appointed fact checkers have emerged to challenge falsehoods on WeChat, but despite their efforts chats are fast-moving and tend to lump together reliable and unreliable sources . Because group membership is the only way to truly locate the memes, false health advertisements, and hate speech circulated, the few fact-check reports produced by volunteers must be forwarded to groups in order to counterbalance bad information in the first place.

Further, since private information ecosystem are invisible to non-members, it’s almost impossible to know exactly how much damage misinformation campaigns have done. For media organizations and government entities already struggling to combat bad information, false information campaigns previously shared in publicly observable spaces will go into hiding.

Moderation tools within WeChat groups remain limited, as well, and group admins have no control over what information is shared. Instead, they are simply given a tool to boot troublesome users and responsibility for all communications within the group.

Lessons for Facebook

WeChat-like group chat won’t solve the problems that are plaguing Zuckerberg in the digital town square. With a souped-up group interface, it will be even more of a challenge to pinpoint and manage the spread of hate speech and curb foreign political influence on the United States.

While the idea of having users engage with smaller peer groups is a nice sounding idea, WeChat’s current iteration of the “digital living room” demonstrate that misinformation can thrive in smaller environments as well. Without considering the myriad misinformation problems that group-based platforms cannot easily resolve, Zuckerberg risks simply sweeping bad information under the rug. There, it would sit untraceable until the next time hoax-inspired violence resurfaces.

Facebook’s suite of messaging apps matter to more nationalities than WeChat, which still primarily serves mainland Chinese, at home and overseas. Facebook’s handling of misinformation overseas has been clumsy: insufficiently answered questions linger about its role in anti-Rohingya violence in Myanmar.

Zuckerberg’s proposed changes to Facebook’s messaging tool kit must learn from the reality of WeChat—or risk fanning the flames of future upheavals. Lofty mission statements about connecting people aside, both Facebook and WeChat should remember that their design decisions affect the news intake, security, and wellbeing of billions.

Latest mobile app rankings show that WeChat, Alipay, and QQ were the most used apps in February, according to Chinese mobile internet research firm Trustdata’s latest release (in Chinese). The company posted its February figures for China’s top 200 mobile app rankings on its official WeChat account Thursday.

China’s super app, WeChat, maintained its top spot, with monthly active users (MAU) growing 2.25% month-on-month in February to 1.01 billion. Alipay, the most used non-social app, ranked second with 608 million MAU. Tencent’s social networking app crossed the 600 million mark during the month, ranking third overall.

Taobao and Jinri Toutiao were the only two apps in the top 10 that declined in February. Taobao ranked fourth overall, but active user count softened 2.8% compared with the previous month. Bytedance’s top app Jinri Toutiao user activity weakened modestly in February, declining 1.5% month-on-month to 227 million.

February figures reflected increased user leisure time during the week-long Spring Festival holiday, with social, video-streaming and entertainment, gaming, photo-editing apps the most popular categories among Chinese smartphone users.

Within the top 50, Tencent’s hit title, “PlayerUnknown’s Battlegrounds Mobile” (PUBG Mobile), saw the fastest growth in February, surging more than 20% month-on-month. The hit game has been banned in several cities in India, leading to arrests.

Short video app active user size grew significantly during February. Bytedance’s Douyin (known internationally as TikTok) led with 303.6 million MAU, Tencent-backed short video app Kuaishou surged 10.7% month-on-month to 218.1 million, and Bytedance’s Huoshan ranked third in the category with 102.0 million MAU. Duoshan, Bytedance’s new video-based social app which launched January 15, made it into the category’s top-10 with 10.0 million MAU.

Active user count for food delivery platforms retracted in February. Meituan Waimai maintained its top spot as the biggest online food delivery platform with MAU of more than 15.6 million, however, it declined 7.3% month-on-month. Alibaba’s Ele.me ranked second with 10.7 million MAU, though February figures fell around 15% compared with January.

In cross-border e-commerce, Xiaohongshu MAU rose 16.3% month-on-month to 49.8 million; NetEase Kaola came in a distant second with 2.9 million MAU.

Apple, WeChat Tussle Over How to Divvy Up Mini Program Revenue – Caixin Global

What happened: Powerhouse messaging platform WeChat has been trying to downplay rapid growth in the number of mini-programs—stripped-down ‘apps’ that run within WeChat—because of an impasse with Apple over a revenue split dating back to May. Apple was reportedly demanding 30% of in-app purchase revenue, and it seems the spat is unlikely to resolve anytime soon, Caixin said Wednesday citing unnamed sources. According to WeChat open platform executive, Du Jiahui, the argument is over the nature of mini-programs, which numbered 1 million as of July. A Caixin source said that widespread adoption of mini-programs since launching in 2017 took Apple by surprise.

Why it’s important: Tencent’s WeChat has previously battled with Apple over another form of in-app revenue: tips for content producers in WeChat’s public account media ecosystem. In June, Apple finally ruled that iPhone users could begin tipping again, as long as all of the proceeds went directly to individual account operators. The dispute over mini-programs may be harder to resolve, however. For one, the WeChat ecosystem is growing fast and lightweight mini-programs lower the barrier for entry for developers compared to the App Store. Many popular apps in China have also launched smaller versions within WeChat. As the potential pool of revenue grows, Apple may find it increasingly hard to let go.

Former LinkedIn China president Derek Shen said Monday that the professional networking site has “lagged way behind” Tencent’s chat platform WeChat, two years after stepping down from the company.

“It’s horrible that the LinkedIn product managers don’t even realize they have lagged way behind a list of new social networking services such as WeChat, feeling good about themselves instead,” said Shen in a LinkedIn post on Monday. The former LinkedIn executive said that he tried to improve the platform when he joined the company six years ago, but struggled to make progress as it involved so many stakeholders within the organization.

Shen’s posted his public gripe after he was unable to message a newly added friend. He also said that the company was prioritizing profits by prominently displaying features such as friend recommendations while leaving out core features such as the friend list.

LinkedIn was not available for comment.

In a reference to Facebook founder Mark Zuckerberg, Shen added that LinkedIn should “target WeChat and try to catch up.” Zuckerberg said on Friday that he regretted not taking advice given four years ago to learn from WeChat, reported the South China Morning Post.

China’s professional networking market is dominated by domestic companies. According to Beijing-based research firm Sootoo Research (in Chinese), Alibaba’s Dingtalk is the most popular job connection service for Chinese users beginning in the first half of 2018, with more than 92.6 million downloads during the period.

Two other challengers, Maimai and Tongdao, the messaging platform for online jobs website Liepin, follow with 87 million and 18 million downloads, respectively. LinkedIn was not listed in the report, which ranked the top five professional networking apps.

Derek Shen announced his resignation from LinkedIn China in mid-2017, and immediately assumed his post as executive chairman for the shared housing startup Danke Apartment. The Beijing-based startup just raised $500 million in a Series C led by Alibaba’s fintech arm, Ant Financial, and US-based investment firm, Tiger Global Management.

聊天宝（原子弹短信）团队解散，罗永浩已退出 – 36kr

What happened: 36kr reported Wednesday that smartphone maker Smartisan’s competition with WeChat may soon be over. Bullet Messenger, developed by Beijing-based Kuairu Technology and launched by Smartisan in August, was marketed as an alternative to WeChat. On Tuesday, as many as 200 Bullet workers were reportedly dismissed, leaving behind only a small team that may be transferred to Smartisan. The phone company didn’t immediately comment on the news.

Why it’s important: Soon after its launch, Bullet Messenger’s App Store rankings surged, at least in part due to cash incentives that rewarded users for inviting friends and staying active. As of late September, however, downloads had dropped off significantly and Smartisan CEO Luo Yonghao stated on Weibo that the app’s features may not have been polished enough. Loose security and salacious content also gave the app a bad name, while rumors of layoffs and unpaid wages dogged Smartisan late in the year. Bullet Messenger’s apparent closure less than a year after launch doesn’t come as a surprise for industry observers. Other competitors aiming to knock WeChat off its throne continue to emerge, the most prominent of which may be AI-powered unicorn Bytedance’s Duoshan messenger.

Social media platform WeChat created more than 22 million job opportunities in 2018, 5.3 million of which drew the majority of income through the platform, according to a report published on Monday. Total job opportunities grew 10% compared with 2017, following steady average growth of more than 2 million positions per year since 2014. The report did not specify the proportion of jobs that were full-time, however, or average wages.

The paper was co-released by Tencent’s WeChat, official think tank China Academy of Information and Communications Technology, and their jointly established Digital China Research Center. Together they calculated that WeChat enabled “traditional” industries such as food and beverage, entertainment, and education to scale more efficiently, capturing more than RMB 4 billion in 2018. The app accounted for RMB 240 billion or 5% of total spending on “information consumption” during the same period.

Mini-programs, WeChat’s answer to the Apple App Store, helped drive growth. Launched in 2017, the fast-growing, flexible feature has helped lower the entry threshold for entrepreneurs across the board. Alone, mini-programs are estimated to have created 1.8 million direct and indirect employment opportunities in 2018, a 75% increase from the previous year. They also created some RMB 500 billion in business value in 2018.

Many of those taking advantage of WeChat’s entrepreneurial opportunities are either individuals or small businesses. New startups comprised a large majority of both mini-program operators and third-party service providers, and made up more than 60% of business operators within WeChat’s public account system, an in-app media platform.

WeChat’s vast ecosystem has opened up flexible and part-time job opportunities for new populations, allowing farmers, homemakers, and those with disabilities to tap into remote online work, according to the report. Of the one billion users on the social platform, 11% said they turned to the app during job searches, with a quarter of those respondents eventually finding “suitable” positions via WeChat.

刚刚，微信大数据发现了这个影响7000万人的「圈」– 微信公开课

What happened: According to new data released by Tencent, tourists are increasingly taking their WeChat Pay habits with them to Hong Kong and Macau. Mainland users’ daily average number of transactions in each territory this past January grew 200% and 900%, respectively, compared to the same period last year. Payment hotspots for mainland tourists included attractions like Hong Kong’s Victoria Harbour and Disneyland, as well as Macau’s airport. Twenty-something users born between 1990 and 1999 made up 65% of cross-border transactions; the group was also skewed towards females, who carried out 70% of all payments. In addition, WeChat Pay’s mobile payment services for Hong Kong users, which launched last October, are now supported by 1 million mainland vendors.

Why it’s important: In its report, WeChat specifically singled out plans for integrating the Greater Bay Area, an official moniker for the region including Hong Kong, Macau, and nine southern mainland cities. While the area is divided by different currencies, regulations, and borders, WeChat Pay may be helping to bridge some gaps—especially for mainland tourists. The payment system is supported on the new Hong Kong-mainland high-speed railway, as well as the massive Hong Kong-Zhuhai-Macau Bridge. Of course, WeChat alone won’t be able to whittle down bureaucratic barriers between territories. But given its growing prevalence and current partnerships with China’s government, it’ll likely play a significant role in future development.

“咪蒙”注销！头条号、大风号被永久关闭–深圳晚报

What happened: Mimeng, an independent media organization accused of falsifying a story in late January, has shut down its flagship WeChat public account. Previously, the account reportedly had 10 million followers. The public account associated with the fake news has also been shut down, while content was scrubbed from a Mimeng WeChat account. On Thursday, in separate Weibo statements, Phoenix News and Bytedance’s news aggregation app Jinri Toutiao said they would close down Mimeng accounts on their platforms. Both referred to the falsified article, as well as Mimeng’s profit-driven clickbait style. Phoenix News also stated it would “resolutely implement related management rules for self-media,” a term used to refer to nontraditional content providers.

Why it matters: The shutdown of Mimeng accounts may mark new scrutiny of “self-media” and independently-generated content. The organization has previously attracted criticism and backlash: in 2017, for instance, the Mimeng article “A Brief History of Prostitution” was deleted from WeChat. However, the public account was allowed to keep posting after a month. After the latest scandal, Mimeng announced a two-month break from WeChat and closed down its Weibo account, apparently not anticipating further measures. The most recent restrictions on the group will most likely be fatal, however. They also hint at official involvement. Phoenix News’ statement claimed that Mimeng threatened “social stability,” while Toutiao encouraged content creators to “promote socialist core values.”

Bytedance increased the total value of red packets offered on three of its apps to RMB 1.6 billion (almost $237 million) this recent Chinese New Year, up from RMB 1 billion last year, to become the biggest player in the Chinese hongbao battle in terms of prize money offered, according to a report from Jiemian.

The RMB 1.6 billion was distributed between content aggregator Jinri Toutiao, short video app Douyin, and social networking app Duoshan. The three apps received RMB 1 billion, RMB 500 million, and RMB 100 million respectively, according to the Jiemian report. They used the money for different Spring Festival promotional activities: users either collect tokens to qualify for a prize money raffle in the form of hongbao issued by the platform or are directly rewarded for participation.

Douyin’s event probably drew inspiration from its Ant Financial-owned Alipay equivalent, which has been held every Spring Festival since 2016. While Alipay’s event asks users for tokens that can be obtained by paying with the app, event tokens in Douyin can be acquired by inviting friends to the app or installing Duoshan.

While this is the second year that Jinri Toutiao has held its Spring Festival red packet event, it is the first for Douyin and Doushan.

More than 61 million people qualified for the draw in Douyin, according to a report from Bytedance (in Chinese). The exact number of participants of Duoshan’s Spring Festival promotional activity is still not available, according to a Bytedance spokesperson.

Chinese people give each other red packets for good luck during Chinese New Year, but in recent years platforms like Alipay, Taobao, and Wechat have been offering users electronic red packets, taking advantage of this tradition to promote their services.

Bytedance is not the only contender in the Spring Festival hongbao battle. Search giant Baidu partnered with China Central Television (CCTV) to distribute RMB 1 billion worth of red packets during the state media’s Spring Festival Gala (chunwan). Alipay offered RMB 500 million worth of hongbao in its collect-token-to-qualify-for-red-packet event and attracted more than 450 million participants. The short video app Kuaishou also recorded more than 100 million users joining in its hongbao event, which saw the app give away RMB 700 million worth of red packets.

Steam, the international games-distribution platform, also had a tokens-for-red packets promotion event that lead to greater discounts on games. Data, however, on how much they “gave away” was not readily available, but there was with much speculation and complaints by users.

Bytedance’s doubling down on its promotional efforts amid fierce competition is reminiscent of the hongbao battles between Alipay and Wechat a few years ago when the two platforms sought to establish themselves the default payment method. Wechat and Alipay rolled back their promotions two and three years into the battle, respectively.

Correction: This story has been amended to clarify that Douyin received RMB 500 million from parent company Bytedance to spend on red packet giveaways, not RMB 600 million as previously reported. The dollar equivalent of RMB 1.6 billion was also corrected from $23 million to $237 million.

Mimeng and ‘Self-Media’ under Attack for Promoting Fake News Stories to Chinese Readers–What’s on Weibo

What happened: The group behind popular public WeChat account Mimeng, known for articles on relationships and love—as well as clickbait titles—came under fire earlier this month. Netizens called BS on a post from a separate public WeChat account run by the same group. In the article, the writer supposedly tells the story of a high-performing classmate from a poor family who died young. After readers cast doubt over aspects of the article, the account deleted the story and was in turn banned from posting for 60 days. The Mimeng group also announced it would place its flagship WeChat account on hiatus for two months, and close down its Weibo account indefinitely.

Why it’s important: Although not run by a formal media organization, Mimeng’s main WeChat account had racked up 13 million followers. Allegedly, it charged advertisers as much as RMB 750,000 ($113,000) to be mentioned in a post. While the veracity of its content may be dubious, it was a prominent example of how independently-run “self-media” groups–also known as “we-media”–can rake in major earnings. Its downfall also calls into the question the methods self-media organizations use to create and popularize content. Critics have called Mimeng’s style “poisoned chicken soup,” implying that moneymaking aims overtook any attempts to create quality content of the “chicken soup for the soul” variety.

According to data released by Tencent’s ubiquitous app WeChat and Alibaba’s payment platform Alipay, China’s mass holiday migration over the lunar new year shook up spending patterns domestically while setting new trends abroad.

Holiday travelers made a total 1.2 billion transactions using WeChat Pay from Feb. 4 to 9. As travelers took their payment habits home with them, what the platform termed “migratory consumption” (our translation) made up over 40% of all WeChat Pay transactions in small fourth, fifth, and six-tier cities.

Alibaba’s Alipay announced that users born in the 1960s or 70s were the driving force behind growth in China’s outbound tourism and spending. The platform, which is now accessible in more than 40 markets globally, is “a huge drawcard for overseas merchants as a platform to help grow their business,” Janice Chen of Alipay’s Cross-border Business unit, said in a press release.

In a further sign of market penetration, the growth of overseas consumption by Alipay users from third or fourth-tier cities outpaced that of travelers from China’s largest metropolises.

For the first time, France also entered the top 10 foreign countries with the greatest spending volume over WeChat Pay, reflecting the growing adoption of the platform in Europe. According to app data, top non-mainland destinations for WeChat users over the holiday were Hong Kong, Macau, and Bangkok.

Tencent’s social media platform also released a slew of other statistics on user behavior, following its 2018 report on generational sleeping habits and other details. Combined with figures from Alipay, the two platforms paint a surprisingly detailed picture of how users spent their weeklong vacations.

For instance, 823 million WeChat users sent or received virtual hongbao, “red envelopes” stuffed with money, a 7.1% increase over the Spring Festival holiday period last year. Among them, the “post-90s” generation—born between 1990 and 1999—led the pack. Beijing was the most popular city for sending and receiving WeChat hongbao, followed by Guangzhou and Chongqing.

Alipay claimed that 450 million people, or roughly a third of China’s population, had taken part in its “five blessings” (our translation) cash prize event. This year, users could participate not only by scanning the Chinese character fu, or “blessing,” but also by participating in a virtual tree-planting activity, taking a safety awareness quiz, or raising cartoon chickens in another charity-related game.

WeChat’s data showed that while the post-90s generation made up over 30% of holiday travelers, they were also among the least active on the first day of the lunar new year. Users born in the 80s or 90s made up a majority of those who clocked under 100 steps, as measured by the app, that day.

They were also among the most voracious readers. WeChat’s social reading mini-program had 15.1 million users over the break, with the post-90s “generation” spending the longest time perusing pages. Sci-fi story “The Wandering Earth,” the basis for a blockbuster of the same name released Jan. 28, was the most popular selection.

Corrections: This post was corrected to reflect an error in an Alipay press release. The growth–not the volume–of overseas consumption by Alipay users from third and fourth-tier cities outpaced those of travelers from first-tier cities. In addition, the headline and text were both corrected to fix a mistake regarding the figure 1.2 billion. It refers to the number of purchases holiday travelers made using WeChat pay and not the value of those purchases. Finally, an editing error changed the meaning of a sentence. Migratory consumption made up over 40% of WeChat Pay in small cities, but it didn’t make up 40% of all WeChat Pay transactions, as an earlier version of this story suggested. We apologize for these errors. 

刷脸支付进入五线城市 三巨头加持物联网“飞”到百姓身边 – Securities Daily

What happened: Facial recognition payment systems can now be found inside the supermarkets of lower-tier cities in China. As spotted by Securities Daily, customers can now use Alipay’s “Smile to Pay” system when purchasing groceries at supermarkets in Xinzheng, a fifth-tier city located south of Henan Province’s capital Zhengzhou. According to a supermarket employee, the payment system was launched a month ago.

Why it’s important: Alipay, operated by Alibaba affiliate Ant Financial, has been improving its facial recognition payment technology since it trialed the beta version of Smile to Pay in 2015. The company then launched the technology for commercial use in September 2017. Facial recognition is expected to become a mainstream payment method in China in the near future, and Ant Financial is not the only player in the field eager to lead in this area. Rival WeChat Pay has already implemented the payment system in various industries. Last December, Chinese bank card service provider UnionPay also implemented similar technology in convenience stores in Shanghai and Beijing.

Editor’s note: A version of this post by Thomas Graziani first appeared on WalktheChat, which specializes in helping foreign organizations access the Chinese market through WeChat, the largest social network on the mainland.

On Tuesday 15th of January, WeChat blocked 3 competing Apps on their launch day: Liantianbao (聊天宝) – formerly called Bullet Messenger, Duoshan (多闪) – launched by Tencent’s archenemy ByteDance, and Matong MT (马桶MT) – launched by Ringo.AI.

Is this approach to competition specific to WeChat? To the Chinese market? And how do Chinese and Western companies differ in their growth strategies?

Building companies versus building ecosystems

Chinese and Western companies tend to have a dramatically different approach to expansion. In a few words: Western companies build products, while Chinese companies build ecosystems.

Nowhere is this trend more obvious than in the investment pattern of Chinese and Western companies. Chinese companies tend to be much more active early-stage investors into booming companies.

The purpose of these investments is to build a system of allegiance to the group. After receiving investment, the company will have to integrate with the ecosystem of the group and reject the competing ecosystem.

As a consequence, Pinduoduo heavily integrates with WeChat and offers WeChat Pay as a recommended payment method, while JD.com doesn’t support Alipay at all. Both companies, of course, received investment from Tencent.

Western companies have a very different expansion pattern: they tend to rely on acquisitions instead of investments.

These acquisitions can be major operations aimed at overtaking superstar products (such as Facebook acquisition of WhatsApp, Instagram and Oculus Rift or Apple acquisition of Shazam last September).

But more often than not, these acquisitions are technology or acqui-hiring operations aimed at developing existing products, such as the acquisition of Redkix by Facebook in July 2018 (which was merged with Workplace by Facebook) or the purchase of Senosis by Google in September 2018 (which was merged with Nest Lab).

Guerrillas and castles

The approach of Western tech companies to competitive warfare is akin to protecting a castle: they have a defined territory and will relentlessly protect it if the adversary gets close enough. Their acquisition strategy is meant to build stronger defenses against their enemies. But they will likely stick to this territory and make limited foray outside of their core domain of expertise.

The Chinese tech approach to competition is more similar to guerrilla warfare: fights happen everywhere, all the time, between a large number of stakeholders both big and small.

As such, foreign companies tend to be much more permissive toward other tech players leveraging their tools. For instance, there is no problem for a Facebook post to link toward an Amazon link, and Google will direct you to a relevant Facebook profile.

How WeChat and Alibaba approach competition

WeChat famously blocks any link to Taobao (and the other way around), while also preventing sharing from Douyin (which belongs to the competing Bytedance/Toutiao ecosystem).

Weibo (which received investment from Alibaba and is part of its ecosystem) is more subtle about blocking WeChat: posts mentioning WeChat or featuring WeChat QR codes will just receive no engagement from users as they won’t be picked by the Weibo algorithm.

The case this week of WeChat blocking the social media apps Duoshan, Duoliaotian and MatongMT is just another example of this very defensive approach to competition.

Did Facebook block competitors?

Of course Chinese tech giants are not the only companies with a history of blocking competition. A prominent example would be the case of Facebook blocking short-video platform Vine in 2013.

This is however quite a different story than WeChat blocking Douyin: Facebook merely blocked the friend-finding feature from Vine (denying it access to users’ contact lists). Vine users were still able to share their short videos on Facebook (which is clearly not possible between WeChat and Douyin–Douyin had to offer a workaround suggesting users to download the video and re-upload it to WeChat with a Douyin watermark).

Another prominent case of Facebook blocking another competing App was the block of Tsu in 2015: a social network which was directly rewarding users for views on their content and for inviting new users.

However, the case of Tsu is also entirely different: because it was giving money in exchange for views, Tsu was used mostly by e-marketers and spammers in order to make a quick buck. The network closed soon after, in 2016, as it failed to raise another funding round to support its apparently unsustainable business model.

A more direct case of “block” of competition happened in 2015 when Amazon decided to stop distributing Apple TV and Google Chromecast, which did not offer Amazon Prime Video streaming services. Amazon however chose to deescalate the fight last year, in December 2017, and announced that it would offer both devices again for sell on its platform.

Overall, although Western companies also can block competitors, they seem less likely to do so, and appear to do it with more focus on user experience than extinguishing their competition.

But which strategy works best?

There is little doubt that Facebook acquisition strategy has been incredibly successful. The poster child of this success is Instagram.

Facebook was widely criticized for overpaying for Instagram, acquired at a $1 billion price tag in 2012. The App is now expected to generate between $8 to 9 billion of revenues in 2018 alone. A pretty good return of investment, and this doesn’t take into account the strategic edge that Instagram provided against rival Snapchat.

According to Recode, Instagram could make up to 30% of Facebook total revenue by Q4 2020.

Because Chinese tech companies have a much more complex strategy of multiple, disparate investments, it is much harder to assess success. Tencent listed investees amounting to $36 billion in value as of Q2 2018, but the value of these investments goes well beyond this listing price.

As we discussed, many of such investments played into a sophisticated fight against arch-rival Alibaba and new rival ByteDance. It is likely that they contributed significantly to the rise of Tenpay / WeChat Pay, which rose from a 10% market share to around 40% in 2018 according to various estimates.

Stuck in a prisoner’s dilemma?

The habit of Chinese tech companies is reminiscent of the prisoner’s dilemma, a foundational concept of Game Theory first described by John Nash (and brought to popular culture in the movie “A Beautiful Mind”)

The prisoner’s dilemma imagines two prisoners kept in a jail. Each prisoner is given the opportunity either to betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent. The offer is:

• If A and B each betray the other, each of them serves two years in prison
• If A betrays B but B remains silent, A will be set free and B will serve three years in prison (and vice versa)
• If A and B both remain silent, both of them will only serve one year in prison (on the lesser charge)

This is exactly the situation in which Chinese tech companies have ended up: they can choose to cooperate and avoid damage to each other (and make a better experience for all end users). But they are so afraid of being betrayed that they end up resorting to hostile behaviors.

Of course, the math also says that, in a repeated game with reputation involved, betraying is not the only solution. At the end of the day, it is a choice that Tencent, Alibaba and ByteDance keep making every day.

Conclusion

Western and Chinese Tech companies approach competition in very different ways. As of today, it is hard to tell which way works best: Tencent, Google, Alibaba and Facebook are all incredibly successful companies with skyrocketing valuations.

One thing seems clear: these differences will likely become clearer and clearer in the future, as Chinese tech companies get entrenched in a guerrilla spreading over many industries and hundreds of invested companies.

Beijing’s Municipal Education Commission on Tuesday published a slew of new rules banning ads, online games, and “red packets,” among others, from elementary or middle school-related social media.

The rules cover apps, microblogging accounts on Weibo, chatroom-like groups on popular messaging platforms WeChat and QQ, and WeChat’s official accounts—often used by organizations for media or public relations purposes. The commission requires schools and teachers to evaluate such services and correct any violations before March 1.

The move comes after China’s Ministry of Education banned apps it deemed to be harmful from school campuses last month, targeting pornographic and violent content, online gaming, and advertising. The ban followed calls by Chinese President Xi Jinping to create a “clean and righteous cyberspace.”

The new list of rules is both exhaustive and detailed. Forbidden topics include the obvious like violence and porn, but also public mention of students’ rankings, extra homework or schoolwork, and other exam-oriented content that could put extra pressure on students.

District authorities, schools, and teachers will be held accountable for enforcing the new restrictions, and for encouraging parents to be careful when installing apps aimed at younger children.

Within student, teacher, and parent chat groups, discussion must not make students’ grades public, praise or criticize individual pupils, or compare their family backgrounds. Spammy content is also frowned-upon: unrelated ads, calls for help, fundraising, and baby photos are mentioned as undesirable. Temporary groups must be disbanded after they’re no longer needed.

Education-related apps will face extra scrutiny; in order to be allowed on the campuses of elementary or middle school groups in Beijing, apps must first pass a two-tier review by schools and the education commission. The inspection includes checks on privacy protection as well as content. Apps may not charge students, organize tests and competitions, or place learners under undue academic pressure.

The WeChat public accounts of schools and educational organizations, similarly, can only be used pending the approval of the local district education commission.

While stringent, the new rules have some precedent. The Cyber Administration of China has continued its online crackdowns by taking down over 9,300 apps this month alone. In addition, authorities have shown concern over apparent privacy issues in a variety of popular apps. The recent guidelines, while sometimes sounding like a manual on social media etiquette, echo those concerns.

A Bytedance executive has accused popular messaging app WeChat of monopolizing China’s social media landscape to the detriment of internet users. The call comes shortly after the Tencent-owned messaging giant vowed to escalate its restrictions on link sharing within its app.

Li Liang, vice president of Bytedance, said in a post on the company’s content aggregation app Jinri Toutiao (in Chinese) that it is reasonable for WeChat to ban its competitors, but it should not claim to be kind if it is slandering its opponents. Li was referencing a speech by WeChat creator Allen Zhang in which he implied companies can choose to be kind rather than “smart,” and not spoil their users with advanced technologies such as artificial intelligence.

Tencent was not immediately available for comment.

Li’s comments follow a WeChat announcement from Jan. 26 (in Chinese), which censured Jinri Toutiao and Bytedance-owned Watermelon video, among others, for “severely damaging user experience” on WeChat’s News Feed-like feature, Moments. WeChat said the companies attracted users by encouraging them to spread promotional links with their contacts in return for cash rewards.

WeChat said it would take immediate action to block infringing links within its app, and that it would impose stricter punishments on repeat offenders.

The dispute between Bytedance and Tencent has escalated over the course of a year, as the two companies vie for the attention of China’s internet population. Tencent has blocked users from directly sharing Douyin content on its messaging app since March 2018. The ban resulted in a public spat between the founders of Bytedance and Tencent on WeChat Moments.

Speculation that WeChat had blocked the use of its app as a user registration channel for Douyin has circulated on Chinese internet since Jan. 22. According to Chinese reports, the move came as a result of Douyin’s alleged misuse of WeChat user data it had acquired through WeChat registrations on its platform.

The company immediately denied the allegations, saying it isn’t possible for the video platform to access WeChat user data as a third-party application. It then vowed to take legal action against those spreading disinformation in an effort to “fight against rumors and clean up cyberspace.”

China will roll out mobile payment facilities on all motorway toll stations around the country in 2019, a move that shows Beijing’s resolve in supporting digital payment methods in the world’s biggest cashless market.

Wu Chungeng, a spokesperson from China’s Ministry of Transport said at a media briefing in Beijing on Thursday that the government would provide drivers with access to mobile payment channels as a “supplement among various payment methods.”

So far, cashless payments are available to Chinese drivers in 14 cities and provinces around the country, including Shanghai, and the eastern provinces of Zhejiang and Jiangsu. The service is also being piloted in Beijing, Guangdong, and 12 other provinces.

Alibaba’s payment platform Alipay first launched its road toll payment system in Hangzhou, capital city of the eastern Chinese province of Zhejiang, in September 2016. Transactions initially took 15 seconds to complete, 25% faster than cash payments, according to Chinese media. That time has been further reduced to five seconds. In November, Alipay said its services were available on the highway networks of Shanghai, and Zhejiang and Jiangsu provinces.

Chinese citizens have embraced mobile payments en masse over the past few years, with users paying for almost everything by scanning QR codes. Alipay has more than 700 million users in China according to its latest financial results.

However, the increased adoption has also led to criticism highlighting the country’s reliance on digital payment channels, as consumers complain about vendors at times choosing to decline cash—a move the government has tried to outlaw. 

In December 2018, a unit of China’s central bank censured Alibaba’s new retail supermarket Hema for rejecting cash payments, restating the renminbi is the country’s legal currency, and no business entity or individual can reject cash.

As from earlier this week, some Chinese netizens are unable to register to popular short-video app Douyin using WeChat, marking the latest twist in a bitter battle between Douyin parent company Bytedance and WeChat owner Tencent.

According to an announcement by Douyin, known as Tiktok internationally, new users have failed to register for accounts on the short-video platform using their WeChat accounts, a registration method that was available until earlier this week. Old users have so far not been affected and can still log in using WeChat.

Tencent was not immediately available for comment.

The dispute between Bytedance and Tencent has escalated over the past year as they fight for the attention of China’s netizens. Tencent has blocked users from directly sharing Douyin content on its messaging app since March 2018. The move later resulted in a public spat between the founders of Bytedance and Tencent on WeChat’s News Feed-like feature, Moments.

Douyin said that the latest incident is not a technical fault on its platform, and WeChat had not communicated possible reasons for the problem. It also warned its users to immediately bind their mobile phone numbers to their accounts instead of WeChat as their only login method.

“So far Douyin is unsure if the fault can be repaired and if existing WeChat-authorized accounts will be totally blocked,” the company said in the statement. Douyin singled out Tencent as the reason for the problem, saying that there had been “no smooth conversation” with the company.

According to Caixin (in Chinese), WeChat cut off the registration method following alleged misuse of WeChat user data by Douyin.  Earlier this week, dozens of Douyin users who had registered using WeChat reportedly found their WeChat acquaintances in their Douyin video feed and friend recommendations.

Douyin immediately denied the allegations, saying it isn’t possible for the video platform to access WeChat user data as a third-party application. It also appealed for “normal competition” among players in the market, adding that Tencent should not make excuses for blocking and defaming it. 

Earlier this month, Bytedance launched video messaging app Duoshan as it set its sights on WeChat’s users. WeChat then blocked links to the app, along with two others that were released on the same day. Duoshan has since been downloaded 1 million times and has risen to become one of the top ranking free apps in Apple’s China App Store this week. 

多闪下载量超过100万，我们找到了它的增长方法 – 36kr

What happened: Bytedance’s latest product, Duoshan, is a social networking app that builds off the success of hit short-video platform Douyin. Only two days after it officially went live on iOS and Android—a trial version had previously been released for Android and a limited amount of iPhone users—it surpassed one million downloads. It also topped Apple’s China App Store charts in the free app category, although its ranking has since dropped.

Why it’s important: Duoshan’s rapidly growing following can be attributed not only to its massive Douyin community but also to a cash prize campaign that rewards users for chatting in-app. Those who send messages get a daily chance to enter a lucky draw, with the cash pool for prizes expanding by a significant RMB 500,000 (around $73,000) each day until Jan. 27. Despite campaigns and advertising in Chinese phone app stores like Oppo, Meizu, and Xiaomi, however, being blocked by dominant social platform WeChat may be a major barrier to growth. In addition, with a recent update, WeChat added its own short-video feature, showing that the chat app isn’t ready to yield to live-streaming competitors just yet.

China’s super messaging app WeChat rolled out an update earlier this week allowing users to find and use its download-free mini-programs more easily in an experience like that offered in an operating system.

The new version gives more prominence to mini-programs, which are hidden by default in the messaging app. To view the mini-programs, users need to swipe down from the top of the app’s “Chats” window. Previously, this would have opened a half-screen menu displaying a list of recently used and liked mini-programs with little additional functionality.

With the update, a window resembling a smartphone’s home screen is displayed when swiping down from within the app. The embedded applications also have been made directly searchable from the window, with WeChat adding a mini-program search bar.

Mini-programs are lightweight alternatives to apps that run inside existing applications on a smartphone. WeChat appears to want to be a  “new home screen” for Chinese netizens, providing them with an operating system within its messaging app. With their increased popularity, Tencent is moving to optimize the mini-program ecosystem and help app developers retain users.

The new swipe-down interface features a clearer design centered around the mini-programs, providing them with a more accessible home. If pressed firmly, the icons of the mini-programs jiggle, allowing users to move the mini-apps around to categorize or delete them.

By mid-November, more than 1.5 million developers had created in excess of 1 million mini-programs since the feature was introduced at the beginning of 2017, the company said in a report last year, adding that over 200 million users open mini-programs every day.

Zhang Xiaolong, WeChat founder and president of Weixin Group, the business unit at Tencent that runs WeChat, said earlier this month that the company’s priority for mini-program growth in 2019 includes improving the search function to better connect users.

More outbound Chinese tourists adopt mobile payment: Nielsen – Xinhuanet

What happened: Mobile payments have overtaken cash for the first time among Chinese outbound travelers, according to a joint report released by global data analytics company Nielsen and mobile payments platform Alipay. Chinese outbound travelers paid for 32% of their transactions with mobile phones, overtaking cash—which was used only 30% of the time. The researchers surveyed around 2,800 Chinese travelers and over 1,200 overseas merchants.

Why it’s important: Mobile payments are ubiquitous in China. When Chinese tourists take vacations overseas, their preferences for the emerging payment method accompanies them. This makes a great entry point for Chinese tech giants like Alipay and WeChat Pay to expand to overseas markets. In addition to serving Chinese tourists, Chinese mobile payment methods also help to boost the operations of overseas merchants with nearly 60% of the overseas merchants surveyed recording growth after adopting Alipay, the report added.

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

In this episode of the China Tech Investor Podcast powered by TechNode, hosts Elliott Zaagman and James Hull discuss the statements of Huawei founder and figurehead Ren Zhengfei, as his company becomes embroiled in controversy.

The guys also cover the battle for India’s smartphone users, WeChat vs Bytedance’s new messaging app, and how some of China’s richest businesspeople are attempting to protect their wealth.

Please note, the hosts may have interest in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• iQiyi
• Xiaomi
• com
• Pinduoduo

Guest:

Hosts:

• Elliott Zaagman– @elliottzaagman
• James Hull – @jameshullx

Podcast information:

• iTunes
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• Music: “Hey Ho” by Steve Jackson, Royalty Free Music

China Tech Talk is an almost weekly discussion of the most important issues in China’s tech. From IPOs to fake data, from the role of WeChat to Apple’s waning influence, hosts John Artman and Matthew Brennan interview experts and discuss the trends shaping China’s tech industry.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

This week saw a multitude of messaging app announcements. First was WeChat’s Open Class PRO featuring a four-hour speech from Allen Zhang. Then, on the same day, Bytedance announced their own messaging app (Duoshan 多闪), what appears to be a clone of Snapchat, and Bullet Messenger announced their upgrade and rebrand to Liaotianbao (聊天宝). All three events, and the recent update to WeChat 7.0, raise interesting questions about the messaging market, WeChat’s primacy, and the ascendancy of Bytedance.

Links

• WECHAT FOUNDER’S 4 HOUR TALK: FULL NOTES
• WeChat pins future on Chinese users’ growing penchant for video, photo
• Bytedance takes on WeChat with new video messaging app
• Bullet Messenger creators developing new messaging app
• WeChat blocks three social networking challengers within one day

• John Artman, @knowsnothing, TechNode
• Matthew Brennan, @MattyBGoooner, ChinaChannel

Producer

• Peter Isachenko

• iTunes
• RSS feed
• Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

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Tencent-backed WeChat banned three social networking rivals within one day on its platform—including Bytedance’s just-launched video-based messaging app Duoshan—taking China’s social media war up another notch in 2019.

Other apps affected by the WeChat ban included: Kuairu Technology-owned, Smartisan-backed Liaotianbao, which is an updated version of the once-popular messaging service Bullet Messenger; and Matong, an anonymous social media app developed by Shenzhen-based Ringo.AI. All three apps were rolled out on Tuesday.

WeChat blocked the download address of Bytedance’s Duoshan for “hazardous content complaints from users.” The blocking of Duoshan came as the app was being announced by its product manager during its launch event in Beijing.

A spokesperson for WeChat declined to comment when contacted by TechNode on Wednesday morning.

Duoshan allows users to share disappearing videos with their contacts and encourage interactions among close friends. Bytedance is seen as a challenger to Tencent’s social media business by offering a fresher take on WeChat’s social patterns. Some WeChat users also have complained about pressures that comes with chasing affirmation from online acquaintances.

Liaotianbao updates Bullet Messenger, the once touted “WeChat killer.” The app hit more than 4 million active users in the nine days following its August 2018 launch, becoming the most downloaded social app in the Chinese Apple App Store during the same month. Its downfall culminated with it being temporarily removed from the App Store and accusations of lax security.

Matong, which launched in the southern Chinese city of Shenzhen, is backed by Ringo.AI. The newly-formed AI startup was founded by Wang Xin, who was considered China’s video-streaming king before he was sentenced to three and a half years in prison in 2013. He has since been released.

China’s social media world has long been dominated by Tencent, with over 1 billion monthly active users mounting on WeChat. In May 2018, Zhang Yiming, Bytedance’s founder and CEO, accused WeChat of making excuses to block Douyin videos from being shared on the platform.

In May, WeChat announced a series of management rules targeting third-party services, claiming for the protection of “users’ privacy and content compliance.” The rules aroused great controversy among Chinese media outlets and netizens, and led to accusations by Bytedance CEO Zhang Yiming that Tencent was looking for excuses to block competing apps. Tencent backed down on the rule, though a number of apps remained banned.

At Liaotianbao’s launch event in Beijing, Luo Yonghao, founder of Chinese smartphone maker and backer of Kuairu Technology, confirmed the app had been blocked by WeChat.

“We found [that our products] had already been blocked on WeChat just before the event was open, and we are uncomfortable with that,” Luo said, “We wanted to say hello to WeChat, but obviously they don’t want that.”

WeChat accounts are readily available for sale via several online channels, with black market accounts being used to defraud unsuspecting victims.

According to an investigation by the Beijing Youth Daily, the accounts on offer vary regarding their authentication levels, from newly registered profiles to old accounts which have undergone real-name verification, and those that have been bound to payment tools. Prices range between RMB 58 (around $8.50) to RMB 500.

Typically, when signing up for a WeChat account, a username, phone number, and password are required. Real-name verification is achieved in the registration process by binding a user’s phone number—which is linked to their ID—to their WeChat account. Accounts are also verified by registering a bank card within the app.

Black market unverified accounts are the cheapest, as their payment and transfer abilities are limited. However, those which have gone through the verification process are more expensive as they have few transfer limits.

Unverified accounts can set up group chats and in some cases have been used to conduct fraud.

WeChat was not immediately available for comment.

According to the report, a Wuhan resident surnamed He was invited to one such group containing 300 people. The group was purported to contain financial analysts and experts who offered investment advice on financial products.

Following their advice, he increased his stake after gaining nearly RMB 2,000 return in his first investment through the group. He eventually lost more than RMB 80,000 and was kicked out of the group.

He reported his experience to police in the central Chinese city of Wuhan. They found that nearly all of the 300 accounts in the group were “shill” profiles. The police reportedly recovered He’s money from the fraudsters and dissolved the 300-person WeChat group. He was the only victim of the case.

This is not the first time WeChat has been used as a tool to commit fraud. In August, Zhejiang’s Consumer Protection Committee said it had received complaints of fraudsters copying the name and profile picture of an individual’s friend, then asking to borrow money. When requested to repay the loan, the lender was blocked by the scammer. The money was never recovered.

Earlier this week, WeChat released its annual statistics report, proving again how closely China’s biggest social networking app is entwined with users’ daily lives. On the same day, Zhang Xiaolong, WeChat founder and president of Weixin Group, the unit that runs the messaging platform, gave a four-hour speech, defending the app’s features and projecting further growth.

Over the past eight years WeChat, known as Weixin in Chinese, has become one of the most widely adopted messaging platforms in the world. As of September 2018, it had reached 1.08 billion monthly active users. But with mass use has come misunderstandings and criticism, Zhang said.

“I think that in China, every day there are 500 million people saying we haven’t done well, and also 100 million people who want to teach us how to make a product,” he said.

Nevertheless, the latest figures show that WeChat’s growth remains steady. Neither concerns over privacy nor AI-enabled domestic censorship appeared to have deterred users of the ubiquitous app. While Tencent’s core gaming business suffered under increased government scrutiny last year, WeChat has continued to make inroads among users of all ages—roughly 6% of its users were aged 55 or above.

The social networking platform also still dominates areas from communication to payment services. In 2018, users sent 45 billion messages daily, an increase of 18% over the same period last year. The number of daily voice and video calls saw even more significant growth, doubling to 410 million per day in 2018, while consumers using WeChat Pay rose 50% over 2017.

Reflecting the increasing adoption of the app by public transportation networks, figures for users who used WeChat to ride buses and subways, as well as travel on highways, increased by 370% and 530%, respectively.

Another set of figures reinforced how essential WeChat has become in users’ lives. The recent report profiled user behavior according to their decade of birth, revealing each age group’s favorite emojis, reading materials, and even sleeping habits based on app usage.

Teen and tween users born in the 2000s, for instance, were found to be most active between 10 p.m. and 12:30 a.m., while those born in the 70s preferred to go to sleep around 11:30 p.m. The latter group, as well as those 55 and up, enjoyed using WeChat’s News Feed-like Moments feature; users born between 1980-1989, by contrast, mostly used WeChat for work in the daytime.

The analysis even showed each age group’s reading material of choice, ranging from “emotional life” for post-90s millennials to national affairs for those born in the 80s.

Big plans for mini-programs

WeChat’s innovative mini-programs, first announced in January 2017, have since been mimicked by fellow tech giants Baidu, Alibaba, and Bytedance. The feature allows developers to create small, in-app programs, which now number in the hundreds of thousands.

According to Zhang, the strength of mini-programs lies in its decentralized ecosystem. “Our team from now on will invest more manpower and resources in this area, so we can treat all companies equally, including the ones we’ve invested in.”

Matthew Brennan, co-founder of China Channel said that the concept of decentralization was “a bit counterintuitive” compared to Apple’s carefully-curated App Store. But mini-programs have proved a “great way to acquire users that wasn’t there before.”

The feature banks on WeChat’s widespread adoption to draw in older or less tech-savvy folks who don’t usually download many apps, Brennan said. It’s spawned successes like a popular mini-program for public dancing—a popular pastime among middle-aged people, particularly women—that otherwise wouldn’t exist. Their small size also lowers the barrier to entry for developers, saving them time and money.

In 2019, according to Zhang, priorities for growth include improving the search function for mini-programs to better connect them with users. Two other potential developments would make programs more app-like: enabling users to leave “social reviews” of mini-programs that can be viewed by their circle of contacts, and allowing the app replacements to send push notifications.

Growing pains

Zhang addressed criticism of the long-running Moments and official account features, as well as some of WeChat’s latest add-ons.

As users’ number of contacts has continually increased, so has social pressure. “Many people are saying they want to escape Moments, or say they don’t really use it anymore.” However, Zhang said that the feature has grown steadily to 750 million users per day. The average user still accesses Moments over 10 times daily, making for roughly 10 billion hits every 24 hours.

To make the social media experience more spontaneous, the latest update allows users to create temporary three-day posts on Moments or display short videos—a la Instagram’s Stories feature—on their profile pages.

The change comes in part because Zhang foresees Chinese users, too, turning towards videos over photos to communicate. He also says users won’t have to worry about their posts being visible for long periods of time.

Improving the experience for official accounts, WeChat’s in-app media ecosystem may be harder. “It looks like, over the last few years, official accounts’ traffic disappeared.” Average reads per article fell 24% from 2016 to 2017, one report shows, with average open rate ending up at under 5% two years ago.

Zhang attributed the decline to growth in the sheer quantity of content, as well as the difficulty of ensuring its quality. WeChat’s attempts to battle plagiarism have proven ineffective, according to Zhang. “So how to encourage the production of more quality content is the next step the official account platform will face,” he said.

Briefing: Tencent bets on AI assistant to boost WeChat growth

Tencent has started testing a credit scoring feature for WeChat Pay in numerous cities around China, basing a user’s rating on spending behavior and personal connections, among others.

The system, dubbed WeChat Pay Points, our translation, has been rolled out in Beijing, Shanghai, Guangzhou, and Shenzhen, The Paper reports (in Chinese). The company teased the new feature at its WeChat Open Class PRO event in the southern Chinese city of Guangzhou earlier this week.

The social aspect of the app will be included when scoring users. When questioned by TechNode, a WeChat representative would not elaborate on how connections and friends on WeChat affect a user’s credit score.

The system is reminiscent of Alibaba-affiliate Ant Financial’s Sesame Credit, which rates users on a scale of 350 to 950. The e-commerce giant’s platform users metrics including purchase history, assets, and fulfillment of contractual obligations to calculate a user’s score.

WeChat’s new system bases scores on social data collected through its mobile payment service. The company said it could not reveal its scoring range, through Tencent Credit assigns ratings of between 300 and 850. WeChat is reportedly targeting nationwide rollout by the end of the year.

“The credit score is calculated based on WeChat Pay’s pool of data, particularly on personal consumption behavior and the ability to keep obligations,” the company told TechNode. WeChat said the purpose is to “provide services that make people’s lives simpler and more convenient.”

Users with high scores will be rewarded with perks such as waiving of deposits for rental services and hotels, and paying for services and goods after delivery.

Power bank service Xiaodian is now supporting the feature. Users with high scores can apply to rent the portable chargers deposit-free. The company said it is working with a number of brands to test the new feature.

For businesses, the credit score system has a number of features, including user risk assessment and payment collections, which aim to help companies lower their percentage of patrons with bad credit.

Tencent began testing its own credit rating system in mid-2017 and officially launched the feature last year. It is one of eight companies that were approved by the People’s Bank of China to develop its own private credit score platforms in 2015. Alibaba is another company that was given the green light, launching Ant Financial-run Sesame Credit shortly after.

Super messaging app WeChat has removed bike-rental firm Mobike from its in-app wallet feature, a significant source of users for the mobility firm, reports Chinese media.

“Riders can still access to Mobike’s services using WeChat’s QR code scanning function or by searching for the mini-program within the messaging platform,” a Mobike spokesperson told TechNode. The company said the removal is due to the expiry of a partnership between the two firms. The move increases barriers for WeChat users who want to access the mobility platform’s services.

The Chinese bike-rental startup signed a partnership with Tencent in March 2017, allowing riders to access its platform in WeChat’s wallet feature, known as WeChat Pay, our sister site TechNode Chinese reported at the time. Mobike was added to WeChat Pay’s interface as a third-party service. Still included are e-commerce giant JD’s marketplace and Didi’s ride-hailing platform, among others.

At the time, WeChat’s 900 million-strong monthly active users (MAUs) were a boon for the bike-rental company. With the massive volume of traffic coming from WeChat, Mobike said it saw a quarter-on-quarter MAU increase of over 200% in May 2017.

In the same month, the company’s executives also claimed that 50% of newly-registered users originated from WeChat.

Mobike was one of the first companies to adopt mini-programs, which allow users to access services from different companies on WeChat without having to download a separate application. According to data service provider QuestMobile, in September 2018, Mobike had more than 55 million MAUs on its mini-program, double that of its own app.

Tencent used to be one of Mobike’s principal shareholders until April 2018, when the bike-rental firm was fully acquired by Meituan-Dianping, the company behind the mega lifestyle app of the same name, according to Chinese media reports. Mobike co-founder and former CEO Hu Weiwei announced her departure from the company for “personal reasons” last month.

Zhang Tong, head of one of Tencent’s key artificial intelligence (AI) units, has quit, potentially dealing a blow to the company’s research ambitions.

The AI veteran will return to academia, a Tencent spokesperson confirmed to TechNode. The company did not specify where he is heading nor who replace him.

Zhang joined Tencent’s AI Lab in February 2017, leading over 250 fellows and engineers focusing on fundamental research in artificial intelligence. Its main research fields include computer vision, voice recognition, natural language processing, and machine learning. According to company executives, the lab functions without KPIs.

Rumors of Zhang’s departure began circulating on the Chinese internet yesterday, saying the top AI expert left his post on Dec. 31 after being at the company for less than two years. The Stanford-trained researcher previously oversaw Baidu’s AI program in its Big Data Lab and worked at IBM and Yahoo.

Chinese reports claimed Zhang plans to head the computer science department at Hong Kong University of Science and Technology (HKUST).

Tencent’s AI Lab was founded in 2016 and is affiliated to the company’s Technology and Engineering Group. The Chinese internet giant is also known for its other AI initiatives. Wechat AI is attached to the Wechat Group, working on voice-to-text and chatbot solutions for users of its popular messaging platform Wechat.

The other, Youtu Lab, is led by Jia Jiaya from CUHK. The lab falls under the company’s Social Networking Group. Initially set up in 2012, the lab announced an organizational upgrade in September last year amid a broader restructuring plan at the company.

According to Tencent, Youtu has been providing smart solutions to 70 product lines within the firm. It also claimed to have empowered industry clients including logistics firm SF Express and mobile operator China Unicom with software development kits for computer vision.

This week, Matt and John take a look at the stories and trends of 2018, including gaming restrictions, Tencent’s restructuring, the delivery and coffee wars, WeChat mini programs, and Bullet Messenger. This is the second of two parts.

Links

• The relevant episodes:
  • Gaming:  18: China’s gaming and e-sports industry with Daniel Ahmad, 39: PUBG and the future of Steam in China with Charlie Moseley
  • Tencent: 45: Tencent vs Alibaba – The battle for China’s offline retail with WSJ’s Liza Lin, 61: How technology has changed music in China
  • Delivery and O2O: 42: China’s mobility and transport market gets all mixed up
  • Luckin and the coffee wars: 46: Internet business models disrupt China’s coffee market: Luckin Coffee, 56: China coffee wars revisited: Luckin vs Starbaba
  • Mini programs: 35: A change in WeChat is a change in Chinese society, 65: Walmart China: Ted Hopkins live from TechCrunch Shenzhen
  • Bullet Messenger: 58: Is Bullet Messenger a WeChat killer?

• John Artman, @knowsnothing, TechNode
• Matthew Brennan, @MattyBGoooner, ChinaChannel

• iTunes
• RSS feed
• Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

Download this episode

China’s “super app” WeChat has undergone its most significant overhaul in four years, making further moves into the short video market.

The most conspicuous change in the new version is the addition of a new video feature called “Time Capsule.” Similar to Instagram, it allows users to post videos of up to 15-seconds to an individual users’ feed instead of WeChat Moments, the app’s equivalent of Facebook’s News Feed. The video will self-destruct 24 hours after its publication.

After uploading either from existing newly recorded videos, users will be able to add descriptions, emojis, music, and locations. It will recommend background music based on the video content. After shooting a video containing buildings, TechNode found that the app suggested a song with the lyrics: “Go up, so high on the sixth floor.”

The update comes at a time when Tencent is pushing into the short video market, which puts itself in direct competition with ByteDance, parent company of popular short video app Douyin, known as TikTok internationally.

Tencent has over 10 video apps targeting different user groups, including Weishi, Shanka, DOV, MOKA. Integrating a short video feature to WeChat may boost the company’s efforts by capitalizing on the app’s significant user base.

Despite the efforts, industry experts aren’t so optimistic, especially from a marketing perspective.

“I think anything that makes WeChat a richer experience for key opinion leaders to communicate with their super fans is fabulous,” said Elijah Whaley, CMO of PARKLU, a platform focusing on Chinese influencer marketing.

For him, the way for WeChat users to interact with shot video is “not very convenient.”

“You have to click into people’s accounts and click a little button [to view videos]. Also, you have to go into your account when checking comments from others.”

At the same time, WeChat networks are private, connecting to friends and family, while platforms like Douyin and community e-commerce platform Xiaohongshu are more about the connection with content creators, people sharing information you are interested in, he pointed out.

Apart from the new video function, the app’s interface has been completely overhauled. The previous darker design has been replaced with a lighter palette, while icons within the app have been simplified.

The major redesign of WeChat, which claims over 1.08 billion daily active users, sparked heated discussions in China’s online community. The hashtag  WeChat Upgrade attracted 620 million readers on Weibo as of 3 p.m. on Monday.

WeChat Pay launches auto scan-and-pay for parking in China’s shopping malls – SCMP

What happened: Tencent has launched an automated payment system under its WeChat Pay operation for car parks across China. The system has been implemented in more than 1,000 parking lots nationwide in major shopping malls, railway stations, and airports. A company executive says the system will be expanded to parking sites in schools and popular tourist destinations. Users are required to register their plate numbers under their WeChat accounts. Their plates are then scanned at the exit of parking lots and matched with the company’s database of WeChat Pay users.

Why it’s important: The launch of the automated payment system for cars parks comes as Chinese tech giants try to transform transportation services with technology. Alipay and WeChat Pay have already split China’s mobile payments for metro transportation into a duopoly. The next frontier is car parking. In August, Alipay rolled out a shared parking service in the eastern Chinese city of Hangzhou that allows users to find, reserve, and pay for parking via the Alipay app.

China’s “super app” WeChat now supports personal and corporate tax payments, as private enterprises and the Chinese government push to digitize public services, reports Tencent Tech.

Pilot programs, backed by China’s central bank and tax administration, have been rolled out in the provinces of Hunan, Fujian, Henan, as well as the eastern Chinese city of Qingdao.

After declaring their tax online or offline, taxpayers can use WeChat to scan a QR code generated by the tax department to make a payment. The process can be completed online or at a tax office.

WeChat payments are linked to a state tax information processing system established in 2006. Payments are cleared and confirmed by the state tax department.

The project is not the first of its kind. Previously, local governments have launched tax systems allowing digital payments. In February, the Shandong Taxation Bureau confirmed the implementation of WeChat tax payments. In April, Guangdong Provincial Tax Service rolled out a “cloud tax payment” project, allowing taxpayers to pay with either Alipay or WeChat.

Aside from taxes, China’s tech companies have begun offering various government services on their platforms in response to a focus on digitization, with Alibaba and Tencent leading the charge.

In September, the government of Jiangsu province began issuing electronic marriage certificates through Alipay. Couples could apply for the certificate in the “Jiangsu Government Affairs” mini-program.

In October, the Beijing government started accepting traffic fine payments via Alipay or WeChat. Earlier this month, the southern city of Guangzhou issued the first dog license to a resident through Alipay. Chinese nationals can also apply for digital IDs, health cards, and in some cases travel documents.

In addition, Alipay and WeChat users can check their social insurance records and utility bills, make appointments at hospitals, and access house renting services.

Jinri Toutiao parent company ByteDance is reportedly planning to launch a messaging app as the firm sets its sights on WeChat and escalates its rivalry with tech giant Tencent.

The service, dubbed Flipchat, is going to take the form of an independent app, people close to the matter told Chinese media, adding that ByteDance has approached several senior staff members on WeChat’s team. ByteDance declined to comment on the news.

The company acquired the English domain name flipchat.cn on October 22 through a Chengdu-based subsidiary, according to domain name and IP lookup service whois.  The same company also registered a series of domain names such as fl5.co, flipchatapp.com.

Tencent has taken on ByteDance’s short video business with the launch of more than 10 video apps. Flipchat could be ByteDance’s effort to tap the home turf of Tencent in social networking.

ByteDance and Tencent have fallen foul of each other as they fight for the attention of China’s netizens. A public spat between the founders of the two companies—Pony Ma and Zhang Yiming—resulted in accusations of defamation.

ByteDance’s Zhang accused Tencent-owned WeChat of making excuses to block Douyin videos from being shared on the platform. He also accused  Tencent’s short video app Weishi (微视) of plagiarism, adding that it could not stop Douyin’s growth.

ByteDance’s products are not the only ones that have been banned from WeChat. Kuaishou, Baidu-backed video apps including Haokan, and audio streaming platforms all have their complaints about WeChat’s content sharing policies.

China’s social media world is dominated by Tencent, which claims 1.08 billion and 800 million monthly active users for WeChat and QQ respectively. Several Chinese tech powerhouses like Alibaba, NetEase, and Bullet Messanger have failed to compete with the messaging giant.

Baidu-backed video platform Haokan has accused tech giant Tencent of anti-competitive behavior after its video content was blocked on WeChat Moments, the platform’s equivalent of Facebook’s News Feed.

Haokan took to microblogging platform Weibo to voice its grievances, saying that content being shared from Haokan to WeChat’s popular feed feature was only visible to the sharer, rather than to his or her contacts.

“Sorry for all Haokan pals, we won’t be able to meet on WeChat,” the company said to its users. “We offer our deepest apologies to our users. The blame is all on us because we are not “Weishi (the video app backed by Tencent).”

Tencent responded by saying that WeChat banned Haokan content because it breached the messaging platform’s external link principles as a result of its “online earning behavior.” No further details were given. Tencent suggests Haokan perform a “self-inspection” and submit an email appeal.

The competition between Chinese tech giants is reaching a feverish pitch. China’s booming short video services are quickly eating up the time netizens spend on WeChat. Tencent is trying to keep up with the video trend after launching more than 10 video apps targeting different user groups. At the same time, it is defending its position in the market by limiting access to rival platforms on WeChat, China’s dominant entry point for online services.

WeChat rolled out tightened restrictions on sharing external video links in its Moments feed in May. The move affected all the mainstream video and music platforms in China, including short video platforms Douyin and Kuaishou. It quickly reversed its decision as it came under public pressure.

Although external sharing is not totally banned, sharing content from non-Tencent related platforms does involve more effort. Kuaishou users have to copy an auto-generated link for the video and then paste it in WeChat before sharing. Douyin users have to save the short videos locally before reloading and share it to WeChat.

Police from China’s Guangdong province have arrested a 22-year-old man surnamed Luo allegedly responsible for creating the country’s first ransomware that requires payment through WeChat.

Law enforcement from the southern city of Dongguan made the announcement on microblogging platform Weibo yesterday (Dec. 6), adding that the suspect, from the province’s Maoming city, was arrested on Dec. 5.

The malware, which was first discovered on Dec. 1, encrypted files on its victims’ computers. It also stole 50,000 user passwords and other data from users of online marketplace Taobao, mobile payment platform Alipay, and cloud service Baidu Wangpan. The ransomware infected more than 100,000 computers.

Victims were then required to use WeChat to pay RMB 110 (around $16) to decrypt their files. Tencent said the payment account was shut down as of Sunday (Dec. 2).

According to the police statement, this is not the first piece of malicious software the suspect has developed. In June 2018, he allegedly created malware capable of stealing Alipay passwords to transfer a victim’s funds.

Data theft has become an increasingly common problem in China. In April, a group of data thieves was found selling personal information for as little as $2. According to an arrestee, he made more than $17,000 between December 2017 and the time he was caught.

In a similar case, police from Wuxi in the eastern Chinese province of Jiangsu uncovered a sophisticated network of data thieves that made up to RMB 1 million trading personal information. The group’s decentralized nature was novel, with its network stretching across numerous Chinese provinces and into Southeast Asia.

In other instances, Apple affiliates have been found stealing iPhone users’ data. While data belonging to users some of the country’s biggest food delivery platforms was sold for as little as RMB 0.10.

Creators of illicit software may have been the most vulnerable targets of a recent, apparently homegrown, ransomware effort in China.

Attacks were first reported on the night of December 1, according to antivirus software provider Huorong Security. The software encrypted important files in .doc, .txt, .jpg, and other formats, and also stole 20,000 passwords and other pieces of data from Taobao and Alipay platform users, among others. The attack affected only PCs, The Paper reports, and a majority of victims were likely illicit software creators or purveyors who often don’t use security software.

The incident marks the first time Chinese ransomware creators have used a (traceable) WeChat QR code to demand payment, with users asked for RMB 110 (around $16) to unlock their documents.

Software security companies including Huorong, Tencent, 360, and others moved quickly to upgrade their security systems and provide decryption keys to affected users. By the night of December 2, Tencent states, the account receiving payments had been shut down.

A company representative told TechNode that the QR payment code has also been frozen, and neither WeChat users’ money nor their account safety had been affected. The company’s claims could not be verified by TechNode.

Alipay made similar assertions, saying that there were no signs the hack affected its users’ accounts. It added that in the “unlikely” case of data theft, losses would be paid back in full.

As of Tuesday night, Huorong stated, 100,000 computers had been infected by the ransomware, although those who had upgraded their security systems should be safe.

Following the data trail to its source on GitHub, Huorong found that the malware originated from a person surnamed Luo. His identity has since been shared with police.

According to Huorong, the malware entered various software products and programs developed using Chinese programming language EPL (literally, Easy Programming Language).

Although the hack eventually affected multiple popular platforms, Huorong determined that WeChat Pay and Alipay played no direct roles in spreading or creating the virus, and the companies’ platforms also didn’t have any significant security weaknesses.

Ted Hopkins, Senior Director of Walmart Ecommerce, joins us to talk about mini programs, eliminating lines in stores, and the future of retail in China.

Links

• Briefing: Walmart’s mini program “Scan to Buy” has attracted over 10 million users

Guests

• Ted Hopkins — LinkedIn

Hosts

• John Artman, @knowsnothing, TechNode
• Matthew Brennan, @mbrennanchina ChinaChannel

• iTunes
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• China Tech Talk.com
• Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

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一线丨为鼓励原创 微信试运行“洗稿”问题投诉合议机制 – Tencent News

What happened: WeChat announced a new measure to help cut down on copycat articles, or “content laundering” (洗稿, our translation). The platform is setting up a special panel comprising writers of original WeChat content who will pass judgment on individual cases. Complaints that meet the legal requirements of plagiarism will automatically be sent to the team for review and punitive measures. Less clear cases require the accusing party to release a public complaint, receive a response from the accused, and be approved by at least 70% of selected panel members in order to be considered copycat content. Once an article has been judged “laundered,” it will be replaced with the original content and the decision made public to all users.

Why it’s important: WeChat has made some efforts to protect content creators within its official account ecosystem. It has enabled creators to label their articles as “original,” for example, which both allows them to receive monetary tips and prevents other accounts from reposting content verbatim. However, due to the relative ease with which official accounts can be created and the fierce competition for page views, “borrowing” content without properly crediting its source is still fairly common. This is the first time that WeChat has set up an independent panel composed of its own users to judge plagiarism, a step forward for the platform. The size and scope of the panel is still unclear, however, as well as their ability to reshape WeChat’s gargantuan media footprint.

 WeChat cancels drift bottle citing porn and prostitutes – SCMP

What happened: Tencent will remove its ‘drift bottle’ feature from WeChat, which allowed users to send voice and text messages for strangers to pick up within the app. The tech giant has said the system was used to “disseminate pornography and solicit prostitutes.” The move comes after it received user complaints and media attention for the illicit use of the messaging service.

Why it’s important: The planned removal comes as Chinese companies police their platforms more strictly amid increased pressure from regulators. Authorities have been pushing to clean up “vulgar” content, fake accounts, and rumors on the internet. Short video services have previously been some of the hardest hit, but it has also extended to gaming and news platforms. Recently Baidu was fined RMB 600,000 for circulating ads containing pornography, gambling, and violence. The industry crackdown has led to the closure of 9,800 social media accounts on WeChat, Weibo, Baidu, and Jinri Toutiao.

WeChat is pushing further in its efforts to regulate third-party services on the platform. The social media giant announced that it has removed the misleading names of 3,312 official accounts and mini-programs. At the same time, the relevant features of 3,326 WeChat official accounts and mini-programs were suspended, according to the company.

Misrepresentation is common for Wechat official accounts and mini-programs to attract more followers and page views on the platform. By misrepresenting oneself as services provided by a more reputable operator, the official account or mini program developers may easily gain bigger visibility in WeChat’s search engine and trick users into using their services.

“WeChat will close or remove the contents of the official accounts or mini-programs with misleading names, logos, and introductions, or any other behavior that involves misguiding the users’ judgments. Any misrepresentation in a batch would consider a move going against WeChat operation rules. The platform will suspend the accounts permanently and reserve rights to offer services to such parties,” according to an official statement from the company.

Several malpractices that go against the rule were listed, from adding meaningless letters or icons in the title to pilling several popular keywords together.

Official account and mini-program have become an important part of WeChat ecosystem, which now provides services to over 1.08 billion users. According to the company’s latest report, there are over 20 million official accounts and more than 1 million mini-programs on the platform.

Due to its popularity, WeChat official accounts are subject to stricter regulation both from the company as well as the state. WeChat announced earlier this year that it will regulate user’s information dissemination behavior and those trying to conduct marketing activities by distorting China and CCP history.

WeChat has released a report of its user data, providing a bunch of fascinating facts about Chinese netizen’s lives as well as the magnitude of the app.

The giant app claims over 1.08 billion monthly active users as of the third quarter of this year, up 10.5% year-over-year. Over 800 million users use WeChat Pay when they are traveling, shopping or dining out. North of 20 million WeChat accounts publish stories and news on various topics. 1.5 million developers developed over 1 million mini-programs. In one minute during the morning rush hours, mobile traffic consumed via WeChat amounted to 46 TB.

Over the past year, the mobile social network has been focusing heavily on integrating its technology with public transportation networks across the country. By scanning WeChat QR code, over 250,000 commuters access metro or buses per minute during the morning rush hours. A total of 3.75 million citizens travel during the 2.5 hours rush time, that’s on par with the population of Puerto Rico. The company’s QR code payment service for public transportation has reached more than 50 million users across 100 cities as of October this year.

In another mark for the company’s effort to deepen its public services initiative, WeChat is connecting 680 hospitals around the country in one minute. Residents from 362 cities can solve over 10,000 public services administrative problems via WeChat, according to the report. WeChat’s e-administrative services range from electric pass for Hong Kong and mainland travelers to tracking traffic records.

Tencent Gongyi (腾讯公益), the “public welfare” arm of the internet giant behind the social messaging app, is taking a bigger role in the system. Over 49,000 Tencent public welfare projects got sponsored in one minute. The paintings by young artists that with mental disabilities and spectrum disorders such as autism got RMB 13,000 worth of donation in one minute. WeChat.7.5 million steps were donated by users of  WeChat’s fitness tracker WeRun.

Chinese social media giant WeChat has pledged to strengthen its self-censorship over sensitive, pornographic, vulgar, and clickbaity content as well as rumors and plagiarism on WeChat self-media account amid the ongoing “eliminating porn and fighting illegal publications” campaign.

The ongoing campaign, spearheaded by the National Office Against Pornographic and Illegal Publications since April this year, is part of the country’s efforts to fight against illicit cultural content and to foster a “positive” and “healthy” cultural environment.

Pornographic content on mobile applications, cultural content for children and media and publication wrongdoings are the main targets of the campaign, which lasts to November this year.

As opposed to traditional journalism, self-media, or “自媒体” in Chinese, are usually run by individuals who post through social media accounts on WeChat, Weibo or other smaller ones. Diversified opinions and varied reporting styles have soon made the form popular among Chinese readers. On WeChat alone, there were 3.5 million self-media accounts in 2017.

However, self-media has long been questioned for spreading misinformation as well as pornographic and vulgar contents due to their less-than-rigorous editorial process and the pursuit of page views.

The relevant authority has cracked down on over 9,800 self-media accounts since October 20. The administration has summoned senior executives of China’s top social media platforms including WeChat and Weibo for a face-to-face meeting and ordered the companies to take responsibilities in monitoring illicit contents.

A spokesperson from the administration said to local media that they want the stricter approach would become the new norm for self-media publications regulations.

Chilled by China’s tightening crackdown on online content, China’s tech companies are taking a more proactive approach by volunteering to clean up their content before the country’s regulators turn their sights on them.

In addition to social media platforms, content aggregators and video apps are also facing tightening regulation. This Monday (November 2), two content aggregators, Bytedance’s Jinri Toutiao and Doubao Kuxun, received a temporary suspension of certain services, as well as an unspecified “maximum administrative penalty” for holding vulgar contents.

Last week, WeChat announced a number of new incentives to encourage innovative mini-program game developers. Under the scheme, developers who apply for and receive the title of “creative game” for their game will be allowed to take a bigger cut of both in-game purchases and advertisement earnings, as well as other perks.

The change was announced amid a general cool-down of China’s gaming industry, which has hit WeChat’s parent company Tencent especially hard. Claiming that too much gaming is bad for kids’ eyesight – which research shows may be true, if only indirectly – in March China’s government stopped approving new games. In more recent months the State Administration of Press, Publication, Radio, Film, and Television has also vowed to limit the amount of time youth can spend on online games.

But despite a drop in earnings, WeChat appears to be pushing through with their mini-program initiative. Applications for original, “creative” games will be assessed by their mechanics, art, storyline, and music. The chosen games will receive a label, initial users to get their programs rolling, and a specialized team to investigate copycat complaints.

Creative game-makers that earn over RMB 500,000 of in-game purchases per month will receive 70% of that income, 10% more than their counterparts. Likewise, creative developers who receive less than RMB 1 million in daily ad revenue will receive 70% of that money, 20% more than normal developers. That puts “creative” WeChat mini-games on par with games in Apple’s App Store or Google Play.

While the move could potentially be a boon for Chinese game-makers, indie developer Liu Yuchen told ifanr that publicity would be more helpful than a higher cut of profits for small and medium-sized organizations. In addition, it would only be partially helpful for some: “individual developers have no way to make in-game purchasing tools.”

It also remains to be seen how widely WeChat will distribute the “creative game” label, and whether it’ll be enough to make a significant impact among developers of original games.

In the end, however, game developers of any size may not have too many other options. At the World Internet Conference in Wuzhen last weekend, Tencent CEO and founder Pony Ma revealed that WeChat’s mini-programs have 200 million daily active users and 1 million total programs, nearly half the number of apps on the App Store.

As a developer calling himself “Lao Qi” told ifanr, while indie game developers may not like the proportion of income that WeChat receives from their mini-programs, they may still consider the platform their best option to capture an audience.

深圳公安办事进入刷脸时代！认证只需40s！–Tencent News

What happened: Shenzhen police have added an “upgrade” to their online WeChat services that allows Chinese users to scan their faces rather than enter passwords in order to log in. The process isn’t necessarily shorter – it takes an estimated 40 seconds to record and upload a short video of one’s face, and 30 seconds to log in each time afterwards. But it does add novelty to the experience, which previously required Chinese users to upload photos of their national ID cards. In addition, it marks a new step in the increasing integration between government, citizens’ data, and private tech companies that’s taking place across the country.

Why it’s important: Shenzhen, along with other cities, has previously used facial recognition at certain street intersections in order to identify and fine jaywalkers. Such systems might one day play a part in larger plans for a nationwide social credit system by 2020 that would incentivize lawful behavior and punish rule-breakers. While the facial recognition feature on Shenzhen police’s official WeChat account seems more gimmicky than useful, it reflects how biometric data has become increasingly ubiquitous in Chinese law enforcement. In addition, it’s one of the few cases where such information is being solicited from willing users rather than implemented as a mandatory safety measure.

Tencent CEO Pony Ma said his company would “seriously consider” the possibility of a virtual reality (VR) backed WeChat, especially given the speedy communication 5G stands to bring to the internet.

“I hear that China Telecom’s pilot 5G service here supports downloading as fast as 1.7G per second, faster than optical fiber,” Ma said in his keynote speech at the 2018 Wuzhen International Internet Conference, which opened today. “Next year’s conference may exhibit more portable VR devices,” Ma added.

Tencent has not released information regarding its plan, or release date of any new enhanced versions of WeChat.

Tencent did not immediately reply to a request for comment from TechNode, but industry observers say Tencent wants to strengthen its capabilities in the internet of things (IoT) sector.

During Tencent’s global partner conference that took place last week in Nanjing, in eastern China, the company discussed plans to expand WeChat beyond consumers to include more businesses applications.

On November 1, Tencent unveiled its new smart vehicle system with WeChat as an interface to control in-car activities by voice and mini-programs.

In May, Ma said Tencent and WeChat would serve as China’s “digital assistant,” to help accelerate technological breakthroughs and applications.

In China, middle-aged and elderly people are increasingly using WeChat mini-programs for entertainment purposes, including watching videos and reading news, and photography, according to the mini program data analysis platform Aladdin.

There are now more than 60 million WeChat users between the ages of 55 and 70 years old. According to local media, many of these users learn how to use online shopping platforms through mini programs that are shared by their friends.

Mini apps are like independent apps but can be launched directly from WeChat.

Of all the WeChat users over utilizing mini programs, 22% use them for watching videos, 20% for news content, and 17% for photography, according to Aladdin’s October WeChat Mini Program Report.

Aladdin notes that the ease of mini program app usage has been improved by WeChat’s recent restructuring of its “Mini Programs Nearby” feature. In it, users can now select from different categories of mini programs, including shopping, travel, beauty, and education to identify mini programs that can be used for services within a two-kilometer radius.

A study published by Tencent’s social science research affiliate Society & Technology (S-Tech), together with a research team at Shenzhen University found that elderly WeChat users are using features other than messaging. The study showed that around three quarters of elderly users read subscription articles, while 50% of respondents used WeChat Pay functions.

Video platform iQiyi has identified the greater use of technology among the elderly and released a short video app targeting that section of the market. The company launched its Jinshi app in September. The app focuses on topics including current events and politics, health, and the military. It also allows users to switch between audio and video streams and features horizontal videos.

Beijing Traffic Management Bureau announced on October 22 that it will add Alipay and WeChat Pay, two of China’s most popular mobile payment tools, to its online traffic security management platform, our sister site TechNode Chinese is reporting.

Since October 22, Beijing citizens in seven districts including Mentougou, Daxing, Shunyi, Huairou and Miyun will be able to pay their public transportation fines by scanning QR codes on the new fine bill through either Alipay or WeChat Pay.

Paying for traffic fine in China usually involves long queues at traffic departments or bank outlets or complicated payment through online banks. Over 68.2% of the traffic fines are being paid through offline channels, local media reported.

Automobile drivers can pay by scanning QR code on the fine bill within four hours after the bill is issued. The QR code will be disenabled once the payment is achieved. Those who failed to meet the time limit have to go back to the traditional payment methods. Instead of scrambling with cash, pedestrians or non-motor vehicles also can pay by scanning QR code generated on a mobile device.

While QR code-based mobile payment is ubiquitous in China’s offline retailing industry, it’s gradually finding ways to civil services as the government tries to keep up citizen’s changing spending behavior. Similar payment channels are already been supported in hospitals and for train tickets purchase.

Mobile payment for civil services is part of China’s initiatives to help local government digitalize their services and both Alipay and WeChat have been working on the trend. Alipay just begins issuing electronic marriages license and trialing digital IDs in Hangzhou and Quzhou in Zhejiang Province and Fuzhou in Fujian Province. Meanwhile, Tencent has been working with Beijing authority to create health cards for residents as well as a WeChat-based e-pass that would facilitate travels between Hong Kong and the mainland.

During the 2018 World Intelligent Connected Vehicles Conference opened on October 18, Tencent’s Pony Ma said the company hopes to bring social networking advantages to more industrial units. The company wishes to transform WeChat into a smart interaction medium which allows users to interact with service softwares and vehicle hardware.

“A user can use voice interaction to send out and receive WeChat messages, and may be able to do it by pushing buttons on the steering wheel. We’re also planning to allow the user to quickly change the message setting to voice call. The voice interaction features will also synchronize the user’s location to a friend and a smart navigation system,” Ma explained during the conference.

Additionally, Tencent wants its technology  to automatically activate service softwares when a user drives to service sites such as gas stations and parking lots, and remind a user of any vehicle issues including low gas level.

Ma also suggested in the speech that future mass production of autonomous driving vehicles requires the capability to manage mass data and complex ecosystems. Tencent’s 1 billion global users and rich software use cases, as he highlighted, will offer significantly helpful assistance.

Prior to the conference, Tencent’s vehicle partner GAC Motor launched electricity powered GE3 530 in August. The model is equipped with a mini program called “Tencent My Car”, which allows a driver to search for charging piles and complete automatic parking and toll gate payment.

However, Ma explained that in-car social features are in process of development, and will be released formally when driving safety can be best assured. TechNode reached out to Tencent for further details, but has not received any update by the publication of the article.

Tencent has been acting aggressively in autonomous driving and industrial internet of things (IoT) sectors. The company announced last month that connecting consumption to industrial business would be a strategic priority in the coming future. According to Ma’s conference speech, Tencent has opened its navigation may system, simulation platform, and data services to partner vehicle manufacturers. BMW, Geely, and First Automotive Works are among Tencent’s cooperation partner list regarding an “AI in car” project the company introduced on November, 2017.

Meanwhile, Tencent-invested Momenta, a Chinese autonomous driving startup which just claimed a unicorn status, accumulated $200 million in funding.

“Intelligent connected vehicles are becoming a crucial intersection where some latest technologies such as AI, IoT, 5G, new energy, and smart city meet each other. Smart vehicles will be a carrier of innovation and breakthrough expectations of other tech sectors,” Ma added.

WeChat Group Admin Jailed for Members’ Porn-Sharing —Sixth Tone

What happened: A WeChat group administrator was sentenced to six months in jail after allowing pornographic content including stickers and videos to be shared among members of the group. This is the first prison sentence handed to a WeChat group admin for spreading porn (which is illegal in China). In a similar case last year, offenders were given a suspended sentence. The six-month prison sentence is still considered lenient.

Why it’s important: The Cyberspace Administration of China issued new regulations which made group admins responsible for content shared in the group in October 2017. Prior to this case, there were many instances of group admins being held responsible for illegal gambling and at least one case in which a person was arrested for criticizing the government in a WeChat group. In all these cases, the mechanism through which the police obtained incriminating content is unclear. It is known that WeChat has a sophisticated system for filtering images and even text through Optical Character Recognition. The most likely scenario in this case, however, is that someone simply tipped the police off.

As always, China’s National Day Golden Week, which came to a close yesterday (October 7th) gave Chinese internet giants a good opportunity to look into Chinese people’s habits and preferences in how they spend their leisure times.

While we are accustomed to crowded tourist spots and congested traffic on highways during the holiday, an increasing number of people opt to enjoy some indoorsy “alone time”. Over 21 million WeChat users took less than 100 steps on any single day from September 30 to October 6, according to a report released by the social media platform. Of the total, 56% are post-80 or post-90 users.

The finding is fairly unsurprising given the travel rush. A total of 726 million Chinese tourists traveled in the country during the holiday, up 9.43% year-on-year, according to data from China Tourism Academy. The railway traveler numbers jump to a level on par with the peak figures for the Spring Festival rush, local media reported.

In addition, the result also comes in line with the rise of otaku culture in China, especially among China’s younger generations. Originated in Japan, the word ‘otaku’ (that means something similar to the word ‘nerd’ or ‘geek’) has become a modern colloquialism as a part of the 2D culture, which is becoming increasingly mainstream in China.

China’s southern Guangdong Province, eastern Jiangsu, Shandong, Jiangsu Zhejiang Province and northeastern Liaoning Province topped the five spots that recorded most shut-in WeChat users, according to the report.

The ranking reasonably coincides with that for online food delivery orders. Guangdong, Jiangsu and Zhejiang Province, with the most recorded most indoorsy WeChat users, witnessed the most online food orders, followed by Fujian and Sichuan Province.

Reading is obviously the most popular past time. WeChat Read users spend a combined 19.87 million hours during the holiday. Historical novel Those Ming Dynasty Stuff, Hugo-award winning science fiction The Three-body Problem, and martial art novel by Gu Long were the most popular books during the holiday.

While some are enjoying their vacations, others kept themselves busy with works. Users of WeChat Work, the enterprise-grade office management platform by Tencent, are most active in Shenzhen, Shanghai and Beijing. Retailing, manufacturing and IT industry spend the most time at work during the period.

China’s craze for Bullet Messenger (子弹短信) is quickly cooling down. Lambasted for numerous problems including salacious contents and lax security settings, the once red-hot WeChat rival is losing traction among Chinese users as the excitement in trying out the latest viral app quickly wanes.

Bullet Messenger’s problem of rampant racy content was pointed out shortly after its product launch on August 20, but it seems that the company hasn’t been able to address the issue properly, only letting it grow bigger. It’s common to get sexual greetings from strangers with attractive-looking female avatars, local media reported. Failure to manage content not only hurts user experiences. It is also a concern of greater importance in China, where keeping aligned with the government’s crackdown on “vulgar” content is critical for tech firms.

The lax security setting of the app is one cause for the content issue. Similar to WeChat, Bullet Messenger is positioned as an IM tool among friends, but it allows users to send messages to everyone, even if the other party is not a friend. Criminals have used this loophole to send pornographic messages and other spams to Bullet Messenger users. To make the matter worse, users have to add the stranger as a friend before they can block the spam source.

To some extent, Bullet Messenger’s dilemma reveals the long-term pain point of the industry. Online sources that are most eager for traffic, usually promoting pornography, gambling, and drug-related contents, are prone to take advantage of user-generated content apps, which is naturally a source of online traffic, according to Yang Miao, founder of Chong Tech. Bullet Messenger needs to improve content control and features if it wants to survive, he pointed out.

Made by Smartisan-backed startup Kuairu, Bullet Messenger is a black horse challenging WeChat’s dominance in China’s social networking industry. The app has amassed 4 million active users in just 9 days since its launch, beating WeChat and Douyin to become the most downloaded social app in Chinese app store on August 28. Along with the momentum, it lured RMB150 million funding ten days after launch. Due to various problems, however, its popularity wanes as quickly as it rose. The app has seen a precipitous drop since the beginning of September.

腾讯与加拿大电信商合推旅游SIM卡：帮游客海外上网 – Sina Tech

What happened: Canadian carrier TELUS has announced a partnership with Tencent to launch two SIM cards—WeChat Go Canada and WeChat Go North America—for Chinese tourists traveling to Canada and the US. The travel SIM cards, which provide coverage for 4G LTE data, allow users access to top-ups and billing features via the WeChat Go mini-program. WeChat Go users will also have free access to Chinese-language movie and TV streaming services.

Why it’s important: As one of the top destinations for Chinese tourists, North America is expected to attract over 5 million travelers coming from China by 2022—giving Tencent a fortuitous opportunity to expand the WeChat ecosystem. WeChat had previously rolled out similar travel SIM cards, in partnership with domestic telecom operators, for Chinese tourists visiting EU countries and Southeast Asia.

Tencent announced its new version for iOS WeChat on September 25 and laid out more challenges for players eyeing the WeChat subscription content cake.

WeChat’s 6.7.3 version allows users to record their own facial expressions as a gif which can be edited. The gif will be saved to a user’s WeChat account which supports different devices.

The new updates, as highlighted in the App Store, will also allow moving to the next text line when typing by long-pressing the text being edited.

Despite these cool sounding features, some updates are making subscription account owners anxious. WeChat added a “Frequently Read” content row displaying users’ most popular content subscription accounts. The row sticks to the top of the subscription main page and will notify users of any updates from the accounts.

At the same time, displays for frequently read accounts and other accounts are different. WeChat allows the former to show a large feature image, but will only display the headline and a side image for the latter.

The WeChat content market expects the updates to further marginalize accounts with declining readership and those hoping to attract readers with eye-catching images. This appears as a further step towards the news feed model of Jinri Toutiao, China’s leading Chinese news platform operated by ByteDance. WeChat, though having denied following ByteDance, is shifting its WeChat account subscription management towards “reading efficiency improvement”.

By the end of 2017, there were over 10 million WeChat subscription accounts providing content covering a wide range of sectors. However, only around 3 million accounts were reportedly active. According to data quoted by local media (in Chinese), which is widely acknowledged in the WeChat content circle, the average browsing rate for a WeChat subscription account (the number of users that click to read an article an account publishes per every 100 users) is less than 5%.

The reality sharply contrasts capital’s interest in WeChat content owners’ profitability potential. In April, Zhejiang Huge Leaf offered RMB 3.2 billion for a digital content company called Quantum Cloud (量子云) which operates 981 WeChat subscription accounts. Earlier this month, a 17-year-old high school student sold a subscription account for RMB 400,000.

Competition among content providers will grow, and not everyone will be allowed to stay.

Tencent’s WeChat Pay set to allow Hong Kong users to pay for purchases on the mainland —SCMP

What happened: WeChat Pay users in Hong Kong may soon be able to make purchases on the mainland. Tencent’s WeChat Pay HK service was previously only available for use in the city as the two payment systems—one on the mainland and one in Hong Kong—are not interoperable. However, according to sources, an update to this system is set to be announced today (September 26).

Why it’s important: Both Tencent and Alibaba are pushing outside of mainland China to gain additional users. While this has previously focused on allowing Chinese tourists to pay abroad, WeChat has launched a localized version for Hong Kong and more recently, for Malaysia. It will be interesting to see if Alipay follows suit. The company has previously mentioned its desire to offer a similar solution.

Mobile advertising is booming in China. It is no surprise considering the country has 731 million internet users, over 95% of which access the internet from their mobile phones. According to market research firm eMarketer, digital ad spending in China is expected to grow by 25% this year, driven by mobile.

“If you want to do marketing in China, mobile should be first,” Daisy Wu, Vice President of Chinese mobile marketing agency YeahMobi, told the audience. Wu joined the fireside chat at TechNode’s ORIGIN Disrupt Stage at SWITCH (Singapore Week of Innovation and Technology) to discuss the different faces of mobile marketing and social media in China.

China is a fast-changing market and a highly competitive one, Wu said, for example, Bytedance’s short video platform, TikTok (aka Douyin), which has emerged as one of the most popular mobile marketing channels nowadays, has garnered 300 million MAU (monthly active users) in China alone. Many marketers in China have already started testing campaigns on the platform.

China’s most popular messaging app, WeChat, is at the center of a mobile marketing strategy for many companies. Wu noted that the app’s mini-program is now one of the hottest topics in China and many companies are scrambling to build own mini-programs.

Aside from WeChat and short video platforms, e-payments are also becoming an effective marketing channel as China is becoming cashless.

Know your audience

In China, there are a lot of new ways to advertise a product. On WeChat marketers can utilize WeChat Moment ads, mini-program ads, subscription ads, and KOLs (key opinion leaders). Wu said in order to build a cost-effective marketing strategy for WeChat, marketers need to have a clear idea of who their audience is.

The effectiveness of marketing channels varies between different verticals. For fashion brands, KOLs are usually more effective; for gaming companies, mini-programs are probably the way to go, according to Wu.

In China, KOLs have become a mainstream way to advertise. This is partly due to the fact that the average age of mobile internet users in China has gone down. Younger smartphone users usually know which influencers to follow on social media, Wu explained, and they find KOLs more relatable in comparison to traditional marketing ways.

The lesser-known facts about China’s mobile advertising

Many foreign brands who want to enter the lucrative Chinese market don’t realize how competitive the market is, said Wu. The attitude of “if I can get one percent market share, it will be big enough” is a popular misconception. Many foreigners fail to realize that China is a highly competitive market that even one percent market share isn’t easy to secure.

China’s regulatory environment is also unique. In China, if a brand wants to run ads on platforms like WeChat or TikTok, it needs to have a registered entity in China and is required to submit a certification of the Chinese entity to open an ad account. This is something many companies did not know beforehand.

“As an agency, YeahMobi is working with WeChat and Bytedance to help companies mitigate this problem,” said Wu.

The company also spend time educating foreign brands about the fast-changing marketing landscape in China where new marketing channels are popping up because it is crucial to know how to leverage different media channels when marketing cost is shooting up.

Another misconception about mobile marketing in China is that “high-value users are coming from Tier 1 and Tier 2 cities,” said Wu. Rather, lower-tier cities have a user base that should not be overlooked. The two recently IPO’d Chinese internet companies, Pinduoduo (拼多多) and Qutoutiao (趣头条), both focus their businesses on capturing consumers who reside in lower-tier cities.

Increasingly, brands and companies are required to become more data-driven. However, collecting data might not be the most difficult part. Rather, the bigger challenge is how to leverage the data, Wu said, conducting audience study base on behavior and interest, for example, is crucial.

子弹短信一个月数据：用户已突破748万 广东用户占14.8% – TechWeb

What happened: Bullet Messaging has released its first monthly figures on its WeChat official account. The startup said it now has 7.48 million users. During its first month, the messaging app held the top spot on China’s iOS app store for 9 days and was the most downloaded social networking app for 13 days. Data from the past week shows that Android users on average spent more time on the messaging app than iOS users, and nearly 20% of users spend over half an hour per day on the app. Huawei owners are most “loyal”  Bullet Messaging users comparing to other Android phone owners.

Why it’s important: Smartisan’s Bullet Messaging launched exactly a month ago today. The messaging app’s quick rise to popularity garnered a lot of media attention and a fair share of speculation about how long it is going to last in the fierce battle with China’s most popular messaging app WeChat. Earlier this month, Smartisan CEO Luo Yonghao announced that he planned on spending RMB 1 billion in the next 6 months on user acquisition and talent recruitment.

Tencent’s short video app Weishi has become the most popular free app in the Apple App Store after the social media and gaming giant quietly allowed some of its WeChat users to directly share and post videos from the app on WeChat starting September 15. Videos from Douyin and other popular platforms remain blocked.

Tencent told local media that not all Weishi videos can play on WeChat, only that are verified by Weishi.

Access in Wechat is located at the “Create a new post” section of WeChat Moments. Tapping on the Weishi ad users to exit WeChat and open the app. If the app hasn’t been downloaded, users will be redirected to the download page in the App Store. However, the button is tagged as “promotional”. Tencent told local media that the promotion of Weishi is only for a limited time, and will be taken down when the time period ends, although there was no specific time span mentioned on how long the promotion will be.

Before this newly-emerged direct and very obvious access to Weishi, WeChat first launched the beta test allowing Weishi videos to be shared on WeChat on August 24, according to the company’s press release.

This came four months after WeChat banned sharing short videos from any platforms including ByteDance-backed Douyin and Watermelon and Kuaishou when the authorities tried to clean the content of short videos.

In early April, Tencent was reported to invest RMB 3 billion to promote the short video app, eyeing the lucrative profits of the short video market and fearing Douyin’s drastic growth would compromise Tencent’s position as China’s biggest social network service provider.

Douyin now is the fourth most popular free app in App Store and it achieved 500 million monthly active users across the globe since July 17.

腾讯与诺华达成合作推动医疗数字化和一体化健康管理 – ifeng.com

What happened: On September 18, global pharmaceutical giant Novartis established a partnership with Tencent in sectors including digital healthcare and other pharmaceutical services. The first formal practice of the partnership will start from cardiovascular disease. Tencent will leverage its social communication platform WeChat and mini programs to allow Novartis products’ origin tracing, online directions for use explanation, and disease knowledge sharing.

Why it’s important: Medtech’s practice in China is taking a quick and light approach with the existing social network instead of simply heavily investing in R&D. This will also provide tech platform providers such as Tencent with data collection sources for further projects. Meanwhile, cardiovascular disease and other chronic diseases’ large population base is a good ground for patients’ medtech habit cultivation.

Popular content aggregator Jinri Toutiao plans to roll out mini-programs, joining WeChat, Alipay, and Baidu in a race for user attention spans, reports local media.

The mini-programs are currently in a stage of internal testing and will be released soon if all goes as planned. According to a Toutiao representative, the company hopes to offer a richer experience for users with different needs by launching the new feature.

Enterprises reportedly have limited access to the mini-programs, which are currently only compatible with Android systems. Users will be able to enter the mini-program by searching for keywords and can share specific program pages to Weitoutiao, Toutiao’s microblogging platform. The new feature also supports Alipay.

By testing out mini-programs for its platform, Toutiao is following in the footsteps of Tencent, Alibaba, and Baidu. The feature was first released on WeChat in early 2017, allowing users to access limited versions of various services and sites without downloading separate apps. It’s since been proven a savvy move for the social networking platform, reaching 200 million daily active users this year.

Alipay and Baidu both launched their own mini-programs in recent months, with plans to expand further in the field. Ant Financial began an initial trial run last September, followed by the establishment of an official mini-program business unit. Toutiao’s latest news is part of a larger trend of big-name online platforms seeking to keep users glued to their apps.

Ant Financial launches mini-program business unit as it plays catch-up to Tencent’s WeChat–South China Morning Post

What happened: On Wednesday, September 12, Alibaba’s Ant Financial announced that it will spend RMB 1 billion on developing mini programs for its Alipay app over the next three years. The decision comes after an initial trial run last September, followed by the establishment of an official mini-program business unit. Similar to Tencent’s WeChat mini programs, the feature allows users to access different services from within Alipay without leaving the app. Ant Financial plans to use mini-programs to link together some of Alibaba’s diverse offerings, such as food delivery service Koubei or navigation-based AutoNavi.

Why it’s important: Ant Financial has been cautious in its launch of Alipay mini programs, announcing their official rollout almost a year after beta testing first began. Although Alipay’s options – 20,000 mini-programs – still pale next to WeChat’s one million, Ant Financial may start moving more quickly now. That spells convenience for the hundreds of millions that regularly use its payment app, although it may restrict independent app developers’ options.

This week, John and Matt talk about the messaging app that’s shot like a bullet (pun intended) to the top of app store charts as well as brief discussion of shady PR and persuasion practices in China.

Links

• Matt’s infamous tweet
• TechNode’s coverage
• Instead of a new workstation, Smartisan should have made a KTV machine
• iFlytek’s journey from the bottom to the top of China’s voice AI industry

Hosts

• John Artman, @knowsnothing, TechNode
• Matthew Brennan, @mbrennanchina ChinaChannel

Podcast information

• iTunes
• RSS feed
• China Tech Talk.com
• Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

Download this episode

借力小程序 沃尔玛扫码购用户累计破1000万 – Ebrun

What happened: International retail giant Walmart announced on September 10 that the total user number of its mini program “Scan to Buy (扫码购)” in China hit 10 million. The program was launched in April. It allows customers to skip cashier queues by scanning products’ batch codes and directly paying via digital payment software. The mini program is now available at around 300 Walmart stores in over 50 cities around China. By the end of this year, Walmart hopes to increase around 100 stores to adopt the digital solution.

Why it’s important: Walmart’s success in securing over 10 million users for smart retail payment signals a step Tencent’s mini programs have taken to cut into Alibaba-led industry ecosystem. With more autonomous power and a platform embedded in the core product WeChat, Tencent is leveraging retail businesses’ independent power to establish a diverse and flexible model which is co-existing and also competing with Alibaba’s affiliates.

China’s love for QR codes is no secret. From meals and groceries to rent and rides—quite literally everything can be paid for by scanning QR codes.

The all-pervasive QR code has redefined what it means to make purchases and sales in the country, and it is driving a mobile payment trend that is crippling the growth of traditional payment systems like ATMs and even POS (point of sale) terminals. Overseas, Chinese QR code payment service providers are looking to set off another wave of disruption in cash-based economies.

The “little white box”

Today, China is the world’s largest and fastest-growing market for mobile payments. The transaction volume of third-party mobile payments reached RMB 40.36 trillion in the first quarter, ahead of the US and the rest of the world.

Mobile payment solution providers, perhaps out of all, have benefited the most from China’s shift away from cash-based payments.

Beijing Inspiry Technology, the QR code payment technology provider for some of China’s biggest Internet companies including WeChat, AliPay, UnionPay, and Meituan, is a pioneer in China’s QR code payment space. Inspiry’s president Wang Yue, dubbed by local media as the “Father of the 2D Barcode”

[note]二维码 erweima, literally “2-dimensional code in Chinese”[/note]

(in Chinese), founded the company in 2002. Around 2006, Wang and his team developed the Han Xin code (汉信码), the first national QR-code standard in China.

A decade ago when QR code payment was still in its early days, it took more than 17 seconds for a phone to generate a QR code—not necessarily representative of what a “quick response” code stands for.  “Almost everyone could not imagine the application prospect of the mobile phone QR code,” Hector Guan Heng, COO of Inspiry, recalls. That response time has since reduced to near instant.

In 2014, amid the upsurge of mobile payments in China, the company rolled out its first self-service QR code reader called the Smart Box, also commonly referred to as the “little white box” (小白盒). The self-service QR code scanner has become the mainstream offline payment option in China, now it holds 70% of the Chinese mobile payment device market.

The payment method rose to popularity largely because it’s a cheaper alternative to traditional payment systems. The little white box is roughly a quarter the price of a handheld POS (point of sale) terminal with QR code scanner that is usually priced at around RMB 800 to 2000. As a more cost-efficient payment option, self-service terminals are widely accepted, especially by small merchants and vendors.

The relatively low cost and lightweight self-service QR code readers are more apt for large-scale adoption and are quickly edging out ATMs as well as traditional POS terminals in China.

In 2017, GRG Banking, the largest ATM maker in China, posted a nearly 30% year-on-year decline in ATM equipment generated revenue.

Similarly, the rise of QR code payment initially sent shock waves in the traditional POS terminals industry. According to the People’s Bank of China (PBOC), the growth rate of POS sales slowed dramatically from 45% to 7.5% in 2016 over five years’ time. However, new payment solutions like the Smart Box enable POS terminals to be integrated with QR code scanners, NFC, and other mobile payment systems and the growth rate recovered to around 27% in 2017 (in Chinese).

Why QR codes trump NFC in China

Since the beginning of 2015, internet companies began promoting self-service scanners to the Chinese market in order to develop QR code-scanning payments themselves.

That was when self-service QR code scanning payment really took off.

Policy rocketship

The fact that QR code payment in China developed earlier and faster than in many other countries is because policymakers are more openminded and supportive, Guan told TechNode. Chinese regulators have been proactive in dealing with issues like security and unfair market competition, but not many hard rules have been imposed so far. Recently, the central bank started to encourage banks and payment service providers to self-regulate. It has asked fintech companies to form an industry group that works with experts on issues such as how businesses using QR codes can better improve their security.

Parts of the regulatory framework, industry norms and technical standards around QR code payment are still forming, however. Safety, which remains a top concern for QR code payments, will eventually be addressed, said Guan, noting that the self-service scanners that read dynamic QR codes—editable code generated by mobile apps—are regarded as more secure than static QR codes—printed out codes that customers scan to pay. In April, the government imposed a new regulation aiming to improve safety for the use of QR code by capping daily spending to RMB 500. The limit applies only to static QR code, which in turn boosted to the demand for self-service QR code scanners.

Not just the government, but internet companies like Alipay, WeChat Pay, and Meituan have come up with new ways to boost the usage of QR code payment and have been keen to work with payment service providers on bettering their products, Guan said.

“The mobile payment industry has fully entered the era of QR code scanning, forming an active whole industry chain,” said Guan. The emergence of new business models such as O2O, new retail, online food delivery services is driving QR code payment into a widening array of services.

Guan noted that QR code payment is not only an entrance for new traffic, it also creating new business opportunities and becoming a commercial infrastructure itself. For example, QR code payment bridges the physical and the virtual world, which makes it an enabler of the O2O marketing.

China’s mobile payment platforms are transforming online marketing

Southeast Asia, the next blue ocean market

Mobile payment isn’t only being integrated into more verticals, but also more geographies.

A top factor that helps drive Chinese payment technology expansion overseas is tourism. Just when Chinese mobile payment companies seek to grow outside of their home turf, other countries are ready to cash-in on the purchasing power of Chinese tourists whose spending abroad makes up 21% of overall tourism spending.

For Inspiry, the main focus now is to open up markets in Southeast and South Asia as well as Japan. According to the Global Payments Report by payment technology provider Worldpay, e-wallets will become the top payment method globally with a usage rate of 46% by 2021. In the Asia Pacific, it is expected to reach 51%.

QR codes are seeing rising popularity in Southeast Asia because it is relatively cheap and easy to adopt comparing to NFC-based Apply Pay, Android Pay or Samsung Pay. Plus it does not require an internet connection to work.

With growing penetration of mobile phones and internet connectivity in Southeast Asia and broadening acceptance of mobile payment options across the Asia Pacific region, the circumstance is favorable for Chines payment service providers to venture into foreign lands. Earlier this year, Alipay launched its smartphone-based QR-code payment service in Japan, and WeChat Pay made its foray into Singapore.

Looking ahead, Guan believes that more countries and companies will opt for QR code payment in the future. In fact, it is already happening in Japan. LINE Corp, the operator of Japan’s most popular messaging app, recently launched a campaign to waive commission fees on QR code payments for three years. SoftBank and Yahoo Japan are also launching similar campaigns this fall. Guan reckons that US-based internet companies like Google, Facebook, and Whatsapp will likely to join the movement in the future.

Guan noted that QR code could help developing countries skip over the credit cards and cheques and enter the era of mobile payments—similar to what Chinese consumers experienced a few years ago. Nevertheless, it will take time for some markets to catch up. “The popularity of mobile payments requires the establishment of public habits, and areas with weak Internet operations may not be able to quickly drive this shift,” said Guan.

罗永浩:子弹短信增长明显放缓 6个月烧10亿拉新 – Sina Tech

What happened: Smartisan CEO Luo Yonghao took to Weibo to announce Bullet Messenger’s bold plans. Luo said the messaging app now has over 7 million active users, noting growth has significantly slowed since its launch. Bullet Messenger’s next step is to focus on stability, recruitment and user acquisition. Luo said the app will roll out a new user acquisition plan in two weeks. The company expects to spend around RMB 1 billion in the next 6 months to add 100 million users to its network.

Why it’s important: Smartisan’s Bullet Messenger soared to the top of the app store charts since its launch in August. The app amassed millions of users in just a few short days and has been largely compared with China’s most popular messaging app WeChat. Bullet Messenger’s popularity made headlines, but it also sparked controversies over the spread of vulgar content and the app’s lack of security.

Shaanxi police have introduced a new in-app safety feature on WeChat. According to local media reports (in Chinese), the new feature, accessed via the Shaanxi police official WeChat account, allows people to not only report incidents of crime and emergency to the police but also upload images, audio and video recordings which could be useful evidence later on.

If the phone’s location service is turned on, people can share their whereabouts directly with the police. The feature also offers a way to get help when the person seeking help for some reason cannot speak or is at a location with no stable service but has access to Wi-Fi.

The murders of two young women and the numerous reports of sexual assault that followed have sparked heated discussions across the country. In China, the number of downloads of emergency-reporting apps has surged. The public is not only demanding Didi to take passenger safety issues more seriously but also calling Chinese authorities for greater oversight of ride-hailing operators.

Since the incident, Didi has announced new safety measures, including a panic button that allows users to contact and share passenger information with the police. Didi will also experiment with audio recordings of shared-rides.

Bullet Messenger (子弹短信), the app that is shaking up WeChat’s dominance in China, announced on its social media channel today that the app reached 4 million active users in just 9 days since its launch.

The app created by Smartisan-backed startup Kuairu (快如) went online on midnight of August 20th and by the morning of August 30th, Bullet Messaging was already installed on 4 million phones.

“Thirty-six colleagues, with an average age of 27, went online for seven days, attracted 54 investment institutions and RMB 150 million of financing in three days,” Bullet Messenger wrote in a post on Chinese Twitter-like platform Weibo.

The app surpassed both WeChat and the popular live streaming app Douyin (Tik Tok) becoming the most downloaded social iOS app in the Chinese App Store. It also received RMB 150 million ($22 million) in funding after its first week of operation, according to statements by Smartisan CEO Luo Yonghao.

However, the messaging app is already facing scrutiny. Users have uncovered Bullet’s dark underbelly which is already populated with racy pictures and videos—content that WeChat would not allow.

The app was also criticized for its lack of security standards namely the lack of two-factor authentification, end-to-end encryption, and other privacy settings, as well as the option to see other parties’ phone numbers which brings privacy concerns, our Chinese sister site reported.

Yesterday, Bullet Messenger issued a statement saying that it fixed problems like displaying ID and phone number in plain text in the web interface and seeing other people’s phone numbers when adding them on the app.

Bullet Messenger team is committed to providing users with safe, efficient and convenient instant messaging services, and attaches great importance to the protection of user privacy. We will be more rigorous in protecting user’s information security. Thank you for your supervision.

宜家做了个小程序，试试在中国做电商的感觉 —Pingwest

What happened: Swedish furniture retailer Ikea launched a WeChat mini program on Monday enabling users to purchase Ikea products online directly. However, Ikea’s mini program is not permanent but a pop-up e-commerce store. For the next nine months, selected Ikea products will be sold via the mini program. According to Ikea, it hasn’t been decided if the mini program will become a permanent retail channel in the future.

Why it’s important: Ikea’s e-commerce struggle in China has been going on for a while. The Swedish company launched an e-commerce retail channel in August 2016. After two years of operation, online purchasing is only available in Shanghai. Last year, Ikea said it would open stores on a third party platform, but business did not go smoothly. There are many third-party purchasing service provider on Taobao targeting consumers in cities where there no Ikea stores or consumers that can’t be bothered to drive to the store.

Search Giant Baidu to Censor Crypto Discussions on Online Forum–Coindesk

What happened: Cryptocurrency-related chat forums on Baidu Tieba, the popular discussion platform, have disappeared. Sub-forums including “数字货币” (shuzi huobi, digital currency) and “虚拟货币” (xuni huobi, virtual currency) appear to have been taken down, although some related forums remain. A Baidu Tieba representative “hinted” that the blockage was due to discussions of initial coin offerings (which are illegal in China) as well as cryptocurrency trading.

Why it’s important: The news follows reports of a WeChat ban on crypto-related media outlets that occurred last week for similar reasons. The blackouts appear to be a result of a large-scale government effort to monitor virtual currency speculation in China, even for trading platforms whose servers are overseas. Baidu’s ban falls in line with Tencent and Alibaba, which have both announced blocks on crypto-trading transactions carried out via their mobile payment apps.

Smartisan’s new messaging app looks to include payment features as it competes with WeChat – SCMP

What happened: A week after Smartisan launched the new messaging app named Bullet Messenger (Zidan Duanxin), founder Luo Yonghao posted on Weibo hinting that it may soon integrate payment features from Alipay.

Why it’s important: Bullet Messenger has risen to the top of the app store charts since its launch and is currently the most downloaded free app on the Apple app store in China. The messaging app has integrated a voice-to-text function—something that China’s most used messaging app WeChat does not have. Including payment features from Alipay (rival of WeChat Pay) would give Bullet Messenger a better shot at survival in a space largely dominated by WeChat.

Tencent’s WeChat wallet is luring Malaysian users with free money —Tech In Asia

What happened: After presenting a localized version of WeChat Wallet in Malaysia in June, the service has kicked off a promotion for this entire week that will be rewarding users with virtual money gifts known in China as “hongbao.” Similar to its China version, WeChat Wallet offers linking bank accounts, topping up phone cards, and buying plane and train tickets but the functions are still limited in comparison.

Why it’s important: WeChat said earlier that its wallet will mostly be targeting Chinese tourists but now it seems that the company is changing its course towards capturing the international market. Malaysia is the first country after China and Hong Kong where WeChat has rolled out a local version. As a payment method, WeChat Pay is accepted in over 40 countries and regions where it serves Chinese tourists, according to the company.

This week, John and Matt talk with Heatherm Huang, a founding member of TalkBox, one of the first chat apps with push-to-talk functionality, about the history of chat message apps in China.

Links

• MailTime

Guests

• Heatherm Huang: heatherm [at] mailtime dot com

Hosts

• John Artman, @knowsnothing, TechNode
• Matthew Brennan, @mbrennanchina ChinaChannel

• iTunes
• RSS feed
• China Tech Talk.com
• Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

Download this episode

WeChat, the giant social networking app that also serves as a hub for producing original content, has permanently shut down a dozen of widely followed blockchain-related official accounts after demands from internet regulators, local media is reporting.

Tencent, the operator of WeChat, was asked to seal the accounts on suspicion of publishing and spreading news and rumors about ICOs and cryptocurrency trading violating the “Interim Provisions on the Development of Public Information Services for Instant Messaging Tools”.

Among the closed accounts are Golden Finance (金色财经), Huobi News (火币资讯), Coin World (币世界), DeepChain Finance (深链财经). The first three accounts are related to Huobi, the world’s third-largest cryptocurrency exchange by daily trading volume.

China has adopted a strict stance towards cryptocurrencies since September 2017, when the country’s central bank banned all ICOs. Under the regulation, several of the country’s top cryptocurrency trading platforms moved their operations abroad. Huobi moved its headquarters from Beijing to Singapore last October. OKEx, the world second largest cryptocurrency exchange by daily trading volume, plans to move its headquarters from Hong Kong to Europe.

While Beijing stands firm in its regulation on cryptocurrencies, it is trying to embrace blockchain, the technology that’s fundamental to virtual currencies. The initiative has been pushed on various levels across the country. In 2017 alone, China applied for 225 blockchain patents, almost two and a half times more than the US which applied for 91. At the same time, the central government began establishing national standards for blockchain technology with numerous local governments following the lead either by establishing their blockchain venture funds or setting up blockchain industrial parks.

The different government attitude divides the legality of the two closely related sectors and also the practitioners in the two fields. Those in the blockchain community, or “lianquan” (链圈) as dubbed by insiders, enjoy government provincial policies and investments, and those in cryptocurrency community or “biquan” (币圈) are operating in a grey market.

WeChat mini programs were a highlight for Tencent’s strategic initiatives in recent months as online gaming revenue slides, according to Tencent’s 2018 second-quarter earnings release.

According to Tencent, WeChat mini programs have reached 200 million daily active users and has a sizable developer ecosystem. Tencent views mini programs as complementary to mobile apps, as mini programs generate traffic and download for corresponding native mobile apps. Mini programs will contribute to the development of the company’s advertising and cloud business, according to the company.

Tencent first rolled out WeChat mini programs in early 2017, which allows users to use services from different companies on the WeChat platform without actually downloading the application from app stores. Mini programs are especially popular with transportation, retail, restaurant and gaming service providers.

As one of China’s most popular application, WeChat has reached 1.06 billion monthly active users, a 9.9% year on year growth, as user activities in WeChat Mini Games and Moments continued to increase, driving up time spent per user per day in those activities.

Tencent’s conference call of the earnings specially mentioned WeChat Pay, a built-in payment feature within WeChat and reported that monthly active users of Weixin Pay exceeded 800 million.

QQ, another social network application within Tencent’s Communication and Social segment, showed 5.5% decrease of monthly active user accounts to 803.2 million while smart device monthly active users reached 708.6 million, a 7% year over year increase. QQ is especially popular among young users as growth among 21 years or below showed double-digit growth year on year.

Revenues from social networks reached RMB 16.9 billion, 23% of Tencent’s total revenue, the second biggest source of income for Tencent.

However, strong performance from social networks didn’t comfort investors as shares of Tencent dropped 4.8% as the market opened Thursday morning, due to slowing growth from online games. Year-on-year revenue growth from online games, Tencent biggest source of income, decelerated to 6%, due to non-monetization of popular tactical tournament games in China. Revenues from online game achieved RMB 25.3 billion and made up 34% of the total revenues.

It’s no secret that WeChat is becoming a prominent channel for luxury brands to reach out to the Chinese population by creating online campaigns. For this year’s Qixi Festival—China’s version of Valentine’s Day—brands have a new trick up their sleeves for online marketing: WeChat mini programs.

As Chinese Valentine’s Day approaches, over twenty brands, including names like Dior, Prada, Louis Vuitton, Burberry, and Gucci launched their mini programs for limited-time and special-edition sales during the festival, according to local media. On July 25, Dior led the race by offering a special Qixi edition of Dioramour handbag on its official WeChat account. It then offered a limited number of Lady Dior handbags through its mini program on July 31. The campaign gained popularity among Dior fans with the handbag currently sold out.

The Qixi or Double Seventh Festival, which falls this year on 17th August, is celebrated on the seventh day of the seventh lunar month as China’s Valentine Day by the younger generation. Unsurprisingly, the gift-giving tradition turns the Festival into a retail extravaganza where luxury brands thrive.

For last year’s Qixi Festival, Dior and Bulgari both became early adopters of WeChat mini program marketing. One year later, more brands are now eager to join the club on this special day. Burberry launched a gamified mini program last week, where the couples have to answer seven questions about each other before being shown the Burberry’s Qixi handbag.

China’s mobile payment platforms are transforming online marketing

WeChat-based marketing is part of the brands’ efforts to localize and tap into China, the world’s largest market for luxury products. Moving towards mini program grants them a more robust channel for accessing customers.

WeChat now has more than one million mini programs, serving over 600 million users as of June this year, according to data released by mini program maker Jisu App.

Zhejiang’s Provincial Bureau of Industry and Commerce (ZBIC) issued a letter of recommendation to Tencent late last month in response to a number of incidents of WeChat Pay users being defrauded by individuals pretending to their WeChat friends. Tencent responded to the letter at the beginning of August, with the matter being made public yesterday (August 13).

The Zhejiang Consumer Protection Committee said it had received complaints of fraudsters copying the WeChat profile picture and name of an individual’s friend, then asking to borrow money, according to local media.  When asked to repay the loan, the lender was blocked by the scammer. Individuals affected said they were not helped by Tencent, with the company saying that it could not give out user information for privacy reasons.

“WeChat is no longer a purely social platform. As a financial platform operator, WeChat Pay should balance the relationship between customer privacy protection and property security,” a spokesperson for ZBIC is quoted as saying.

The government department said Tencent should provide more assistance to individuals affected by this sort of fraud.

“[Tencent should] actively cooperate with the judicial authorities to disclose the real information of the other party, and should not use personal privacy protection as a reason to counter the reasonable appeal of users,” the ZPIC continued.

In a letter issued August 1, Tencent detailed some improvements in response to the recommendation letter. The company said it would fully implement WeChat Pay’s real name verification system, not allowing users who have not verified their identity to transfer funds through the platform. The company said that for large transfers it would make the full name of the receiver visible to the sender, not just the last character. It also said it would improve its customer service in the aftermath of fraudulent activity.

Earlier this week (August 13), an investigation found that criminal groups were luring in victims under the guise of educating them about WeChat and Alipay mini programs. They were then duped into paying tens of thousands of RMB for projects that only cost a few hundred.

Earlier version of the article used “mini program design fraud” in the title. This version has replaced it to avoid ambiguity.  

The strong performance and increasing needs of mini programs are breeding fraud. But the country’s legal system is behind the race with misbehaviors taking the ride of China’s booming business digitalization demands.

Deceiving those who wish to launch mini programs but lack technical knowledge, criminal groups are charging tens of thousands of RMB for projects that only costs a few hundred, China’s state media Xinhua says in an investigation report (in Chinese). In the case, mini programs become a tool to lure potential victims into a business fraud.

Victims claim that they were invited to exclusive conferences with WeChat and Alipay’s official trademarks and authorization designed for face-to-face payment. This was easily taken as an official event organized by Tencent or Alibaba. After fake experts gave speeches on program design and announced a few open VIP opportunities, many conference attendees eagerly paid for expensive services.

A victim surnamed Wang rushed to sign up for six projects and paid RMB 78,000 ($11,342) over three installments after he saw people at a conference eagerly signing up.

The six projects Wang signed up for, according to the event organizer’s introduction, can help set up regional business monopolies to secure market share and revenues in diverse segments. According to a phone conversation Wang had with official Alipay staff, accessing a mini program is free, and designing fee for mini programs he signed for is usually around a few hundred each. Additionally, no one can guarantee any monopolies.

Organizers of the events also signed contracts with victims. However, legal terms used in the contracts are vague. The contracts neither include service providers’ real addresses, responsibilities, or other related service information.

Ant Financial receives around 200 monthly calls to confirm events’ and projects’ qualifications, the Alibaba’s finance affiliate says. As top-tier cities are gradually aware of the fraud, criminal groups are moving to less-developed areas. With weak legal evidence, nevertheless, victims in developed areas find it hard to push forward an investigation.

The Chinese IT industry is considering mini programs another blue ocean that could bring huge traffic and new commercial potentials. The valuation of the mini program ecosystem is now around RMB 10 billion. An earlier report from Xinhua says mini program users in China have hit 280 million. Apart from WeChat, China’s leading mini program development platform, Baidu released its own mini programs during Baidu Create 2018, the company’s annual innovation conference. Huawei and Xiaomi also developed similar digital products.

WeChat will begin cracking down on falsified pageviews and followers on public accounts beginning tomorrow (August 8), local media is reporting.

WeChat said that in order to “ensure the healthy operation of the platform” it would be attempting to eliminate false data, including that created by the use of bots. It said that while there may be some differences between past and new statistical data, it would not have an actual effect on traffic.

“Cracking down on fake views and fake followers is a pretty uncontroversial move. These have always been vanity metrics,” Andrew Schorr, founder of enterprise contact center solutions provider Grata, told TechNode. “We’ve seen clients run campaigns where the vendor was clearly buying followers for the client. You get unbelievable growth numbers during the campaign, then everyone unfollows you over the next couple weeks, and none of your real metrics see any impact,” he said.

Nonetheless, in Tencent’s 2016 crackdown on unwanted bots, public accounts saw a marked drop in activity. At the time owners of some WeChat public accounts, which previously garnered over 10,000 views per article, saw their views diminish by as much as 90%.

Companies have been able to increase their metrics by paying firms that specialize in fake accounts. These firms charge as little as RMB 15 ($2.20) for 1000 views and RMB40 ($5.85) for sharing 100 times. Once payment is made, bots visit the account repeatedly increasing the total number of page views.

This is not the first crackdown Tencent has led recently. Last week, WeChat announced that it had shut down 8,000 groups and 4,000 accounts in the first half of 2018 for spreading investment rumors. Those dealing in false information would pose as legitimate investment advisors and offer tips in exchange for money, with some even going as far as luring in unsuspecting buyers through live streaming services.

Tencent-backed Weimob files for Hong Kong IPO as marketing solutions provider joins rush to go public – SCMP

What happened: Tencent-backed marketing and cloud services provider Weimob filed for an initial public offering in Hong Kong on August 6. Weimob provides cloud services and marketing solutions to small-to-medium sized enterprises via WeChat.

Why it’s important: WeChat has become a major portal and millions of enterprises are looking to promote their business on the platform. Weimob was one of the first service providers on WeChat Official Accounts in 2013 and also is among the first group of enterprises that sell market solutions through WeChat’s mini programs. The company now has more than 2.6 million merchants for its SaaS product alone, which serves small businesses. Despite the promising market prospect, recent tech IPOs in Hong Kong has experienced headwinds, which cast doubt whether Weimob’s IPO would satisfy its investors.