WeChat, the shape of the connected China

Since 2006, FABERNOVEL has been producing annual studies which are available to all, thus completing one of its missions: to contribute to the understanding and accessibility of the digital revolution. After Uber in 2017 and Tesla in 2018, we’ve decided to dedicate this year’s annual study to the analysis of the WeChat phenomenon. More than ever, the model’s applicability and exportability raises questions – while a slowed-down Chinese growth in 2018’s third trimester (6.5%!), and a trade war with the US, have got some observers worried.

Impressive, intriguing China is all too often dismissed as a source of inspiration for being “too different”. Yet over the past decade, China has undergone unprecedented change as a result of the implementation of protectionist economic policies. No longer the world’s sweatshop, the country is now the international epicenter of technological research & development. This new identity has been helped along by superstars of technology headquartered in vibrant and dynamic cities such as Beijing, home to 40 unicorns and venture capital funds, Shanghai and its financial services, Shenzhen, the Silicon Valley of hardware, and Hangzhou, home to Alibaba’s headquarters.

The Dizzying Rise of WeChat.

Among the giants responsible for this new driving force, one in particular has done more than any other to turn China into a connected country: WeChat, Tencent’s flagship product and backbone. The application snowballed at lightning speed, amassing 100 million users after just 433 days on the market (compared with 1,650 days for Facebook) and helping to create 20.3 million jobs along the way. 1

We estimate that the platform, with its one billion users, now accounts for over half of Tencent’s total value, bearing in mind the company is listed at over $400 billion in market capitalization on the Hong Kong stock market.


The application is shattering records, with a penetration rate on the Chinese market estimated at 92%. The company is on the brink of fulfilling the super-app dream of connecting users to a wide ecosystem of suppliers offering commercial, public services and a unified payment solution, thus upholding its promise to bring users “one tap away from everything”. And the dream is rubbing off on similar applications that are being developed in South-East Asia, such as Grab in Singapore and Go-Jek in Indonesia.

“Making a doctor’s appointment, ordering a taxi, booking flights, sending money to your loved ones, divorcing, paying your electricity bills and taxes, sharing photos with friends – anything’s possible when you’re a WeChat user.”


Looking back, the secret to its success becomes clear in the five key strategies that WeChat’s founders were able to roll out.

  1. WeChat is the result of a successful pivot strategy.

In 2010, as Apple’s iPhone celebrated its third anniversary, Tencent was a household-name player dominating China’s social media market thanks to its QQ Messenger platform (650 million users). QQ went even further, providing an ecosystem of services accessible online. Aware that new mobile applications would be emerging, that QQ risked losing its place as the market leader, and that instant messaging applications were booming across Asia and the West, Tencent was faced with the innovator’s dilemma described by Clayton Christensen, in which established players hesitate in the face of groundbreaking innovations. And this hesitation can prove fatal. Tencent resolved this dilemma by launching an internal innovation competition, among other things. Future WeChat founder and QQ Mobile’s Research Director, Allen Zhang, won the competition along with his team. After a few months of development, and once Tencent was confident the new product’s features met market standards, QQ’s user base was connected to WeChat. WeChat came into being on January 21, 2011, with a ready-made pool of 650 million potential users.


  1. More than just a distribution channel, WeChat is a turnkey solution to everyday inconveniences.

In order to get the app into Chinese households, WeChat put resolving everyday annoyances and inconveniences experienced by Chinese users at the very heart of its product and user experience. In 2014, it digitalized the ancient Chinese ‘little red envelopes’ tradition, in which people gift money to loved ones for special occasions. In doing so, WeChat secured its lasting position as an indispensable feature in its Chinese users’ lives.

“Being a product creator is like being in a relationship with the users. Otherwise, it’s only a business transaction. Product managers must have big hearts.”

Allen Zhang, founder & CEO of WeChat

Just as Native Americans used every last part of a buffalo, WeChat managed to take advantage of every single smartphone function, from cameras, accelerometers and GPS to screens, pedometers and microphones, to meet users’ hunger for mobile features, while creating new uses that are now standard, such as ‘Shake’, by propagating the use of QR codes on a mass scale, and by investing in the voice-based features of the future.

  1. WeChat developed an ecosystem in which value is dynamically balanced.

Designed like a digital Swiss Army knife, WeChat provides seamless access to an array of different services, connected through a fluid user experience. This emphasis on service quality is mirrored in its business model: unlike Facebook, WeChat doesn’t rely on algorithms aimed at capturing users in its app as long as possible.  Above all, advertising is not of the key to the app’s profitability. WeChat draws the bulk of its revenue from the transactions generated by its partners. Finally, it is a campaign’s creativity and tendency to go viral that determine a brand’s visibility, rather than the size of its budget.

  1. Tencent uses WeChat as its secret weapon in expanding and diversifying to compete with Alibaba.

To do so, WeChat has rallied around allies such as Didi, JD.com, Mobike, etc., which the company picks and then promotes on its platform. Its partnership strategy takes things one step further: it identifies its ecosystem’s rising stars, plucks them out of the network and gives them a leg-up, as was the case with Pinduoduo (a social/shopping app) founded in 2015 and now worth an estimated $24 billion.


  1. Originally intended for the Chinese market, the question of whether or not WeChat can be exported remains to be seen.

After an initial failed attempt in 2012, WeChat hasn’t given up. With its penetration rate of 92% for the Chinese market, the key to its financial growth lies in whether or not it can expand internationally. And to do so, WeChat has two options. It can try increasing its value per existing user by rolling out services for Chinese tourists and the diaspora. It can increase its user base by tackling well-established giants head-on on their own turf (GAFA and unicorns), or it could venture into new regions, such as South-East Asia. In this area, recent statements regarding Africa made by Jack Ma, founder of Alibaba (Tencent’s main competitor), may well be a harbinger of the next tech battles.

Download the study

2015/2016 Snapshot of Digital & Luxury in China

2015 was a watershed year for digital innovation in China. For the first time, China became more than another market or the source of cheaply manufactured goods. Instead, it was at the center of innovation for digital communication strategies and technologies. We’ve gathered some of the year’s highlights in this field, as well as our predictions for 2016 and put them into a PDF. We’ve included our Top 5 Innovative Campaigns, Top 5 Social Media Moments, Top 5 Platforms To Watch, and Our 5 Predictions for 2016. We hope you enjoy and share it!

Click here to download the PDF: 2015/2016 Snapshot of Digital & Luxury in China (pdf)

What does Weibo’s new character limit mean for brands?

1,500 most common Chinese characters.

1,500 most common Chinese characters.

Last week, Chinese Twitter-like social network Weibo announced that starting today, January 28, it will begin a month-long trial of offering VIP users the option to publish up to 2,000 characters per post. Weibo plans to roll out the new feature to all 500 million users by February 28. The current character limit is 140.

This announcement comes hot on the heels of news that Twitter will increase its character limit from 140 to 10,000.

Weibo’s character limit increase won’t visually affect user timelines too much—since posts will show only the first 140 characters—but that’s partly the problem.

More room for content will certainly help with storytelling. However, Weibo’s main problem has less to do with text and more to do with visual experience, which is key for social media at the moment. Instagram and Tumblr led the way for visual dominant platforms in the west. In China, WeChat improved upon its Tencent predecessor QQ Messenger by offering users a more media rich experience and is currently the number one social network in China. Next generation networks like Snapchat, Meerkat and Periscope skew even purer visual, by featuring ephemeral video.

According to Weibo’s own data, only 10 percent of original posts surpass the current character limit. Furthermore, since the beginning, users have employed the basic solution of posting screenshots to circumvent the character limit. Despite this reality, a Weibo spokesperson told the South China Morning Post via email that increasing character limit will “offer greater choice and a better user experience”—a statement that seems misguided at best.

While Weibo has seen a user decline in recent years, it remains the second most popular social network in China and the platform of choice for PR due to its open, viral nature. Furthermore, no indigenous Instagram or Tumblr alternative has succeeded in capturing a large audience. Weibo is better positioned than any other player to make the leap to a visual driven platform by tweaking its interface (pair down features, enhance visuals) or creating a new platform and migrating users.

Digital Roundup | Lancôme Digital Moves, Online Fashion Store, Young Car Buyers, Online Wine Sales, Digital Credit Card

A roundup on how digital is transforming our life and business – both in China and the rest of the world through March 24th.

Lancome Digital Reward Elite Program
Lancôme Ramping Up Digital Initiatives


Lancôme is ramping up its digital efforts with a pair of digital initiatives designed to draw in new consumers. The Lancôme Elite Rewards program is based on a social media model — in addition to purchasing product, members can earn points by connecting with Lancôme USA through social media, whether it’s uploading a glammed-up Instagram selfie to show off a new Rough in Love lipstick using a specified hash tag, watching makeup tutorials on lancome.com or checking in at a Lancôme beauty event on Foursquare. A simple dashboard accessible through lancome-usa.com helps members track and manage their points earned in real time.


14 Online Fashion Stores, from Cheap to Couture, for Hong Kong Shoppers

By TechInAsia

Hong Kong is known for its shopping and for being a hip and fun place – yet it’s still surprising just how many diverse and awesome online shopping choices there are in the city. There’s a funky mix of Hong Kong-based tech startups and fashion labels that are doing interesting things with ecommerce. Many of them not only sell in Hong Kong but have also expanded across the region. Plus, this list will also look into some big-bucks ecommerce companies that are accessible to clothes shoppers in the territory.


China’s Idealistic Young Car Buyers Demand Eco-friendly Options


Car buyers in China are getting younger, and the young will soon be the dominant players on the car-buying scene, according to a recent Chinese market survey. In addition to impacting how cars are marketed in China, it may also impact how they’re made: the findings show that more young car buyers are concerned not only with the performance of the cars, but also with their environmental and health aspects. To understand the young people’s car purchasing decisions and what influences them, Chinese social network RenRen teamed up with Chinese auto site Chewen.com and global information company Nielsen.


How the Internet is Boosting Foreign Wine Sales in China

By Red Luxury

According to a report published by Bordeaux Management School in France, 27 % of wine sales in China last year were made over the internet. By contrast, online sales accounted for only 8 to 10% of wines purchased in Europe and just 2% in the United States. On Singles Day on November 11, in a 24-hour period, Chinese importer Summergate Fine Wines sold over 100,000 bottles. Wine sales worldwide total more than $5 billion every year. Last year, California exports to China reached $35 million, an all-time high that ranks the state as the fifth-largest export market. Amazon has also capitalized on the trend, and began to offer wines from California through its Chinese portal last October; over half of the initial online sales went to Shanghai.


Chinese Central Bank Calls Off Digital Credit Card Business

by Technode

The People’s Bank of China (PBOC), the Chinese central bank, reportedly released a notice to suspend the digital credit card businesses together with mobile payment services enabled by scanning the QR codes (source in Chinese). Despite the innovations in QR code payment technology, it also brings information and capital security concerns for the customers. Virtual credit card is still a pre-matured business in terms of user identification and capital security, according to the PBOC. The heat for digital credit card business was at full strength in Chinese Internet arena last week as both AliPay Wallet and WeChat Payment, the mobile payment arms of Chinese Internet giants Alibaba and Tencent, announced they planned to explore this sector together with China CITIC Bank.

Infographic – 2013 Year in Review for China’s TMT industry

After a year that saw the burgeoning entrepreneurship cutting across China in 2011 and a following year that tasted the backlash in 2012 — painfully leads to the termination of venture capital spree in addition to the shutdown of innumerable failures, we are now at the end of 2013 and looking back at a year which is neither so good nor so bad for Chinese Technology, Media & Telecommunication industry.

IPO Window Reopens | Breakthroughs that set for changes | 2013 goes down as the most active for Internet M&A | Xiaomi becomes a cult | Lei Jun, starts a business at 40 | 2013 is a lost year in terms of creativity and innovation.

TECHNODE 2013 Year in review

Source: TechnodeL

China Digital Roundup | Google Glass, eBay’s Online Mall, WeChat, Alibaba

A roundup on how digital is transforming our life and business – both in China and the rest of the world through January 24th.

L'Oreal Matrix Google Glass

L’Oreal’s Matrix Offers Stylist’s-Eye View with Google Glass

By BrandChannel

Google Glass may still be a novelty of sorts for just about everyone outside its “Explorer” program, but that’s not stopping global beauty brand L’Oreal from incorporating the futuristic specs into its personal care brands. According to Retailing Today, L’Oréal subsidiary Matrix is using Google Glass to help teach hairstylists how to do better work. Called “Matrix Class for Glass,” the initiative will include blogger video series, a salon professional education platform, and an app that “will house an exclusive library of content that can be downloaded by consumers and professionals.”


eBay said to open online mall to lure fancy brands


Word has it that eBay has plans to open an online marketplace that caters to various brands, according to The Wall Street Journal. Rather than using the eBay moniker, this site is said to be called “The Plaza.” On “The Plaza,” it’s said that brands will be able to sell directly to consumers — just like with eBay — but won’t have to be listed next to second-hand items or possible knock-offs. It said that with the rumored online mall, merchants could sell their goods through eBay but not have “to worry about weakening their brand.”


Next WeChat 5.2 update show LinkedIn integration and a makeover for Android

By Tech In Asia

China’s most popular messaging app and social network WeChat’s upcoming version 5.2 update will likely come with LinkedIn integration and a new interface for Android users, according to Pingwest. The following screenshots come from a private beta version, so the updates aren’t final, yet. This is a major move early in LinkedIn’s official Chinese career, especially since it doesn’t even have a Chinese-language site yet. LinkedIn first revealed it had plans to officially expand to China last week when the professional networking site announced it hired a new president for LinkedIn China in the form of Derek Shen. Company shares rose strongly on the news.


Alibaba on Tour: the China’s Tech Giant draws a crowd in Amazon and Microsoft land

By GeekWire

Alibaba may not be a household name in the United States yet, but the company is a giant in China — with a dominant e-commerce platform, growing cloud computing system, smartphone operating system and even a finance business. It’s sometimes described as Amazon, PayPal and eBay combined, with a bit of Google thrown in for good measure. And the company is widely expected to make a headline-grabbing IPO this year. So we jumped at the opportunity to sit down with Wang Jian, Alibaba’s chief technology officer, as part of a visit by some of the company’s top executives to the Seattle region this week.


Asians spend 257% more on brands they follow online

By Red Luxury

A new study from Waggener Edstrom Communications found that Asian consumers spend up to 257 percent more on brands they follow online. “This study shows that in 2014 digital-driven brand storytelling is central to successful communications. Consumers want to be engaged by brands online,” said Matthew Lackie, Senior Vice President at Waggener Edstrom. “We are seeing that B2B and B2C companies will be rewarded in 2014 with larger spends, engagement rates, and higher levels of brand advocacy when they provide their audiences with great content.”

China Digital Roundup | Personal Care, Wearable Device, 3D Printing, Social Media

A roundup on how digital is transforming our life and business – both in China and the rest of the world through January 17th.

Digital Inception Review

17% Personal Care Brands Have Mobile-Optimized Sites in China

By Luxury Daily

Half of the mobile sites examined in L2′s latest China report offer click-to-call customer service and a quarter provide one-click email for customer service. L2′s Personal Care China report asserts that the fragmented digital landscape, big investments and the need for localized marketing has forced several personal care players to resign their efforts in China. For the brands committed to navigating the densely forested paths to consumers, L2 argues that digital is the clearest avenue available.


China now has half a billion mobile web users, 618 million total internet users

By Tech In Asia

Here are the latest figures from the China Internet Network Information Center (CNNIC) for December 2013. They show strong growth from the agency’s last report midway through 2013 when we saw that China had 591 million internet users and 460 million mobile netizens. The number of mobile web users has more than doubled from the end of 2009 when there were only 233 million accessing the web via phones. China’s smartphone boom – there are about 270 million active Android users in the country right now – has surely caused a big bump in mobile web browsing in the past few years.


This Bracelet Knows When You’ve Had Too Much Sun

By Fast Co

Introduced at this week’s Consumer Electronics Show in Las Vegas, Nevada, the June may look like a bracelet you’d buy at Claire’s, but it’s actually a fashionably designed wearable that measures exposure to the sun. Made by Netatmo and designed by Louis Vuitton and Harry Winston collaborator Camille Toupet, the June syncs over Bluetooth to a paired iPhone, where an app tells you how much sun you’re getting based upon readings from the bracelet’s photovoltaic gem, and then recommends sunglasses, a hat or a specific sunscreen based upon the measurements. While Netatmo’s June might seems like a gadget for outliers, it actually represents an important step forward. It’s wearable tech that someone might buy for looks alone, not giving a damn about how “smart” it is.


3D Printing is Starting to Revolutionize the Fashion Industry


Will the 3-D printer replace the sewing machine as the favored tool of fashion designers? In recent months, 3-D-printed clothes and accessories have shown upon Project Runway (a contestant printed belts), the actual runway (Dutch designer Iris van Herpen’s 3-D-printed collection called Voltage) and on the Neiman Marcus website (which sells 3-D pieces such as Bathsheba Grossman’s sculptural stainless steel orbs). A few days ago, 3-D-printed fashion had perhaps its biggest moment when CBS broadcast the annual Victoria’s Secret Fashion Show. Model Cara Delevingne walked the runway in computer-generated angel wings, while Lindsay Ellingson was outfitted in a corset, bustle and arm pieces intricately designed to look like snowflakes.


The Need to Address China Social Media Differently

By Fast Co

A brand or a company venturing online in China better not do so in the way they would in the West. Expect participation and engagement. Both positive and negative. Produce quality content or engage in a smart way and people will respond with a host of likes, comments and re-posts. Whole debates might rage, prompted by your video, infographic or picture. The research company Altimeter recently mapped China, followed by Indonesia, Philippines, Vietnam and Malaysia, as the most engaged online populations in the world. The U.S., UK, Germany and France were significant laggards by this measure.


Photo courtesy: L2

Infographic – Global Digital Statistics 2014

Let’s start the new year by looking at the big picture – at the world’s wired citizens and what they’re doing on the web. A new 180-page slideshow has been created showing all the facts and stats we have so far on Earth’s 2.5 billion web users. Let’s look over some Asia-related highlights:

  • There are now 1.86 billion active social network users around the world.
  • Across Asia, 635 million people have mobile data subscriptions so that they can go online on their phones.
  • Southeast Asia is the most mobile-centric area of the continent, with a 109% of mobile penetration rate.
  • Southeast Asia and South Asia have internet penetration rates below the world average of 35%.
  • Boosted by China, East Asia’s internet penetration rate is above average, at 48%.
  • 3 of the top 10 social networks (by active usage) are messaging apps: WeChat with 272 million active users; WhatsApp with 400 million; and QQ with 816 million. China’s Tencent owns both QQ and WeChat.

An Eye on China

With so many people fascinated by China’s fast digital growth, let’s look more at the latest China figures.

World web user facts for 2014 slide 01

World web user facts for 2014 slide 02

World web user facts for 2014 slide 03

World web user facts for 2014 slide 04

World web user facts for 2014 slide 05

Source: We Are Social

China Digital Roundup I Apple, Tmall, Fan BingBing, LightInTheBox

A roundup on how digital is transforming our life and business – both in China and the rest of the world through January 10th.

Apple aims for more Chinese customers with a new e-store on Alibaba’s Tmall, by Tech in Asia

Apple Store tmall Premium Brand

Apple has opened an official web store on Tmall, Alibaba’s “online mall” for brands and big-name merchants, reports the Wall Street Journal. Accessible at apple.tmall.com, the new online storefront marks Apple’s first foray into setting up an e-store outside of its online Apple Store.

What’s the significance here? For one thing, it’s a sign that Apple is directly utilizing yet another sales channel through which it can reach Chinese consumers. Last December it finalized a massive deal with domestic telco China Mobile, and it will cut the ribbon at a shiny new Apple Store in Beijing today.


Fan Bingbing’s potent ‘Star Effect’ worth $74 million on Taobao, by JingDaily

Fan Bingbing Taobao iron man

Brands such as Louis Vuitton, Chopard, Cartier, Mercedes-Benz, Adidas, Moët & Chandon, and L’Oreal knew what they were doing when they hired actress Fan Bingbing (范冰冰) as their celebrity brand ambassador: a report last month by online retail giant Alibaba’s Taobao revealed that the Iron Man 3 star has generated US$74 million (RMB450 million) in e-commerce revenue.

Showing that “star effect” is actually quantifiable, the e-tailer released its list of the most lucrative brand ambassadors generating income for the site in 2013. According to the report, Fan easily topped the charts. The ranking was calculated by taking into account the name keyword searches that brought in the most revenue, along with the total sales revenue of each brand with a celebrity ambassador, according to Taobao. Unsurprisingly, her largest influence was in the areas of women’s dresses, handbags, high heels, and sunglasses.


Try on virtual makeup and pay with your hand with Retail Tech at CES 2014, by Brand Channel

ModiFace Makeup Mirror

Traditionally the International Consumer Electronics Show (CES) is an event that offers a glimpse of the future in technology from a consumer perspective. CES 2014 is no different—but it wasn’t just a glitzy keynote by Yahoo CEO Marissa Mayer that was creating buzz. Also on display were several technological innovations that suggest a whole new retail world is right around the corner.

The latest innovations are: “3D Augmented Reality Makeup and Anti-Aging Beauty Mirror” by ModiFace, The Biometric Scanner by PulseWallet, the virtual currency BitCoin and the tracking technology iBeacon by Apple. This is just the beginning of a brave new retail world—and consumers have yet to weigh in on just how much technology they want to help them shop.


China’s LightInTheBox acquires Ador, the Seattle-based social commerce site, by Tech in Asia

Ader LightInTheBox social ecommerce

LightInTheBox, the China-based e-commerce and sourcing company, has acquired Ador, the Seattle-based social e-commerce startup, for an undisclosed sum. The Lockerz team then launched Ador last April as a site where users could follow celebrities and models, track what they wear, and then purchase goods from retailers that provide Ador with a cut.

The acquisition is quite an interesting one. Ador appears to be in a state of constant transition, and a relationship with LightInTheBox – which, as a business and a brand, is pretty far from a sexy social e-commerce firm – will likely bring about further changes in its business model. Meanwhile, LightInTheBox can leverage Ador’s expertise in social and its existing partnerships with US retailers to move beyond its reputation as a seller of high-quality, inexpensive Chinese goods. In addition, the Ador team’s experience at Amazon will bring along knowledge and industry connections.


China Luxury Trends for 2014, by Red Luxury

China Luxury trends

China is a country in constant change. The rate of change related to anything China has been phenomenal, presenting both challenges and opportunities for luxury companies who want to part of this promising market.

Despite a much-reported growth ‘slowdown’ and political upheavals, China’s growth will continue. We expect Chinese luxury consumers’ desire for less conspicuous consumption and unique experiential pursuits to gain further momentum this year. Other trends to watch in 2014 include:

E-Commerce/M-Commerce Becoming the Norm – Lower Tiered Cities Become Major Battlefield – Research & Purchase Model Is Here to Stay – Growth of “Lifestyle” Brands – Shift from Rapid Store Expansion to Improve Store Productivity – Second Hand Luxury Boom – China to Become Greener.