With more than 1.2 billion monthly active users in China, WeChat has changed the way people live their daily lives. What began in 2011 as a humble messaging up -similar to WhatsApp-, has since morphed into a multidimensional platform that offers its members a simple yet highly effective way to take care of most everything, from hailing a taxi to paying bills, transferring money, getting movie tickets, or reading news, among many other things.
WeChat, or Weixin as it is called in China, has redefined the laws of gravity in the app world. No other application has been able to expand its user base at such mind-blowing speed and with such efficacy.
The number of WeChat subscribers surpasses the estimated 1 billion Chinese internet users, and out numbers the population of the European Union (at 448 million).
The number of Monthly Active Users (MAU) has been steadily increasing. As of September 2023, WeChat has 1.671 billion monthly active users worldwide. In 2022, that number reached 1.541 billion. This represents a substantial year-on-year (YoY) growth of 8.43%, or an increase of 130 million MAU compared to last year.
The number of WeChat MAU is predicted to increase by 15.49% between 2023 and 2025, which means 1.93 billion monthly active users by 2025 worldwide.
WeChat Work, also known as WeCom, is a remote working solution created by Tencent, and it has 102 million active users as of 2023, representing an 11.5 million increase or 12.70% growth from the previous year. By 2025, it is estimated it will reach 125 million users.
After China, the next most extensive user base is in Malaysia, with 12 million users, representing 0.71% of all WeChat, followed by India, with 10 million, and Russia, with 9.5 million users. In the United States, WeChat users account for 4 million as of 2023.
Tencent, parent company and creator of WeChat
Tencent, a world-leading internet and technology company founded in 1998, with headquarters in Shenzhen, China, is the creator of WeChat. Though it may not be widely known outside China, Tencent is the largest gaming company, as well as one of the world’s most valuable companies with a market value of US$ 372 billion, as of October 2023.
The popularity of Tencent in China rivals that of Amazon and Meta in the West. In addition to its 1.2 billion WeChat users, Tencent has its own music app with 604 million monthly active users. The annual revenue of WeChat was US$17.49 billion.
The WeChat Universe and its services
No longer is WeChat just a basic chatting app. The platform includes all the everyday essentials in the interface of a single app. By linking a WeChat account to a bank card, users can order taxis, buy airplane, train, and movie tickets, book hotels, pay utility bills, transfer money to other users, top-up cell phone accounts, and manage personal finances.
The app also offers a searchable news feed-like interface, called Moments, for tracking updates of individuals and organizations, and much like Facebook, users can also subscribe to specific accounts for updates.
WeChat users are now sending an average of 45 billion messages per day. Additionally, the platform facilitates approximately 410 million audio and video calls daily. These figures indicate that WeChat’s usage has increased sixfold compared to 2016.
The application has become a significant rival to Snapchat and YouTube, with users uploading 68 million videos every day. Although it still has a way to match YouTube’s 300 hours of uploaded video content per minute (as YouTube does not disclose such data), video content has undoubtedly become one of the platform’s most popular offerings among its diverse services.
According to WeChat statistics, 21% of users open the app more than 50 times daily and 60% of users use WeChat almost ten times a day, which represents an impressive engagement rate.
Chinese WeChat subscribers do not need to take their wallets when they leave their homes. Over 900 million WeChat Pay accounts are active, with restaurants, clothing stores, and street food vendors, and use QR codes to replace cash and bank cards. Handheld machines once used for swiping cards now come equipped with a barcode and QR code scanner.
Even smart watches can display the WeChat personal QR code, allowing payments to happen from the simple flick of a wrist. Digital payment by WeChat has become far more popular than other digital currencies (such as bitcoin), causing a shift in financial behaviors as Chinese surge from a cash and bank card society to a dependence upon personalized barcodes.
Experts at the McKinsey Global Institute estimate that the transition from cash and card to digital payments will increase GDP in developing economies by 6 percent before 2025, adding US$3.7 trillion and approximately 95 million jobs to the global economy.
According to Statista, the total transaction value in the global digital payments market is projected to reach US$9 trillion in 2023. Of this, the Chinese digital payments market is expected to account for the world's highest accumulated transaction value of US$3,639 billion.
The apps created by Tencent and Alibaba (AliPay) have supported further social development by creating online markets for agricultural goods, enabling service providers to engage with their users, and raising funds to support humanitarian assistance programs such as drought relief in South Africa or earthquake recovery in Sichuan province.
Foreign companies which seek to expand their business in China, often overlook the power of the country’s biggest social network. After WhatsApp, it is also the second largest messaging platform in the world. International firms tend to prefer more traditional marketing vehicles and miss the opportunities offered by this exciting global application.
The power of WeChat, the second largest app in the world
Many companies view WeChat -mistakenly- as just another messaging app. The beauty of WeChat is that it combines the functionality of Instagram, Facebook, WhatsApp, Uber, Monzo and every retail app all rolled into one ‘super app’. It is designed as a one-stop-shop for the end-user and provides the ideal online environment for brands to get noticed in the Chinese market.
Some of the most popular applications in China, including Pinduoduo, JD.com, DiDi and Meituan, all have mini programs on WeChat. Tencent takes a small slice of revenue from each of these mini programs, and also provides the payments platform.
As the platform operator, Tencent can see which programs are the most popular. It has become one of the largest investors in China, second only to Sequoia China, and alongside hundreds of stakes in Chinese startups it also has shares in Snapchat, Fortnite and Tesla Motors.
WeChat is the only app in China to have over one billion active users and is one of only five apps in the world which have surpassed that milestone. WeChat Pay, which was built using the framework of Tenpay, has over 900 million users and has supplanted AliPay as the most popular payment service in the country.
Here are 5 reasons why it is crucial to include WeChat as a part of any marketing strategy in China:
More than 1.3 billion regular users. As the largest social media platform in the country, WeChat represents an opportunity for your company to connect with the Chinese consumer market. Its demographic is young urban residents who typically make the most online purchases, are the most internet-savvy and have an increasing level of disposable income. WeChat is an integral part of their daily lives and will allow you to get their attention.
No other social platform offers a better way to connect with your target audience Based on their users’ browsing history or location, WeChat allows you to create content and target it to specific consumers who subscribe to your company. This is the first and most important step to get your services or products in front of the right customers. The platform offers two different account types for businesses: Subscription or Service. Subscription allows you to push regular content and notifications which are displayed in a sub-section for users who subscribe to your account. The Service option is more advanced, and your content will reach your subscribers’ main ‘Moments’ feed (such as the Newsfeed feature on Facebook). Luring users to subscribe to your account is essential for success. Many businesses extend exclusive WeChat offers just for their subscribers. Because there is a much stronger culture of sharing posts in China, producing the right content will lead to greater rewards.
Direct communication with consumers and real-time feedback One of WeChat most interesting features is its ability to allow followers and brands to have a direct channel of communication. This type of personalized interaction between vendors and buyers ensures greater consumer satisfaction. When companies present their new products on WeChat, they can get immediate feedback from users who will be happy to share their honest opinions and first impressions. This will allow your company to collect valuable data for marketing purposes. When it comes to data analysis and metrics there is a wealth of information to draw on to improve your marketing strategy with customer insights, traffic figures, click through rates and impressions. Customer service can be offered as well on WeChat through individual and group chats. Offering this service will greatly improve your reputation as it is the most convenient method for customers to contact you.
Offline to online leads convert more easily E-commerce companies can establish a digital ‘Micro Store’ where users can explore and find out about different products within the app and make purchases in just a few clicks using their WeChat wallet. Online shopping could not get any easier. QR codes are also widely used in China and with just a quick scan, anyone who comes across your brand in the physical world will be connected to your WeChat account, and thus your Micro Store, within seconds. Ensuring your QR code is visible on all your product packaging, in-country stores, and your other online presences, is essential to engaging Chinese consumers. WeChat is built around the scanning of QR codes to access content and for users to add one another.
WeChat users can be found all over the world WeChat has expanded its reach beyond China, reason enough to get your attention. According to experts, there are over 300 million WeChat users outside China and the company is actively working on adding more in markets such as India, Southeast Asia, and Latin America. The system currently supports over 20 different languages, and this number is set to grow in the future. WeChat gives brands the chance to develop their e-reputation and visibility in new markets on an unprecedented scale. Using it to engage with consumers in their own language is the most effective way to rapidly generate new leads digitally.
However, because of its size and scope, it can be difficult for new companies to enter the WeChat universe. But once you are in it, as a new business you can sell, market your products, offer customer service and engage in promotions all on one single platform.
The first step is setting up an official service account, which will allow you to promote content, attract followers and link your account to a ‘mini site’ hosted within the WeChat app itself. Developing this Mini Site is essential for the presentation of company information, products, and services.
The app is fondly referred to as the ‘WeChat Times’ because so many Chinese people use it as source of information, and even treat it as a search engine. It is important to develop good Mandarin Chinese content that is aligned with your brand but tailored for the end user. Quality content can drive a lot of traffic to your account.
Chinese users who embrace capitalism as a popular philosophy, appreciate businesses that market themselves on WeChat and other social media platforms. ‘Social Commerce’ in China has taken off with a hub of innovation in this field. In China, social media has embraced e-commerce as a powerful ally.
Influencers or KOL’s (key opinion leaders) are another key element in the WeChat universe. These individuals have a large follower base and are regarded as an expert or authority on a particular subject. Recruiting KOL’s to represent your brand can be a powerful way to tap into large, engaged communities focused around a specific area of interest.
It is important to produce the correct content for a KOL, manage the promotion of the post and up-rank it for increased visibility. Users will often comment on the post asking for more information, and you cannot expect a KOL to be your customer service representative.
When done correctly, WeChat can become a powerful business ally in China. But its digital ecosystem is a complex one, and you may want to consider partnering with a specialist to maximize the benefits of this platform.
WeChat as a payment system for foreigners
To attract international travelers, WeChat recently started allowing foreign customers to link their international credit cards to the application. Tencent is collaborating with financial service providers such as Mastercard, Visa and Discover Global Network, to facilitate transactions for foreign clients.
Since 2019, WeChat Pay allows operations with international credit cards in specific sectors. However, with this additional service, tourists will be able to utilize WeChat Pay and link their international bank cards to make purchases at millions of merchants.
Foreign customers will also benefit from fee exemptions for small international card transactions below RMB 200 (US$27.82).
The Chinese government is interested in improving mobile payment solutions for tourists and increasing their convenience in making payments ahead of major events. Since the 2022 Beijing Olympic Winter Games, authorities have encouraged domestic payment service providers to collaborate with overseas card issuers within legal and regulatory frameworks to offer mobile payment services to visitors.
Large numbers of travelers are expected for various international events in 2023, such as the Chengdu FISU World University Games and the Hangzhou Asian Games. Tencent’s expansion of the WeChat Pay merchant network will significantly enhance the mobile payment experience for foreigners, further promoting China as an attractive destination.
Foreign visitors can easily set up WeChat Pay on their WeChat app once they arrive in China and link their international credit or debit card to their account.
Six types of documents are accepted to open a WeChat Pay account, such as passport, foreign permanent resident ID Card, Mainland Travel Permit for Hong Kong and Macao Residents, Mainland Travel Permit for Taiwan Residents, Residence Permit for Hong Kong and Macao residents, and Residence Permit for Taiwan residents.
Foreigners opening a WeChat Pay account do not need a local phone number to receive the verification code, during the configuration process. A password is necessary to ensure the security of the account. Once the process is complete, visitors can start using WeChat Pay with their foreign card.
Transaction fees will be waived for small operations. For transactions above RMB 200 (US$27.82), a 3 percent transaction fee is charged. In the event of a refund, the fee will be reimbursed proportionally based on the amount.
The exchange rate is calculated based on the rate of the card and the issuing bank.
There are some limitations customers should know about when using a foreign card with WeChat Pay. Currently, foreign cards are restricted to daily consumption transactions, and do not support special features like red packets (a kind of monetary gift used during holidays or special occasions in China) and direct transfers.
There are also certain transaction limits when using foreign cards through WeChat Pay. The maximum amount for a single transaction is RMB 6,000 (US$834.75), with a monthly cumulative limit of RMB 50,000 (US$6,956.23) and an annual cumulative limit of 60,000 (US$8,347.48).
Alipay, WeChat Pay’s competitor, offers a similar international card service in terms of recommended usage scenarios, transaction fees, and exchange rate calculations.
However, WeChat Pay has expanded its support for international card types by adding JCB cards, while Alipay does not offer this option. Additionally, when it comes to transaction limits, Alipay allows a maximum of RMB 3,000 (US$416.88) per single transaction, whereas WeChat Pay allows up to RMB 6,000 (US$833.76) per transaction.
The popularity of a cashless society is one of the most important key factors that has reshaped the payment landscape, as well as a thriving e-commerce market in China.
China’s path has been different than those countries, which underwent a gradual transition from cash to credit cards before embracing mobile payments. Credit card use in China, particularly for e-commerce, is relatively low compared to other forms of payment.
The widespread availability of QR codes in China has played an important part in facilitating fast and convenient mobile payments.
Alibaba and Tencent are also responsible for the shift away from cash through the introduction of AliPay and WeChat Pay. Both applications offer users an easy and convenient payment experience, which facilitates the purchase of services and goods both online and offline.
While both platforms offer comparable functionalities to cater to the needs of international users in China, they employ slightly different approaches to enhance the payment experience.
WeChat Pay’s upgrade is specifically created for foreign users in China, offering access to millions of merchants across various sectors. By allowing international credit or debit card linkage, Tencent aims to simplify payment processes for travelers and expatriates.
In the past, foreign visitors had difficulties navigating the complexities of setting up Chinese bank accounts to access mobile payment services. International credit or debit cards were also restricted.
After three years of COVID isolation, China has reopened its doors and is trying to attract foreign tourists. The country is working to provide a welcoming and convenient environment for visitors, making them feel at ease during their stay.
No end-to-end encryption and privacy concerns
One of the biggest disadvantages of using WeChat is the risk users face when it comes to data collection and privacy. WeChat security, like that of many other social apps, does not require end-to-end encryption. As a result, information that is shared between the two parties does not remain between them. WeChat is known for collecting user data, which raises privacy concerns.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms. Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
Can Woodburn help you? We are offering a free 30mins call where we discuss the obstacles you are encountering on your China business journey and how we can help accelerate your success.
DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.