WeChat: Dominant in China, but Not Abroad
A few months ago, The Economist published an article titled WeChat’s world: China’s WeChat shows the way to social media’s future. WeChat is a messaging app that is extremely popular in China but not other parts of the world; in this article, the author argued that it represents the future of social media in that it allows a user to navigate his or her day with only a smartphone. Users in China can use WeChat for both business and pleasure — just a few of its myriad functions include free video calls, a QR code scanner, and the ability to book taxis and pay bills. An app that is as all-encompassing as WeChat currently does not exist in the West — for example, for me to be able to do all of the above functions that I just listed, I would have to open up Facetime/Skype, a QR code scanner-specific application, Uber, and the Citibank app.
However, WeChat has not had success abroad due to competitors like Facebook, which have strong network effects. Because the vast majority of users in the West (Facebook is blocked in China) are dependent on Facebook to communicate with their friends through sharing statuses and direct messages, it is extremely difficult for WeChat to break into the market and reach its “tipping point”. The concept of a tipping point was discussed in class — essentially, it is the point past which the product will become extremely popular, and below which the product will grow less and less popular. One advantage that Facebook has is path dependence — because it is well established, it has the benefit of path dependence in that users will prefer to stick with Facebook unless WeChat demonstrates that it is significantly better in some way to pass its tipping point and convince users to switch. However, based on the benefits described in this article, if WeChat ever managed to gain a foothold in the United States, it is possible that it could reach its tipping point due to the many options it offers its users. WeChat has already tried one way of passing its tipping point — it ran ad campaigns featuring a celebrity soccer player, Lionel Messi, which were meant to generate buzz. Other routes that it could take include offering users discounts on products within the application or free trials on paid services to convince users to try out the application, both discussed in class as effective ways to push a product past its tipping point. However, one concern that the widespread adoption of WeChat would raise is privacy. The combination of functions that WeChat provides necessarily means that it has a vast amount of customer data, which could be extremely dangerous if leaked. Furthermore, there could be temptations for WeChat to sell its customer data to companies that are looking to target specific segments of the market.
Link to article: http://www.economist.com/news/business/21703428-chinas-wechat-shows-way-social-medias-future-wechats-world