WeChat, China’s most popular social media and messaging service, has launched a new bid in Europe and the US to develop its payments offering and win new advertisers.
Owned by Tencent Holdings, in which South Africa’s Naspers has a 34% stake, WeChat is looking to launch an office in the UK and another European country, alongside its existing presence in Italy.
Tencent, which has an established office in San Francisco, is also looking to grow its WeChat team in the US, targeting advertisers and payments providers.
“We needed to make a step closer in serving European brands,” said Tencent Europe director Andrea Ghizzoni.
WeChat, which also hosts payments and brand pages, has more than 889m users in its home country, yet remains largely unused outside of its home country.
It is not the first time WeChat has attempted to win over Western users. In 2013, the app hired soccer star Lionel Messi in a high-profile campaign outside of China. “There were lots of downloads” of the app, said Ghizzoni. “However, stickiness was slow.”
WeChat is now focusing more on business-to-business, encouraging Western brands to sell products on the WeChat platform. The service is courting “high-value” brands in countries like the UK and Italy, Ghizzoni said. Burberry and Chanel are already high-profile clients on WeChat’s platform.
In Europe, the focus is first on fashion and luxury goods, and will in time expand to travel and broader retail services. WeChat is hoping its expansion in Europe will convince more high-profile brands onto the platform, not only to reach consumers in China, but also Chinese tourists visiting Europe.
Goldman Sachs estimates that 220m Chinese tourists will travel overseas by 2025, up from 120m in 2015.
“Tencent could be following Chinese travellers to Europe and the US, as many of these consumers are going overseas for shopping,” said Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service. “It would make sense for brands to advertise on WeChat which is a large and effective platform.
Tencent’s payments business is booming, as its average daily transactions topped 600m a day in December. Chinese consumers are using the service to pay for everything from ride-hailing to food takeout.
But while WeChat has been one of the leading providers in offering chat-based payment systems, its global competitors have been ramping up the competition.
Facebook, which owns WhatsApp, has been expanding its payments offering within its messaging apps, while Alibaba Group’s finance affiliate has been busy pushing Alipay in Europe. In August, Ant Financial, Alipay’s parent, announced a partnership with Ingenico, a French payments group, to allow Chinese tourists to pay for goods in Europe via the group’s e-wallet platform.
“We are talking to different payments institutions in Europe,” said Ghizzoni, “in order to integrate them into WeChat.”
Ghizzoni flagged the UK’s high-profile payments industry as a major reason for setting up in the country.
“Tencent could be trying to do what Alipay is doing,” said Sun, “but there’s much more uncertainty in terms of when the business could take off, as it would need to overcome many regulatory hurdles.” — (c) 2017 Bloomberg LP
