Inside Story

China’s first top-100 global brand?

Four hundred million people have downloaded WeChat, a quarter of them outside China. And the figures are growing daily, reports James Leibold

James Leibold 25 August 2013 1198 words

Overtaking Facebook: WeChat founder Pony Ma.
TechCrunch/ Flickr

ALTHOUGH China is the world’s second-largest economy, 94 per cent of Americans can’t identify a single Chinese brand. In fact, there isn’t one Chinese company among Interbrand’s 2012 list of the Top 100 Global Brands. But is this set to change?

In recent months tens of millions of people around the world have downloaded the instant communication app, WeChat, which allows users to send multimedia messages over their smartphones for free. Even Kevin Rudd has an account.

Last month I joined the crowd. Remarkably intuitive and aesthetically pleasing, WeChat helps users stay in touch with friends and family across the globe. And, unlike other internet apps, WeChat doesn’t seem to be impeded by the Great Firewall of Chinese censorship.

As of August, nearly 400 million people (or 27 per cent of all smartphone users) had downloaded WeChat, making it the fifth most popular smartphone app in the world – more popular than Twitter and Skype, and gaining quickly on Google Maps, YouTube and Facebook. Yet, unlike these Silicon Valley titans, WeChat is a product of China.

When Apple CEO Steve Jobs died in October 2011, Chinese and foreign analysts alike dismissed the possibility of China producing a similar visionary. “Is there going to be a Steve Jobs in China?” the normally chest-thumping Communist Party mouthpiece, the Global Times, opined at the time. “Probably not in the near future” was its answer. Others agreed, according to an article in Caixin magazine, with 92 per cent of respondents to one survey (admittedly by an unnamed company) seeing little chance of a Jobs-like figure in China over the next twenty years.

China’s authoritarian political culture, naysayers have long argued, stifles the freedom and openness required for genuine entrepreneurial innovation. This country might be the “world’s factory,” but media censorship, poor protection of intellectual property, and the sort of corruption and cronyism that undermines genuine market competition means iPads and iPhones are assembled in China rather than designed here.

After Jobs’s death, the former head of Google in China, Kai-Fu Lee, joined others in arguing that China’s educational system also played a role in discouraging creativity, innovation and the willingness to risk failing. Chinese kids spend so much time memorising characters and exam answers that they literally don’t have time to “think outside the box.” Rote learning undermines the curiosity, critical thinking and rebelliousness essential for success in today’s globally networked society.

Yet WeChat’s creator, Pony Ma (Ma Huateng), was educated in China, not Silicon Valley. The forty-one-year-old founder and CEO of the Shenzhen-based Tencent Holdings built WeChat – or Weixin (“micro-message”) as it is known in Chinese – on the back of Tencent’s extremely popular QQ instant messaging platform. In April 2012, Weixin was rebranded WeChat and Ma announced his intentions to spread the app’s influence far beyond China’s nearly 600 million internet users.

Not much more than a year later, WeChat is available in eighteen different languages, with over one hundred million registered users outside China (a figure that doubled in only three months). WeChat is already the leading social networking app in several Southeast Asian countries, and is growing rapidly in other parts of the world, including Australia and the United States. Tencent recently appointed Lionel Messi as WeChat’s global brand ambassador, launching a range of print and television ads featuring the popular Argentine football star using the app.

While few outside China recognise the name, Tencent is now the world’s fourth-largest internet company. Its US$87 billion market capitalisation is only US$3 billion shy of Facebook’s.

Some industry insiders believe that Facebook, not to mention China’s leading social networking site Sina Weibo, are looking vulnerable as internet usage and social networking traffic becomes increasingly mobile. Apps like WeChat, which were specifically designed for smartphones, have the innovation edge.

Originally a free SMS service, WeChat now features a range of communication and entertainment tools. It allows users to send free voice or text messages over WiFi, share photos and weblinks with friends, and even connect with nearby users. I found over a hundred WeChat users within a 500-metre radius of a popular Beijing Starbucks. The latest Chinese-language version offers a new mobile payment and social gaming component, as well as heaps of the emoticons that many texters love.

According to Tencent, one of WeChat’s distinguishing features is its privacy. Operating on a secure, closed-loop network, WeChat IDs and conversations are not searchable via the internet and groups and contacts are by invitation only. “We are committed to protecting your privacy,” WeChat’s Privacy Statement reads, “while providing you with the products and services that serve your needs.”

Are Western consumers willing to entrust their personal data to a mainland Chinese company, though? Despite WeChat’s phenomenal rise, Chinese firms still face significant hurdles in “going global,” as Huawei, Chinalco and other Chinese companies have already discovered in Australia and elsewhere. Political concerns often follow Chinese enterprises overseas like an unwelcome shadow.

Most of us understand the limits of online data security even if we do little to guard against breaches. But how many of us are willing to place our personal information, photos and conversations on servers located in China? Tencent is subject to the same censorship and security laws as other Chinese companies and WeChat has shown a willingness to block some sensitive keywords for its users in both China and abroad. As Yahoo! China discovered when it was forced to hand over personal data on its Hong Kong–based servers in 2006, the Chinese party-state cares little about privacy when its own interests are at stake.

In fact, WeChat’s continued success is dependent on the Chinese Communist Party’s good graces. In December 2012, party secretary Xi Jinping toured Tencent’s headquarters and praised the app’s successes in “bringing China’s internet industry to the world.” But he also warned that companies like Tencent have a crucial role to play in providing the government with advice on how best to employ the internet as an effective tool of “social management,” especially when coping with “emergency vents” (tufa shijian), that is breaking news or mass incidents that can quickly spread throughout networked communities online.

Unsurprisingly, Chinese activists like Hu Jia have stopped using WeChat, as they believe their accounts are monitored, and there are several cases of Tibetan activists being detained based on evidence from their WeChat accounts (although it’s unclear whether the information came from confiscated mobile phones or electronic monitoring).

No technology is entirely safe, and the average WeChat user is more interested in what the app can do for them than what others can do with their personal information. If WeChat becomes China’s first global brand, it will reveal as much about youth attitudes towards privacy and information-sharing online as about the changing dynamics of China and its global reach. •