When it comes to China, the country, the market and the impact and potential of social media and social commerce there, we all understand it’s pretty big. The actual dimensions and some of the intricacies, however, are not so easy to grasp. As we further enhance and expand our global social intelligence supply chain, understanding the Chinese social media and social commerce ecosystem is critically important.
On Friday last week, the Chinese ecommerce company Alibaba had its widely reported record-breaking $25bn IPO on the New York stock exchange. On the first day of trading, shares went up 38% from the initial price of $68 per share. At almost $94, the company had a market capitalization of $231bn – behind Google and Microsoft, but ahead of Facebook, Amazon and Tencent – another Chinese company.
“Chairman Jack Ma”, the founder and CEO of Alibaba, is now the richest man in China. His Alibaba Group (which gets described as a mix of Amazon, eBay and PayPal, and which, with a sales volume of $248bn in 2013, grossed more than Amazon and eBay combined) could now become “the World’s largest retailer by 2016.”
Tencent Holdings is Alibaba’s big local rival. Traded at the Hong Kong stock exchange, with a market cap of around $150bn, Tencent is tipped to be a strong competitor in mobile commerce, not least through its ownership of WeChat. Both Alibaba and Tencent were founded just over 15 years ago, within months of each other – by Jack Ma and “Pony” Ma Huateng, respectively. The two are not related. Together with Baidu (the ‘Chinese Google’), they make up the BAT triad of Chinese internet giants. German newspaper Die Zeit recently described an internet future of “shopping with Alibaba, searching with Baidu, and chatting and gaming with Tencent.”
W2O Group’s original analytics models and solutions for global social intelligence were focused on the global footprint of Facebook and Twitter, and we also have taken into account additional channels such as YouTube and Instagram. But things are a little different in China (or in India, or in Russia – to name but a few more very distinct markets).
Access to Google, Facebook or Twitter in China is highly restricted. However, there are more Internet users in China than the population of any country in the world, with the exception of India. More than 600m Internet users make a huge market, and yet that is an Internet penetration of still less than 50%. Mobile penetration is more than 90%, with more than 1.2bn subscribers.
From the outside, China is a marketplace of contradictions: on the one hand highly regulated by central government, on the other hand commercially confident and innovative. As social commerce evolves into mobile social commerce, China will lead the way. Not just because of the sheer numbers, but also – in fact mainly – because of its ability to pragmatically disrupt the market (something that we always regard with admiration).
To understand the disruptive, innovative drive, and the differences in scope, adoption, adaptation and development speed in social and mobile commerce between China and the West, a comparison between WhatsApp and WeChat is instructive. WeChat (or Weixin) is a “Chinese version” of WhatsApp. As Baidu is Google, and Sina Weibo or Tencent Weibo are Twitter, and YouKu is YouTube, and Renren is Facebook (the list continues).
WhatsApp was founded in 2009 in the US, has 600m active users and was bought by Facebook for $19bn earlier this year. WeChat was founded in 2011, is part of Tencent Holdings, has 440m active users and is said to be worth at least three times what Facebook paid for WhatsApp.
What makes WeChat so much more valuable? Where WhatsApp is a modernized mobile version of MSN Messenger, WeChat is a mobile and social commerce platform. Users can send messages and play games, but they can also book taxis, shop online, buy and sell shares through the app.
While social commerce is still a relatively new concept in the West (and W2O Group is actively involved in broadening and deepening understanding and application through the Center for Social Commerce at Syracuse University’s Newhouse School of Communication), it has become a natural way for Chinese netizens to conduct their day-to-day activities through their mobile phones. While in the West, we create funny lists of “life hacks”, Chinese consumers are shaping mobile technology, transactions and interactions to disrupt and reshape the global business ecosystem.