 |
| Matthew Brennan |
 |
| William Bao Bean |
Bean: One of our companies, OCheng, is applying AI to WeChat commerce. WeChat service accounts are allowed to send a message to their followers once a week. OCheng can take customer relationship management data, look at the content people are engaging with, their purchase history, etc., and use machine learning to personalize these weekly messages. Instead of sending one message to a million people, you can send a million messages that are unique to each user every week.
eMarketer: Is this process entirely automated?
Bean: The content has to be written around the products the marketer is pushing that week. But the way the messages are written and the offers that are being shown to each person are personalized through automation. And when users write back, an AI-assisted chatbot can answer their questions. You not only have personalized content going to each user, but you can also have one-on-one conversations with WeChat users without a human, or you can have a chatbot and human working together.
eMarketer: What types of brands are working with the tech?
Bean: The Richemont Group, Dunhill, Macallan and Sephora are some of the brands that are leveraging this type of technology to drive higher sales. It’s not some pie-in-the-sky platform for them—it’s about dollars and cents, and there’s real ROI [return on investment].
eMarketer: Is it easier to achieve this on WeChat than Facebook?
Bean: You can do a lot more within WeChat because it’s a more open platform than Facebook. A lot of the techniques you use on WeChat you can also use on Facebook. Facebook should start catching up, but the difference is how the two platforms make money. WeChat makes money on transactions, whereas Facebook makes money on ads. Facebook wants to capture ad revenues, whereas [WeChat parent company] Tencent wants to capture the commerce aspect. Marketing is important, but the opportunity to capture a percentage of the transaction as opposed to a percentage of the marketing budget is a bigger opportunity over time.
eMarketer: In what other areas is machine learning being deployed to improve marketing outcomes?
Bean: Influencer marketing is big in China. Influencer platform Robin8 uses machine learning and natural language processing to analyze the content that key opinion leaders [KOLs] push out, and then analyze the impact—who’s engaging with that content. Robin8 can do end-to-end attribution from KOLs all the way through to purchases on WeChat. This gives marketers an idea of what kind of content from which KOL works with different types of users, and they can optimize their KOL buy.More in eMarketer.
 |
| Matthew Brennan |
One of the app’s most popular features is WeChat Pay, a mobile payment service. WeChat Pay has “grown organically from micropayments to offline payments” as phones have replaced wallets in major Chinese cities, according to Matthew Brennan, WeChat expert and founder of the platform’s largest marketing conference. WeChat is betting on its nearly 200 million WeChat Pay users to expand its ecommerce services to include full-fledged mobile banking, a potential threat to state-owned and traditional banks.
With a vast amount of data at stake, critics have often called WeChat’s privacy policies into question. According to Brennan, “In terms of government access to data in China, there’s government access if they [the government] request such access.” This policy applies not only to WeChat, but also to other Chinese platforms. However, Tencent is more restrictive than many U.S. technology companies in sharing data with third parties, such as marketers.
Furthermore, user data from WeChat app usage outside of China is routed through servers outside of the Chinese mainland, and therefore does not fall under Chinese legal jurisdiction.More in Harvard Political Review.
|
| Matthew Brennan |
In early January 2017, with much fanfare, WeChat officially launched its Mini Program platform. While the market questioned their necessity at first, they started gaining momentum in the second half of the year.
Confident in the future of Mini Programs, Matthew Brennan, WeChat expert and founder of China Channel, explained, “Mini Programs are finally starting to deliver on the hype, and the mission is ‘let’s kill Taobao’.”
He went on, “The Mini Program framework is starting to supercharge WeChat ecommerce by taking away all friction and making the entire buying experience virtually the same as Tmall. What’s more, brands can control the experience and they are not ranked next to their competitors.”
In the past, brands entering China either had the option of building their own ecommerce platform or opening a store on a third-party ecommerce platform such as Taobao or JD.com. However, neither option was ideal.More at the JingDaily.
 |
| Tom Doctoroff |
All three Chinese companies on the top 10 brands list are technology related, with the music app NetEase Cloud Music coming in at No. 10, the global branding and marketing consultancy Prophet said on Thursday as it unveiled its 2017 brand relevance index for China.
“Chinese consumers today live, work and play in a connected, digital world, so the brands that deliver useful, easily accessible and enjoyable experiences are going to be the most relevant to their lives,” said Tom Doctoroff, a senior partner at Prophet.
The rest of the list is dominated by brands that include Ikea, Apple, Nike, Estee Lauder, BMW and Marriot hotels.
The consultancy surveyed more than 13,500 Chinese consumers in 39 cities on the mainland about which among 235 household brands in 30 industries were most relevant to them this summer...
“Overall, the relationship between digital and individual in the West is significantly more functional,” Doctoroff told the South China Morning Post in Shanghai. “But In China, where ambitions are huge but social regimentation keeps people from [expressing themselves or] realising their ambitions, people project a lot of their emotions onto their digital selves.
“So that’s why I think these tech brands are all so rich and meaningful for people – it is not just an utilitarian, convenient relationship,” he said.
More in the South China Morning Post.“There is no way in America that you are going to have PayPal [the western equivalent of Alipay] to rank No. 1,” Doctoroff said, stressing the more apparent emotional connection between tech brands and Chinese consumers.
 |
| Matthew Brennan |
A few days ago a small but potentially important new change on WeChat was quietly released without any official announcement (to date). There’s now finally a way to get around WeChat Pay’s yearly balance transaction limit and it seems that this is now WeChat’s first serious move to promote WeBank, which makes it a big deal...
WeChat Pay currently has a yearly user balance transaction limit of 200,000 RMB (roughly 30,000 USD). For power WeChat Pay users and small businesses alike, this limit has caused some pain. Yet in the past few days, it seems a small but potentially important new change on WeChat was released without any fanfare..
This new move is just one of the recent ways that WeChat Pay is trying to make up ground with Alipay in terms of providing mobile financial products and services by leveraging WeBank. Another big one is WeChat’s Lingqiantong 零钱通 feature which allows users to earn daily interest on the balance left in their WeChat wallet, a very similar feature to Alipay’s massively successful Yu’e bao 余额宝....
Bye, bye traditional banks. We don’t need you anymore. WeChat and Alipay control the relationship with the customer. They find smart ways to incentivize users to open up accounts at their own internet banks and link those up instead.More at the China Channel.
 |
| Shaun Rein |
Ant Financial and Tencent, which according to iResearch make up the lion's share of China's 22.7 trillion ($3.4 trillion) mobile payment market, have just completed a weeklong battle in which they dished out generous incentives to lure users to their payment systems.
Ant said in a statement that it will comply with the requirements of the central bank. Tencent said it will cooperate with regulators and other relevant parties to build a justified, fair and source-sharing platform for a nonbank payment network.
"Online payments generate a significant amount of data that payment firms can use to their benefit," said Shaun Rein, managing director of China Market Research Group.
More in the China Daily."The government should really step up to limit their power and ensure financial security."
 |
| Matthew Brennan |
From Alibaba’s perspective, it’s more appropriate to define the initiative (to go international) as the globalization of Ant Financial’s whole financial ecosystem, of which Alipay is just one part, according to the Ant Financial spokeswoman. Ant Financial expects half of its users coming from overseas market in the future four years, local media has reported (in Chinese).
On the other hand, social networking and gaming giant Tencent is also trying a similar path with investments in Australia-based cross-border payment startup Airwallex, shortly after Tencent co-founder Zeng Liqing invested in RoyalPay, another Aussie cross-border payment service April this year.
“Both Alipay and WeChat Pay are going after tourists first… In stage two, they will open up local wallets to enable peer-to-peer transactions within the local economies. That’s quite ambitious because there’s a lot of regulations,” commented Matthew Brennan, co-founder of China Channel.
“In order to enable that, they have to partner with local companies. It is a slow process in most places. In many countries, I think it’s most likely impossible. Tencent has local wallets in South Africa and Hong Kong. They are able to do it in South Africa because of Naspers, which is a key investor in Tencent. The same for Hong Kong as its so close to China. But every other country is challenging for them,” he added.More in TechNode.
 |
| Matthew Brennan |
Matthew Brennan, who tracks WeChat’s changes at China Channel, points to the success of Honor of Kings as an example of WeChat’s indirect influence on Tencent’s revenue growth. “When you go into the game, it becomes all about playing with your WeChat friends, and looking at their scores and achievements,” he says. Honor of Kings is currently ranked the top-grossing game in China’s iOS App Store(registration required), and four other Tencent titles fill out the top 10.
The categories Tencent uses for revenue do little to help with a simple but perplexing question: How much money does WeChat actually make for Tencent? Many analysts believe the short answer to be: not much in the past, but that will quickly change...
Brennan, pointing to WeChat’s low take on payments (Stripe and PayPal each charge about 3%) and its aggressive discounts, speculates it’s a loss leader. Tencent executives, meanwhile, have downplayed its role in making money for the company. “We consider payment at this point in time as to [sic] infrastructure service rather than a service that generates profit for us. And I think that status will maintain for quite some time,” said Lau when Tencent reported on the final quarter of 2016...
Brennan agree(s) that while WeChat’s direct contribution to Tencent’s growth has been minimal to date, that will likely change as soon as next year. If revenue growth from smartphone games plateaus, the company will then roll out ads and payment-related services more aggressively. That means that Tencent’s enormous valuation—approaching $400 billion—will likely only get bigger.More at QZ.
|
| Matthew Brennan |
The main concern is that Tencent may have ceded too large a lead in the race to Ant Financial, whose Sesame Credit has had 2.5 years to gain ground in the marketplace, particularly since Alibaba is the bigger player — with 53.7 percent of China’s mobile payments market to Tencent’s 39.5 percent.
But Tencent, whose payments services have until now been largely limited to small transactions in convenience stores and peer-to-peer lending, has spent much of the last 12 months upping the level of its game and has signed up many new retailers to its payments platform, including Starbucks.
Matthew Brennan, co-founder of tech consultancy China Channel, says the credit scoring play is the next natural move if Tencent wants to continue to bring the competition to Ant Financial and its leadership position.
“Tencent obviously wants to change that, and they need to build up infrastructure to compete with Alipay’s more mature offering,” he said. “Credit scoring is an essential part of that.”More in Pymnts.
|
| Matthew Brennan |
Ant Financial and Tencent could both potentially surpass credit card companies like Visa and Mastercard in total global transactions per day in the coming year, as they offer merchants a cheaper and more accessible QR-based option that is more desirable than a more costly upgrade to payments terminals for cards.
That nearly ubiquitous presence among merchants online and off in China’s major retail sector has lead to an incredibly mobile-dominated marketplace full of some very loyal customers.
At present, according to analyst Matthew Brennan, Alipay and WeChat Pay collectively control some 67 percent of the Chinese payments market in major cities — compared to Union Pay’s 22 percent and cash’s 11 percent.
Apple Pay, which launched in China over a year ago? Less than 1 percent. And not for lack of trying or interest. Apple went into the market with an alliance with Union Pay — the nation’s only state-backed issuer of six billion cards that are accepted at major retail stores all over China. They also enlisted participation from 19 Chinese banks, including its four largest. They even managed to get three million customers to link their cards to an Apple Pay account within the first two days the service was available.
Full speed ahead? Not so much — it didn’t even make so much as a ripple in the marketplace. According to Brennan’s data, 67 percent of store clerks have no idea how the service even works — and built in, smartphone-based payments tools are an order of magnitude less popular among Chinese consumers than app-based systems that use the more understandable and accessible QR codes.More at Pymnts.
 |
| Matthew Brennan at the EU Parliament |
Matthew Brennan, Co-Founder of China Channel, explained the potentialities of digital marketing in China.
“If one is to understand China’s digital ecosystem, one needs to understand the phenomenon of WeChat. WeChat is not social media. It is not, as many people put it, China’s version of WhatsApp. WeChat is a tool, an operating system which integrates all different functions of life.”
In order to attract Chinese tourists, Europe needs to become smarter and link to the very tools used by Chinese travelers, such as e-wallet solutions like WeChat Pay and Alipay, online booking apps like Ctrip and Dianping, and leading mapping platform Baidu Maps.More at the China-EU newsletter.
 |
| William Bao Bean |
Born on January 21, 2011, WeChat now boasts 846 million monthly active users and is unquestionably the number one platform to consider when entering the China market. However, with slowing user growth, it is quickly becoming a red ocean with companies fighting harder to attract customers.
“WeChat used to be an easy way to acquire users. It’s now much harder to get users to follow a WeChat public account. They are overloaded with great content and spam marketing content. WeChat is maturing,” says William Bao Bean, managing director of Chinaccelerator, an accelerator based in Shanghai.
Aiming for “user acquisition cost zero,” Chinaccelerator has experimented WeChat public account as a marketing tool for its fresh born startups on Batch 10, leveraging high quality content, growth hacking, and conversion.
William was the first one to tell TechNode the phenomena of startups leveraging WeChat to slash marketing cost last year. However, more recently, he says that putting all your marketing focus on WeChat could be risky.
Instead of solely relying on WeChat, each company in Batch 10 companies used 10 to 15 different platforms, including Miaopai, Douban, and Zhihu to acquire users. Fashion e-commerce startup Fashory, from Chinaccelerator’s recent Batch 10 used 12 Chinese and international social networks, including Baidu Tieba, Keep, Momo, Facebook, and Snapchat to attract users.
More in TechNode.“WeChat is a closed network, meaning, you need a lot of friends to effectively expose your business. However, when you see other Chinese social networks, like Douban and Zhihu, it’s open platform, and you can get instant exposure,” founder and CEO of Fashory Emmy Teo said. Fashory made 250,000 RMB (36,000 USD) in sales, with over 500 transactions in the fourth week of November.
 |
| Shaun Rein |
About 200 million consumers use Weixin Pay and Alipay, the system owned by Alibaba Group Holding Ltd.’s financial affiliate, at physical stores because of the ease and speed at which consumers can make purchases. Some overseas retailers have balked at digitized transactions because of costs involved in changing payment systems and concern that data collected could breach customer privacy.
“Accepting mobile payment would unlock massive value for Starbucks,” said Shaun Rein, managing director of China Market Research Group, in an interview. “Since they couldn’t move customers through the line faster, they were losing 5 to 10 percent of business.”...
For giants like Starbucks, which is opening stores in China at the pace of more than one a day, the concern was over safeguarding the data of its customer base, said China Market Research Group’s Rein.
“A lot of chains are concerned about too much user-data controlled by Alibaba,” he said. “It’s their customers, but now all the data goes to the mobile payment providers. There are concerns about confidentiality.”More in Bloomberg.
