If the rumour mill is right and Facebook acquired WhatsApp as a tactic to enter China, Facebook has spent a lot of money (reportedly US$19 billion) on a gamble that looks unlikely to pay off.
Could the rumour mill have a slight case of Chinese whispers? It seems more likely Facebook’s strategic acquisition of WhatsApp is proverbial fireworks to block foreign competitors such as WeChat stepping onto Facebook’s turf—the western social-media landscape.
Mark Zuckerberg isn't planning to enter China, he’s planning to defend his social empire from the onslaught of Chinese brands that develop social channels better than he does. Experts have missed the point. The big question they should be asking isn’t 'Which brand is taking on China?' It's 'Which Chinese brand is taking on the World?'
Let’s take a step back.
强龙难抵地头蛇: This Chinese saying nicely describes the mobile Instant Messaging (IM) competition faced by WhatsApp in China. Translated crassly, it means, 'The foreign dragon will not survive the local snakes.'
Why? WhatsApp is not a preferred IM service for the Chinese. It’s that simple.
Could Facebook build its popularity to a dominant position? Unlikely. There is no denying WhatsApp is an international stronghold of IM, but its functionality limits its potential to dominate in Mainland China. It just doesn’t have enough to offer when compared to Chinese-derived IM platforms.
Without a doubt, WeChat is now dominating Mainland China’s mobile IM market. WeChat’s rapid user growth, particularly in 2013, has seen its user base grow to more than 400 million users. And counting. The platform is greatly supported by Tencent group resources and boasts high levels of consumer understanding. It’s considered not only a social communication tool but also a lifestyle extension tool. This is important for marketers.
WeChat offers a richer experience for consumers; it’s a playground of potential for creative brands. if you'll allow me to tout my own agency for a moment, look at the work Razorfish created with Lays for the ‘Who’s your Flavourite?’ campaign. We used WeChat to culturally connect with our audience, it became a personal interaction platform for user-generated plot and character builds. This responsive scripting allowed the brand to develop webisodes of plots co-created with consumers. We're proud of the sky-high engagement rates we achieved during that campaign.
In comparison, Facebook resources for WhatsApp seem disconnected to support expansion among the Mainland China market. And let’s face it, localisation is always a headache for global Internet players marching towards the East. The marketing approach of WhatsApp in China is quite subtle and low-profile at present. Will that increase after the acquisition? Is a partnership possible with local players for a big landing? We’ll need to wait and see.
Local challenges in China’s IM market
Similar to the WeChat business model, Japan’s Line (‘Lianwo’ in Chinese) is booming because of its unique emotional catch. Line’s stickers, games, and Korean entertainment elements are very popular attractions among Chinese consumers right now.
Also, there is never a lack of competition from Chinese local players. Alibaba, the biggest e-commerce group in China, has already launched its own mobile-based IM app, called Laiwang. China Telecom also cooperated with Netease to come up with Yixin. Neither has reached the same level of influence as WeChat yet, despite big data resources from e-commerce and telecom territories.
Opportunity lies in differentiation
Constant change is a unique feature of China's social-media channels, starting from SNS to weibo to WeChat. Chinese consumers are unique in the way they are open to accepting new platforms with unique features and positioning.
But that’s a lot of noise: More functions are constantly being integrated, creating a more commercial environment and a more complicated experience. WhatsApp may have an opportunity to thrive by pursuing “simplicity”, offering a platform where consumers can come back to basics, purely for connecting socially.
Although Facebook is inaccessible in Mainland China, other mobile-based experiences, such as Instagram, have gained popularity and also shared similar user profiles. The cross linkage between those mobile functions may be a unique differentiation point for these social networks to land more Chinese consumers.
JK Shen is senior vice president with Razorfish China