Pivot to We Chat

Christopher Williams

During a conversation that I had with a New York City electrician, I said to him that the technology that I see my students use on a daily basis in Guangzhou is more advanced than what most of their American peers are using.  For example, I described to him that robots deliver food to the student’s dormitories. I added that many of my students do not carry cash or even an ATM bank card because they simply scan a bar code using the QR reader on their phones to make payments for goods or services.  The technology that I am referring to is We Chat, the Chinese App that has over 1.17 billion users worldwide.

            We Chat is a multipurpose messaging, mobile payment and social media platform that was developed by Shenzhen based Tencent in 2011.  We Chat’s rise over the past decade has been a phenomenal success because it coincided with the explosion of e-commerce, of goods and services over the Internet.  We Chat’s growth and popularity would not have been possible without the rapid development and affordability of smart phones in China.  Approximately 800 million own smart phones in China and that number increases each day.  The sale of millions of these devices, however, would not have been possible without the great economic transformation of China. 

            I explained to the electrician that Facebook is popular with Americans because it is a social media platform and messaging system which allows friends, family and businesses to communicate with each other.  Facebook has a live feed where users can stream video.  Millions of people upload pictures and videos of themselves in various activities ranging from the mundane to the political.   We Chat also has these functions.  However, what makes We Chat strikingly different from Facebook is its broad range of e-commerce options and other payment features. 

            Once a user downloads We Chat onto their cell phone, they will have to bind their We Chat account to their cell phone number.  Similar to the purchase of the cell number, users must verify their identity with either a Chinese nationality card or in the case of foreigners a valid passport.  It is the binding of the user’s bank account card to We Chat and the phone number that activates We Chat Wallet. 

By establishing this connection people can engage in a wide range of commercial activity ranging from the purchase of products at a supermarket to high speed rail tickets, domestic or international flights.  We Chat can also be used to pay for buses, subways and taxis rides, along with a host of other services including hospital visits.  The operation of We Chat Wallet also enables the user to either receive or send money to another person or business.  Note that all payments or purchases via the We Chat platform are made exclusively in renminbi (RMB), the official currency of the People’s Republic of China. 

            One of the powerful aspects of We Chat’s Wallet is its convenience.  Before the advent of We Chat Wallet, if a person wanted to purchase a train ticket home, they had to either go to the train station or to the travel agency to book the ticket.  I recall seeing long lines of people snaking around the Guangzhou Rail Road Station, especially as the Spring Festival approached.  We Chat Wallet drastically changed this practice as millions can now make these purchases from their smart phones.  So ubiquitous to China is We Chat in daily commerce that even street performers and beggars use it to collect donations. 

            Another intriguing aspect of We Chat is that is used across all social classes and demographics.  For example, farmers use it to sell vegetables along roadsides and in markets in towns and cities across the length and breadth of China.  In many ways, We Chat Wallet has become a kind of bridge connecting isolated rural communities through an electronic stream of commerce.  

            Considering the staggering amount of daily e-commerce that is conducted via We Chat, it is understandable why Facebook is pivoting in that direction.  Facebook which has 2.8 billion users globally sees a vast ocean of potential consumers.   Early efforts for payment by Facebook began with its Messenger service and continued with the acquisition of Instagram and What’s App. The launching of Facebook Pay in 2019 is the latest effort to capture some of this on-line consumer market share. 

Since Facebook has approximately 2.45 billion active monthly users, it sees the potential goldmine of transactions that could take place even with just a small percentage of this base.   With the rapid development of the Internet over the past two decades, along with the recent arrival of 5G, it looks like Facebook is heading in the right direction as it pivots towards We Chat.