If Chinese Tech Trends Point to Future Shifts in Western Markets, Here's Where You Should be Investing
I read an interesting tweet stream on the weekend which suggested that the most significant threat to the market dominance of Facebook and Google may actually be the evolution of Chinese apps like WeChat into offering payments and credit, thereby streamlining direct commerce.
It’s not the first time this has been suggested, through varying approaches, and it got me thinking about what the chances of such a shift could be – and in particular, whether usage trends among Asian users tend to translate to western regions.
The most obvious example here is Facebook’s push to diversify Facebook Messenger. Facebook’s been fairly overt in their use of Chinese messaging apps as inspiration for their Messenger push - as Stan Chudnovsky, the recently appointed head of Facebook Messenger, explained to Wired back 2015.
"What's happening in Asia is an inspiration - and not only WeChat. But that's more about proof of what's possible. It's proof that everything starts from a conversation. There were 2,000 years when everything happened through a conversation, then a blip when the web came out when behavior was very structured - you'd go to websites, look for things to buy, and it was straight-up merchandising when you'd assume there were no human beings behind it. In Asia, the conversation was never removed. That's why people are discovering the world through those apps."
The Messenger team has sought to both acknowledge the inspiration and broaden its terms, so that their modeling's not seen as a direct copy. But the logic here is fairly obvious - in China, WeChat has become the must-have app, with more than 83% of all smartphone users in the country also being active users of the messaging app.
But it’s not just messaging – through WeChat, users can do their banking, pay their bills, pay for goods in-store, shop online. The app has become the Swiss Army knife of digital connection, and given the popularity of such varied applications in the world’s most populous nation, it makes sense that Facebook would want to use this as the template for their Messenger business push – especially given the rise in messaging app use in recent times.
Through Messenger and WhatsApp, Facebook's perfectly placed to transition users into that next phase of broadened messaging use, and with almost three billion cumulative users across the two apps, and growing, you can see why they’re so keen to fill Messenger up with a range of business options.
But so far, users haven’t warmed to such tools. The addition of Messenger bots – of which there are now more than 300,000 - hasn’t changed the way most people interact with the app, while Facebook’s also now looking to scale back the amount of options available in Messenger due to concerns of user overwhelm.
While the logic of the endeavor is sound, users in western markets, at least at this stage, haven’t adapted to business via messaging apps the same way that Chinese users have. The question then is will they ever? And how will that impact Facebook’s broader growth plans?
Another interesting example here is live-streaming. A few years back, Facebook was crazy for live-streaming, pulling out all stops to jump onto the rising trend, sparked by the arrival of the now defunct Meerkat.
But it wasn’t just Meerkat that piqued Facebook’s interest – in China, live-streaming is doing huge business – as reported by the South China Morning Post (in December):
“The [live-streaming] industry has seen explosive growth in the last two years, with the number of platforms growing to more than 100, while revenue surged from just 7.4 billion yuan (US$1.1 billion) in 2015 to 20.8 billion yuan in 2016, according to iResearch, which also forecasts it will more than double to 43.2 billion yuan in 2017.”
It didn’t quite hit that predicted high, but live-streaming revenue in China did reach $US4.75 billion in 2017, a huge amount – and that revenue is raised through a range of methods, but mostly through donations to streamers through stickers and other “digital gift-giving” methods.
Given this, Facebook’s sudden enthusiasm for live-streaming makes sense – but again, we haven’t seen the same take up in western markets.
Another example - QR codes. Despite limited interest in QR codes, social platforms keep bringing them out, keep introducing new QR code tools.
Guess where QR codes are popular?
As per CNN:
“In China, QR codes are everywhere - used by major retailers, street markets and even beggars and buskers.”
For whatever reason, cultural and societal trends don’t always translate, and while it may seem obvious to jump onto such shifts and get ahead of the next wave, these examples suggest that it may not always be viable.
Or western users just might not have caught up yet.
This is the key question – are Facebook, and other providers, misguided in looking to push Asian market trends in western regions, or are they simply too far ahead of the game for us to realize that they'll become far more significant offerings?
And if so, should businesses be planning to adopt such tools in anticipation of the next consumer shift?
Definitely, Facebook is still proactively moving on such options – just this week The Social Network announced plans to roll out WhatsApp payments in India, despite many of their partners being unprepared for the launch. Facebook’s concerned about the possibility of competitors getting in first – and that’s an expensive push to make, which would suggest that their concerns have solid grounding. Indeed, Ant Financial Services Group, the operator of China’s biggest online payment platform Alipay (owned by Alibaba Group), recently closed its latest funding round, which could signal their next big push.
It’s interesting to note such shifts, and consider what they mean for the future of digital trends.
Also, one other key area of interest, particularly in regards to Facebook’s future plans – China leads the world in virtual reality adoption.
We’re not seeing these trends translate across the Pacific as yet, but that doesn’t mean we won’t.
Evidently, Facebook’s still confident their time will come – and if they’re right, these will be the areas worth investigating.
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