Starting mid-2021, commuters in Hong Kong can scan a barcode to enter the subway turnstile through WeChat Pay, the digital wallet linked to Tencent’s popular messaging app. That’s a year behind Alibaba’s payments affiliate Alipay, which claims to enable QR codes for MTR in mid-2020.
Both Alipay and WeChat Pay are making this scan-to-ride option available to visitors from the Chinese mainland and Hong Kong residents.
Hong Kong has become a testing ground for the Chinese e-wallet titans going global due to the city’s geographic adjacency and cosmopolitan population. Its market of 740 million people also offers growth potential as mobile payments adoption is still nascent. In a survey conducted by the Hong Kong Productivity Council, only 30 percent of the respondents said they had paid with mobile devices, while most locals are accustomed to credit cards and cash.
By contrast, 92 percent of China’s 970 million mobile users have paid on smartphones, according to a July report from consulting firm Ipsos.
Cracking the Hong Kong market isn’t easy. For years, locals have used the stored-value Octopus card to pay for everything from MTR rides to convenient store purchases. The card system, which is 57.4 percent owned by MTR, claims to cover 99 percent of the city’s population.
Time will tell whether the payments newcomers could replicate their success in their neighboring city. On the Mainland side, WeChat Pay took off after a series of marketing campaigns that involved users fighting for cash-filled digital packets on WeChat. Alipay, on the other hand, traced much of its success to its ties with Alibaba’s ecommerce platforms, which don’t accept WeChat Pay.
In Hong Kong, the rivals have introduced redeem programs and shelled out generous subsidies to vie for shoppers. AlipayHK said in June that it crossed 1.5 million users, up from one million in March. WeChat Pay Hong Kong is keeping mum about its user base but a company executive said in November that the wallet scored more than ten times growth in transactions over the past year.
Since its entry into China in 2016, WeWork has extended from four to around 60 locations across the country’s megacities like Shanghai, Beijing, and most recently, Shenzhen.
That’s one-sixth of WeWork’s 360 locations worldwide. It’s also equivalent to what WeWork has achieved in its early five to six years globally, Sern Hong Yu, regional head of project delivery at WeWork China, said at TechCrunch Shenzhen recently.
“Next year, it will be even faster,” he added, without revealing the exact number of offices that will open.
The executive confirmed that China will be one of WeWork’s fastest growing region and much of that boom will come from the rising number of enterprise clients.
While the coworking titan strives to redefine office spaces for old-school companies, these larger corporations are presumably a more reliable income source than long-shot early-stage startups.
But Yu said WeWork is also supporting nascent companies. The office operator runs a program called WeWork Labs that gives startups discounted desk space, an educational program, and mentorship without taking stakes in them.
The incubator is just one facet of WeWork’s expanding ventures. It’s been keen to distinguish itself from a pure coworking space. Besides offices, it manages a raft of ventures around the world that include shared apartments, wellness complexes, and even wave pools, all based on the tenet of “make a life, not a living.”
When it comes to China, WeWork says this package of services could help combat the country’s notorious “996” work regime, an acronym short for working from 9 am to 9 pm for six days a week.
“A lot of people like the [WeWork] workplace so much that stay longer than usual,” Yu said. “But in the meantime, we do remind them of the work-life balance.”
The American giant envisages a future where it exists in every other block down the street. But it has some serious contestants in China.
UCommune, which rebranded from UrWork after WeWork sued it over the name similarity, is one of them. The rival is founded by Chinese real-estate veteran Mao Daqing and claims to operate more than 200 co-working spaces across the world, most of which are in China.
You may not have heard of ByteDance, but you probably know its red-hot video app TikTok, which gobbled up Musical.ly in August. The Beijing-based company also runs a popular news aggregator called Jinri Toutiao, which means “today’s headlines” in Chinese, and the app just assigned a new CEO.
At a company event on Saturday, Chen Lin, an early ByteDance employee, made his first appearance as Toutiao’s new CEO. That means Toutiao’s creator Zhang Yiming has handed the helm to Chen, who previously headed product management for the news app.
Zhang’s not going anywhere though. A company spokesperson told TechCrunch that he remains as the CEO of ByteDance, which operates a slew of media apps besides TikTok and Toutiao to lock horns with China’s tech giants Baidu, Alibaba, and Tencent.
The story of ByteDance started when Zhang created Toutiao in 2012. The news app collects articles and videos from third-party providers and uses AI algorithms to personalize content for users. Toutiao flew off the shelves and soon went on to incubate new media products, including a Quora-like Q&A platform and TikTok, known as Douyin in China.
The handover may signal a need for Zhang to step back from daily operations in his brainchild and oversee strategies for ByteDance, which has swollen into the world’s highest-valued startup. The company spokesperson did not provide further details on the reshuffle.
Toutiao itself is installed on over 240 million monthly unique devices, which makes it a top news aggregator in China, according to data analytics firm iResearch. TikTok and Douyin collectively command 500 million monthly active users around the world, while Musical.ly has a userbase of 100 million, the company previously announced.
Toutiao’s success has prompted Tencent, which is best known for creating WeChat and controlling a large slice of China’s gaming market, to build its own AI-powered news app. Toutiao’s fledgling advertising business has also stepped on the toes of Baidu, which makes the bulk of its income from search ads. More recently, Toutiao muscled in on Alibaba’s territory with an ecommerce feature.
At the Saturday event, Chen also shared updates that hint at Toutiao’s growing ambition. For one, the news goliath is working to help content providers cash in through a suite of tools, for instance, ecommerce sales and virtual gifts from livestreaming. The move is poised to help Toutiao retain quality creators as the race to grab digital eyeball time intensifies in China.
Toutiao also recently launched its first wave of “mini programs,” or stripped-down versions of native apps that operate inside super apps like Toutiao. Tencent has proven the system to be a big traffic driver after WeChat mini programs crossed two million daily users.
Lastly, Toutiao said it will take more proactive measures to monitor what users consume. In recent months, the news app has run afoul of media regulators who slashed it for hosting illegal and “inappropriate” content. Douyin has faced similar criticisms. While ByteDance prides itself on automated distribution, the company has demonstrated a willingness to abide with government rules by hiring thousands of human censors and using AI to filter content.
Renren, which was once heralded as the ‘Facebook of China’ and later became China’s answer to MySpace after falling out of fashion among its core young users, is selling its social networking business.
Renren’s parent company Beijing Qianxiang Wangjing has agreed to sell all tangible and intangible assets of renren.com to Beijing Infinities Interactive Media, according to a statement. As part of the deal, Qianxiang will receive $40 million worth of shares in Beijing Infinities, a $700 million firm that owns one of China’s major IT news sites DoNews.
“I am happy to find a home for renren.com,” says Renren’s chairman and chief executive officer Joseph Chen in the statement.
The social network won’t be foreign to its new home. On the list of the buyer’s shareholders is Oak Pacific Holdings, which Chen and James Liu, Renren’s executive director and chief operating officer, control.
Once a highflyer in China’s PC era, Renren’s prospects have faded as it fell behind peers like Tencent and Weibo in the mobile space. Its stocks hover around $2 today, compared with its spectacular moment at $84 when it debuted on the New York Stock Exchange in 2011. That put its market cap only behind Tencent and Baidu. Renren says it plans to remain listed in the US after disposing of its social networking arm.
Shedding its social network legacy, the company says, will allow it to focus on the more promising ventures. In recent years, Renren has diversified into areas outside the social space, including a used car platform in China, US-based transportation network Trucker Path, and a SaaS business in the US. The auto unit has been a key revenue driver, accounting for more than 90 percent of its total revenues in Q2 this year, a spike from 60 percent throughout 2017.
Renren has also been a prolific startup investor with a portfolio valued at $500 million (paywalled) after deducting debt, according to the Financial Times. The company was also mulling an ICO earlier this year but reportedly shelved the plan after talks with Chinese regulators.
A glorious past
These days, Chinese youngsters hang out on WeChat, QQ, Weibo, and increasingly Douyin – TikTok’s China version – but back in the PC days, teens and college students flocked to renren.com.
Like Facebook, Renren started from the dorm rooms at China’s top universities. Its founders aptly named it “Xiaonei”, which means “on campus”, when they started the site to target student users in 2005. Among its early founders was Wang Xing, who would go on to launch Meituan Dianping, a neighborhood services provider that has blossomed into a $300 billion giant listed on the Hong Kong Stock Exchange.
A year later, Chen bought out Xiaonei and merged it with his own Xiaonei rival. He later renamed the new entity to Renren, which means “everybody”. The social network flourished and got a further boost after China blocked its American competitor Facebook in 2009.
In its heyday, Renren had over 100 million active users. Today, it’s more like a time capsule, but its once loyal users haven’t erased it from their memories. In August, Renren staged a marketing stunt that got waves of internet users reminiscing their good old days on the site. Topics ranged from how they played browser games together and sent anonymous notifications to crushes. But the excitement was transient, and people soon resumed their routines on the mainstream social apps of 2018.
Renren has not mentioned plans to close down its forgotten social network, so users can still log in whenever they feel nostalgic, safe from the agony that their Path counterparts had to go through when the latter recently shuttered.
Chinese consumers were quick to adopt digital payments, and a recent shopping binge showed they are ready for another leap: biometric payments.
On November 11, Alibaba wrapped up Singles’ Day – the world’s largest shopping event – and hauled in $30.8 billion in total transactions, a staggering amount bigger than Cyber Monday and Black Friday combined.
Instead of frantically inputting payment passwords to grab deals, Chinese users jumped on new technologies to shop in the blink of an eye. This year, 60.3 percent of Singles’ Day customers paid either by scanning their fingerprint or taking a selfie.
That’s according to Alipay as it collected the data for the first time. The Alibaba affiliate digital wallet handles online and offline transactions for 870 million users around the world and its close rival WeChat Pay, the payment method that runs on Tencent’s popular chat app, is on a par at over 800 million.
Both are racing towards a future of seamless payment. Alipay debuted pay-by-fingerprint back in September 2014. In less than a year, WeChat Pay announced its own. Over time Chinese shoppers got themselves familiar with biometric verification, using it to unlock smartphones and enter office buildings. By 2016, around 95 percent of the people surveyed by China’s Payment and Clearing Association said they “knew about” fingerprint recognition.
The more sophisticated selfie-taking method soon followed. Last year, Alipay rolled out a smile-to-pay scheme at a KFC store in Hangzhou, home to Alibaba and Alipay, and has since then launched face recognition verification for a wide range of offline scenarios, including delivery pickup.
Alipay’s parent company Ant Financial lets users scan faces to pick up deliveries. / Source: Alibaba
The government has also been swift to leverage face recognition for other purposes. A well-known example is its alliance with the world’s highest-valued AI company SenseTime to develop China’s national surveillance system that can, for instance, track down criminals on streets.
Chinese people are getting in on unique-to-my-body authentification fast. In 2016, just above 70 percent users were comfortable with paying with their biometric information, according to the CPCA survey. In 2017, the ratio jumped to 85 percent.
This fast adoption also raises issues. In 2016, half of the respondents from the survey expressed security concerns over using biometrics payments. In 2017, 70 percent said they were worried. That same year, 77.1 percent cited privacy as another concern, up from just under 70 percent a year ago.
Just a few years ago, Li Mengqi could not have imagined shopping on her own. Someone needed to always keep her company to say aloud what was in front of her, who’s been blind since birth.
When smartphones with text-to-speech machines for the visually impaired arrived, she immediately bought an iPhone. “Though it was expensive,” Li, a 23-year-old who grew up in a rural village in eastern China’s Zhejiang province, told me. Cheaper smartphone options in China often don’t have good accessibility features.
Screen readers opened a plethora of new opportunity for those with visual impairments. “I felt liberated, no longer having to rely on others,” said Li, who can now shop online, WeChat her friends, and go out alone by following her iPhone compass.
Reading out everything on the screen is helpful, but it can also be overwhelming. Digital readers don’t decipher human thoughts, so when Li gets on apps with busy interfaces, such as an ecommerce platform, she’s bombarded with descriptions before she gets to the thing she wants.
Over the past two years, Alibaba’s $15 billion R&D initiative Damo Academy has been working to improve smartphone experience for the blind. Its latest answer, a joint effort with China’s prestigious Tsinghua University, is a cheap silicone sheet that goes on top of smartphone screens.
Li is among the first one hundred visually impaired or blind users to trial the technology. Nothing stands out about the plastic film – which cost RMB 0.25 or 3.6 American cents each to produce – until one has a closer look. There are three mini buttons on each side. They are sensory-enabled, which means pressing on them triggers certain commands, usually those that are frequently used like “go back” and “confirm”.
“It’s much easier to shop with the sheet on,” said Li. Having button shortcuts removes the risk of misclicking and the need for complex interactions with screens. Powering Smart Touch is human-machine interaction, the same technology that makes voice control devices possible.
Alibaba’s $1 “Smart Touch” plastic sheet helps smoothen smartphone experience for the visually impaired. / Photo credit: Alibaba
“We thought, human-machine interaction can’t just be for sighted people,” Chen Zhao, research director at Damo Academy told TechCrunch. “Besides voice, touch is also very important to the blind, so we decided to develop a touch feature.”
Smart Touch isn’t just for fingers. It also works when users hold their phones up to the ears. This lets them listen to text quickly in public without having to blast it out through speakers or headphones. Early trials of ear touch show a 50 percent reduction in time needed to complete tasks like taking calls and online shopping, Alibaba claims.
Emotions also matter. People with visual disabilities tend to be more cautious as they fumble through screens, so Smart Touch takes that into account. For instance, users need to double-click on the silicone button before a command goes through.
At the moment, Smart Touch works only on special editions of Alibaba’s two flagship apps, e-commerce marketplace Taobao and payment affiliate Alipay . The buttons automatically take on different functions when users switch between apps.
But Zhao said she wanted to make the technology widely available. Some tinkering with existing apps will make Smart Touch compatible. The smart film requires more testing before it officially rolls out early 2019, so Damo and Tsinghua have been recruiting volunteers like Li for feedback.
“Unlike with regular apps, it’s hard to beta test Smart Touch because the blind population is relatively small,” observed the researcher, but embedding the technology in popular apps could speed up the iteration process.
There’s also the issue with distributing the physical sheets. According to state census, China had around 13 million visually impaired people in 2012. That’s about one in a hundred people. However, they are rarely seen in public, as a post on China’s equivalent of Quora points out.
One oft-cited obstacle is that most roads in China aren’t disability-friendly, even in major cities. (In my city Shenzhen, blind lanes are common but they often get cut off abruptly to make way for a crossing or a bus stop.)
Damo doesn’t plan to monetize the initiative, according to Zhao. She envisions a future where her team could give out the haptic films — which can be mass produced at low costs — for free through Alibaba’s expanding network of brick-and-mortar stores.
Time will tell whether the accessibility scheme is more than public relations fluff. Initiatives around corporate social responsibility have mushroomed in China in recent years. They have come under fire, however, for being transient because many merely pander to the government’s demand (link in Chinese) for corporate ethics overlook long-term impact.
“The technology is ready. It just takes time to test it on different smartphones and bring to users at scale,” said Zhao.
Alibaba scored another blockbuster Singles’ Day after customers around the world shopped in stores and online on the tenth edition of its November 11 shopping festival. That puts this year’s gross merchandise volume – a measure for the dollar value of total transactions – at a staggering $30.8 billion, although the company recorded its lowest-ever annual growth rate for the event.
This is by far the largest-ever Singles’ Day to date. Just 15 hours and 49 minutes into the spending spree, transactions leapfrogged that of 2017’s tally of $25 billion, the company announced on Twitter.
And there it is. Gross merchandise volume at this year's 11.11 Global Shopping Festival tops last year's total. pic.twitter.com/YVEzXfFulv
As the world anticipates when the supercharged shopping day will hit a ceiling, sales are already cooling. The final total of 2018 represents a 27 percent increase from last year. That’s the lowest Alibaba has seen in the history of Singles’ Day sales, and a drop from 36 percent in 2017 — still, it remains impressive given how large the target is each year.
The slowdown came on the heels of Alibaba’s weakest revenue growth since seven quarters ago and a cut in annual revenue forecast – though revenues were still increasing at a healthy rate of 54 percent year-over-year in its latest quarter.
New growth fuel
Consumers are expected to tighten their purse strings as an economic downturn hits China. The ecommerce giant is, however, unconcerned for it’s betting on the country’s rising middle class in the long run.
Shoppers “are looking for new ways to upgrade their lifestyles and make their lives better,” Alibaba executive chairman Joe Tsai said at a media event on Sunday. “This will really offset a lot of the short-term cyclical effects.”
More than 300 million of China’s 1.4 billion people have entered the middle-income bracket, according to the national statistics bureau. That means discretionary items will drive much of the growth in the Chinese retail titan – and the upmarket trend is already underway. Health supplements, small home appliances, and skincare items are among the fastest growing categories by GMV during Singles’ Day this year.
Alibaba has also tapped into physical stores. The online retailer is poised to “digitize the whole consumer retail market,” Daniel Zhang, current CEO and incoming chairman as Jack Ma hands over the helm next year, told media on Sunday. Over the past two years, Alibaba has been jostling with close rival JD.com to snap up strategic partnerships with brick-and-mortar retailers who remain keen to reach Chinese consumers.
Alibaba CEO Daniel Zhang started the Singles’ Day shopping festival in 2009 when he was in charge of the company’s Tmall business (Photo Vivek Prakash/Bloomberg via Getty Images)
There are nuances in the sheer size of GMV, however, as it doesn’t reflect final revenues. A slew of factors could boost the figure. For one, refunds cannot be processed on November 11. Many vendors run pre-sales weeks in advance, taking deposits for items at the time but only processing full payments on Singles’ Day.
Alibaba also aired a star-studded gala on the night of November 10 to drum up sales. It said that over 240 million people – that’s almost one in five people in China – watched the show and its Singles’ Day commercials through two of China’s top TV broadcasters and Alibaba’s own Youku video streaming site.
Next ten years
As Alibaba enters its 19th year, it’s turning to new channels to sell. “Voice will be an important entry point,” said Zhang. The firm’s efforts to brace for China’s transition from a mobile-first age into an AI-powered one include a tie-up with voice assistant startup Rokid.
Alibaba also has its sights set on international consumers. This year, merchants from over 200 countries participated in Singles’ Day, including those on Alibaba’s Southeast Asia-based Lazada platform. “From day one, our dream was to create a global shopping day,” suggested Zhang.
An 11.11 advertisement in New York
Alibaba celebrated another big milestone this year: over one billion packages were shipped throughout the shopping day. But the company is also under mounting pressure to address its packaging waste problem.
“We have to redefine packaging,” said Zhang. That means more than using recycled material. More important, the CEO wants items to travel at a closer distance. This is made possible by algorithms that optimize inventory management. Alibaba could also lean on Ele.me, which it acquired this year and runs a fleet of food delivery staff, to process neighborhood orders which may require less or no packaging at all.
Singles’ Day was first popularized as an antidote to Valentines’ Day for the way the date is written numerically: 11.11, which represents four single people. Nearly a decade after Zhang first turned it into a sales promotion for Tmall, Alibaba’s online sales platform for brands, the one-day event has swollen into the world’s largest online shopping festival.
“We created this day for people who are lonely. Today, we totally redefined the day for how people shop,” concluded Zhang.
Attention coders, designers and all other builders: the TechCrunch China Hackathon is returning to Shenzhen, the city known as the hardware capital of the world, this month and we want you to take part!
So if your inner being is to code, design, build and hack cool things; if you want to have fun with others like you over a weekend; if you love to use your superpower to win cash and prizes; and if you need an excuse to kickstart that side-project project you’ve been thinking about for weeks… then come on over!
Arranged as a pre-cursor to our TechCrunch China Shenzhen event this month, the hackathon takes place on November 17. There’s really is no better place to build your next app, product or hack.
Like the traditional TC Hackathon, participating in the Shenzhen Hackathon is entirely free. All you need to do is register, which you can do right here.
The plan is simple: after 24 hours of building, hackers present their projects to their peers and a panel of judges who decide on the winners.
The top teams win the grand prize and there are other special awards on offer, including the Most Innovative Product, the Most Valuable Product, and the Most Completed Product awards.
In addition, this year, we’re giving you more. Every hacker who successfully submits their project will receive a two-day pass to the TechCrunch Shenzhen 2018 event — valued 1299 RMB or $188 — in addition to a certificate of honor and a souvenir t-shirt.
Every successful hackathon entrant will receive tickets to the TechCrunch China event in Shenzhen, which runs November 19-20
There will also be a bunch of blockchain challenges from our sponsor Ontology and other partners. With blockchain’s versatile applications and usability across a range of industries, the blockchain challenges bring together different knowledge bases and backgrounds, from gaming to supply chain software, medical software and voting applications.
The TechCrunch Shenzhen Hackathon takes place at the Shenzhen Bay Inno Mall 深圳湾创新广场 from November 17-18. Get your tickets here — you can visit this link for more information.
China’s JD.com has made it clear recently that it’s venturing into artificial intelligence and automation. Every few months over the past year, the online retailer – China’s second-largest by transactions after Alibaba – has unveiled new products based on cutting-edge technology: for example drone delivery, self-driving trucks, fully automated warehouses, to name a few.
Most of these technologies are still in their testing phase and JD’s ever expanding technology investment is already eating into its profitability.
In the second quarter, the retail titan’s technology expenses were up over 70 percent year-over-year for the third consecutive quarter, costing the company 2.8 billion yuan, or $400 million. Net income slipped more than 50 percent to 478 million yuan, versus 977 million yuan last year.
By comparison, marketing and fulfilment, which traditionally make up the bulk of JD’s overall operating expenses, grew at less than 30 percent over the same period.
When will JD start to seriously capitalize on its technologies? When it can do things at scale, according to the company’s head of technology.
“If there is no scale, there is saving,” JD’s chief technology officer Zhang Chen told a group of reporters in Beijing on Tuesday.
“If you build something, you want other people to use that. It takes a lot of time to make a product perfect before you say it’s done. AI is all about iteration and how much data you get,” Zhang continued.
Alibaba also enjoys much wider profit margins than JD, thanks to a light-asset platform approach that connects vendors to consumers and derives the bulk of its revenue from advertising. JD, on the other hand, runs a more costly model that sees it operates most of the supply chain and deliver goods from warehouses to customers – like Amazon .
Alibaba’s operating margin in Q3 stood at 16 percent, while JD posted a 0.8 percent non-GAAP operating margin in Q2. That said, Alibaba has also suffered a margin squeeze in recent quarters as it continues to invest heavily in offline operations such as food delivery.
To secure more user traffic, JD has been leaning on its ties with Tencent, a major shareholder in its business and the builder behind the massively popular WeChat messenger. While Alibaba’s e-store links are blocked on WeChat, JD runs smoothly through a “mini program,” a light-weight application that runs inside WeChat’s interface that allows buyers to bypass app stores.
It’s unclear how much traffic WeChat brings over to JD. But WeChat has proven to be an effective channel for acquiring ecommerce users. This is evident in the case of group-buying app Pinduoduo, which started out as a WeChat mini program. In June, the three-year-old company leapfrogged JD in mobile penetration to reach 26.2 percent, according to data services provider Jiguang.
Pinduoduo’s rise was so impressive that its shares popped 40 percent in their first day of trading on NASDAQ in July though later nosedived following accusations over fake goods sold on the ecommerce platform.
Counterfeiting is a decade-old problem in the Chinese internet, tarnishing the name of both Alibaba’s online bazaar Taobao and even JD, which boasts of its authenticity of direct sales.
JD has also been looking overseas for growth. In August, Google poured $550 million in JD as part of a strategic partnership to help the Chinese company grab more users around the world. While JD’s vice president of strategy Ling Chenkai did not reveal details on the firm’s European plans when asked by TechCrunch on Tuesday, he assured going global has always been “an aspiration” for JD and partnership will play a key role amid the process.
But JD understands that it can’t always fall back on its partnerships, even with its close allies.
“Every company protects its data like [there will be] none tomorrow, even with strategic partners. Data sharing is a very serious business,” says Zhang the CTO.
“Most Chinese companies have a really big security team,” he observed, adding that while partners do not directly share data, they collaborate by exchanging user insights.
Elderly couple having a moment on Douyin / Credit: Douyin ID @淘气陈奶奶
It also helps that smartphone data became cheaper and internet penetration kept growing in recent years — China now has 800 million smartphone users, according to government data. In 2013, just under 40 percent of China’s online population streamed videos on their phones, according to database CBNData. In 2017, that ratio surged to 80 percent.
And TikTok, called Douyin in China, is spearheading the short-video game.
In recent years, few mobile apps in China have captured as many stares as WeChat, Tencent’s messaging app that’s evolved into a one-stop platform allowing people to shop, order cabs, book hotels, and complete other daily tasks.
Then short video apps came along, eating people’s eyeball time away. Apps like TikTok do not compete directly with WeChat as they serve different purposes, but data suggests that use of instant messaging services has waned amid the fledgling video scene.
This year WeChat and its peers occupied 30.5 percent of people’s online time, a 3.6 percent drop year-over-year per the QuestMobile report.
It comes as no surprise that Tencent is fretting over the clip craze and in particular, ByteDance’s rise. In May, Tencent’s usually low-profile boss Pony Ma got in a rare online spat with ByteDance founder and CEO Zhang Yiming over plagiarism and WeChat blocking TikTok content.
Typical miming and finger dancing performed by teens / Credit: Douyin ID @李雨霏2007
Elsewhere, Tencent took action. Since April, the tech giant has rolled out a number of TikTok rivals but so far none has gotten close to the latter’s lion’s share: 500 million monthly active users worldwide. That’s excluding the 100 million total users on Musical.ly, which ByteDance acquired in late 2017 and merged into TikTok this August.
Tencent’s got other backup plans, though. It owns shares in TikTok’s China archrival Kuaishou, which had a 22.7 percent penetration rate in September according to data service provider Jiguang. That’s however, dwarfed by TikTok’s 33.8 percent, which means the app was installed on over a third of all mobile devices monitored by Jiguang. Plus, ByteDance’s other short-video apps for different niches, Huoshan and Xigua, are also faring well, commanding 13.1 percent and 12.6 percent, respectively.
Alibaba: not quite an ally
Until recently, ByteDance appeared to be making nice with China’s other internet giant — Alibaba. The companies kicked off a partnership in March that saw TikTok using Alibaba’s online marketplace Taobao to process ecommerce transactions on its app. Authorized TikTok users, usually those with a big following, can link videos to their Taobao shops. This money-making setup allows TikTok to lure more quality content creators. Alibaba, on the other hand, gets traffic from the fledgling social media app that could absorb some of the loss from WeChat blocking its ecommerce apps.
Things can go south anytime, however, as ByteDance makes forays into Alibaba’s territories. The startup recently introduced an ecommerce platform and entered the business of long-form video streaming, an area where Alibaba, Tencent, and Baidu’s iQIYI dominate.
Life hacks are popular, too: guy sharing his gardening tips / Credit: Douyin ID @速效三元化合肥
ByteDance seems set to grow independently. Unlike many of China’s promising startups, six-year-old ByteDance hasn’t accepted financing from any of the tech trio of Baidu, Alibaba, and Tencent — known as the BAT such is their dominance in China’s consumer technology.
ByteDance’s moves into new space may also signal the firm’s urge to explore additional monetization channels besides advertising on feeds. It lifted its revenue target to $7.2 billion for 2018, well above the $2.5 billion it earned last year, according to Bloomberg.
At home and afar
Despite the boom, China’s short-video market faces increasing regulatory headwinds. In recent months, authorities have been clamping down on Kuaishou, ByteDance’s video apps, and smaller players on account of eradicating content that’s deemed illegal or inappropriate.
Violation could result in app store bans and those that underwent such severe punishment like Miaopai, which is backed by China’s Twitter equivalent Weibo, suffered from a tumble in app installs.
Sometimes Douyin does get serious – a Beijing TV channel has its own account and it covers news here / Credit: Douyin ID @BTV新闻
ByteDance didn’t get a ban – yet, but it came under fire for its AI-driven recommendation algorithms. It’s something the startup prides itself on but has irritated media watchdogs who reprimanded TikTok for showing users “unacceptable” content, such as videos depicting adolescent pregnancies. ByteDance’s popular news aggregator Jinri Toutiao, or “today’s headlines,” received similar criticisms for giving its 120 million daily users “fluff”.
In response, ByteDance added thousands of censors to screen content on top of AI-driven recommendation across its apps.
ByteDance’s expanding territory through TikTok goes well beyond China. This year, the short-video platform has been climbing app store rankings around the world, an ascend accelerated by its incorporation of Musical.ly. Now it’s not just Tencent that’s taking note; Facebook is also building a TikTok clone, TechCrunch reported recently.