Social communication tool Weixin is set to play a more important role in Tencent’s (00700.HK) business in the coming years as the internet giant tries to fend off competition from rivals such as Alibaba Group and Baidu Inc.
In a significant development, Tencent has decided to establish a dedicated business group to oversee the strategic development of Weixin, hoping to give a strategic push to the popular mobile internet platform.
The new Weixin business group will be led by Tencent’s senior vice president Zhang Xiaolong, who is also known as “the father of Weixin”, according to an internal company memo.
The business group will be responsible for development of basic infrastructure platform, open platform, payment platform and online-to-offline (O2O) strategy of Weixin. Other existing services such as email and contact lists management are also included in the agenda as the company seeks to extend the reach of Weixin to more users and to create additional value to business partners.
It is not surprising that Tencent is making Weixin an independent business group, given the fact that Weixin is the killer application for the Chinese internet titan to gain ground in the O2O battlefield, where Alibaba has invested massively to link up its online e-commerce platform to offline economy. Tencent, with its advantage of a loyal base of more than 300 million Weixin users, should be able to further monetize the platform and establish its own close O2O ecosystem.
One of the most important functions for Weixin in the O2O ecosystem is mobile payment capability. Tencent is gearing up to transform Weixin from a mobile social communication platform to a mobile payment gateway, using innovative routes such as QR Code payment, in order to connect online users and offline retailers at the cashier counters.
The new Weixin business group represents, in a way, the birth of a new Tencent, as the company’s existing business has to a large part stemmed from its instant message application QQ. The new Weixin group puts Weixin in the center, linking up wide range of services and applications from communications and social media to open platform for third party developers’ software, mobile payment, internet financial products and games and entertainment.
While Alibaba has outlined its goal to be the leading daily life service platform for the mainlanders, bringing traditional offline service industries online, Tencent’s move to build a new Weixin business group is a counter-attack that hits at the weakness of the e-commerce giant — the lack of adequate mobile tools for services.
As Tencent steps up its game, Alibaba may need to elaborate more on its mobile strategy and related plans for the future. The e-commerce behemoth, which is readying to launch an initial public offering in the US, has an opportunity to use the IPO marketing events to spell out its vision for the future.
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