22 April 2019
SHKP Executive Director Christopher Kwok (L) and Tencent Vice President Jim Lai shake hands after inking a strategic cooperation agreement last week for promotion of WeChat Pay in Hong Kong. Photo: SHKP
SHKP Executive Director Christopher Kwok (L) and Tencent Vice President Jim Lai shake hands after inking a strategic cooperation agreement last week for promotion of WeChat Pay in Hong Kong. Photo: SHKP

Why Tencent’s tie-up with SHKP on WeChat Pay makes sense

Chinese internet giant Tencent Holdings has faced some of its worst days ever recently as mainland authorities launched a crackdown on online gaming players, accusing them of fueling video-game addiction among the youth and marketing inappropriate content.

The regulatory squeeze included suspension of approvals for new online game titles, a move that cast a cloud over Tencent’s growth outlook, given the company’s huge dependence on the gaming segment for revenues. Confronted with uncertainties surrounding the business, the firm has been stepping up attention on its other units in a bid to shore up its prospects and reassure investors.

In line with those efforts, Tencent has now launched a significant initiative in relation to WeChat Pay, focusing on Hong Kong, aiming to boost usage of the mobile payment service in the territory. 

Last Thursday, the Chinese tech behemoth announced that it has joined hands with Sun Hung Kai Properties (SHKP), one of Hong Kong’s biggest real-estate developers and commercial landlords, for promotion of WeChat Pay mobile payments in Hong Kong. 

Under the tie-up, WeChat Pay will be encouraged for completion of transactions at retail outlets in Sun Hung Kai’s shopping malls and YATA Supermarkets in the city.

Also, the Tencent-owned payment system will be promoted on the SmarTone mobile network.

The cooperation “integrates Sun Hung Kai’s extensive business, retail and telecom network, and Tencent’s innovative technologies and its mobile payment platform WeChat Pay HK to bring money-saving, value-added and convenient services to consumers in Hong Kong,” a press release said.

Covering 23 major malls of SHKP and YATA department stores and supermarkets, as well as the business subsidiary SmarTone, the partnership marks the “largest-ever mobile payment activation” effort in Hong Kong, the companies said, vowing to deliver an enhanced consumer experience through a multi-phase campaign beginning this month.

The partners would hand away HK$13 million to Hong Kong people who use WeChat Pay HK service at specific malls and shops. Each user would get two mobile coupons worth more than HK$30 for spending. SmarTone users, meanwhile, can enjoy a special offer on topping up their accounts.

The promotion campaign is certainly ambitious, but it can only be a short-term gambit to boost WeChat Pay adoption in Hong Kong. In the long run, one wonders if Tencent can keep on spending money to push its mobile payments system and whether it’s a sustainable approach to build user habits. Moreover, the firm could face a big challenge from the local dominant player, Octopus card.

But for now, the roadmap is clear: lure more people to WeChat Pay, encouraging the shoppers — through special promotions and giveaways — to use the Tencent system for payments, rather than cash or credit cards.

Mobile payment, in fact, is just one of many applications that Tencent would like to bring to the Hong Kong market. SHKP operates a wide range of businesses, including private residences, commercial office buildings, shopping malls, data centers, telecommunications, hotels and retail businesses. It has a lot of room to work with Tencent to incorporate digital elements in various operations.

A potential cooperation between the two parties is for smart car parking. Tencent and SHKP are said to be studying the possibility of introducing smart car parks in Hong Kong that require no manpower to control and gate and collect the fees. An arrangement towards this end could help speed up traffic surrounding the car parks and provide more parking spaces to consumers during peak hours.

According to mainland media, Tencent has launched its car park payment system in Guangzhou, Shenzhen, Hangzhou, Qingdao and Changsha. Through the WeChat app it can implement a car parking solution that would result in better operational efficiency. Such scenario would require users to register their car plate number with WeChat app.  

In addition to smart parking, Tencent has also launched artificial intelligence community services in China and has begun to work with property developers. In June, Tencent announced a partnership with mainland developer Country Garden to introduce smart communities at the firm’s properties, as well as cooperate in Internet of Thing innovation labs, big data and cloud services.

Tencent launched a smart community platform based on WeChat last year. It uses WeChat public accounts to provide property management and community services for housing estates.

The facility allows property-related notifications, quick maintenance, advice, express delivery, payments, smart access and other functions. Property management companies can utilize the platform to provide better and quicker services to residents.

The functions and services of the Tencent Haina platform are not much different from other smart community applications on the market. However, the platform has a unique advantage, which is using the popular WeChat app as the entry point for providing the service.

Residents can enjoy the service by following a specific public account on WeChat. 

Tencent’s cooperation with SHKP is expected to bring such new service to a number of property projects in Hong Kong. That could drive up usage of WeChat substantially in the city.

Looking ahead, the tie-up on WeChat Pay promotion could be just the beginning of a long and fruitful collaboration between Tencent and SHKP.

For Tencent investors, who have been worried about the slide in the company’s share price this year from record highs, any new initiative that would help the firm broaden its revenue streams would be welcome.

Given the risks facing the online games business, Tencent could certainly do with efforts to expand revenue from newer services by leveraging the WeChat platform, and also seek out new markets. 

The partnership with SHKP should be just one of those elements.

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EJ Insight writer

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