New WhatsApp on block
China’s WeChat moves into low-budget Africa
WECHAT, China’s biggest internet-based mobile messaging platform, is scrambling for a piece of the African market.
The move is leading the South Africa-China joint venture down a competitive path as Facebook’s WhatsApp is part of the social media fabric in most African countries.
The outcome could help determine who can turn the exponential growth in online messaging services into profits.
WhatsApp is used more widely but WeChat is betting an array of services that include money transfers, prepaid electricity and airtime and its experience in selling products to lower income users in China will loosen the Silicon Valley grip.
Launched in Africa in 2013 by China’s Internet giant Tencent and its 34 percent shareholder South African e-commerce and media group Naspers, WeChat Africa is a rare south- south corporate partnership to expand on the continent.
The joint venture is facing an uphill battle in taking on WhatsApp, which offers free text, picture and video messages and whose adoption in big African markets such as South Africa was lightening- fast because texts over a phone network are still expensive.
A 2015 study by World Wide Worx, a Johannesburg consultancy, showed WhatsApp had just over 10 million users in South Africa compared with just over 5 million for WeChat.
But WhatsApp, acquired by Facebook in 2014 and which has a long-standing promise to keep the platform ad-free, has no immediate plans to make money out of the service in Africa, Facebook Africa said.
A spokesperson said WhatsApp is the No 1 messaging platform in South Africa, Nigeria and Kenya.
“You could argue that WeChat is pulling ahead in monetisation efforts but WhatsApp guys can do anything using their numbers. It’s all about who’s got numbers,” ICT analyst Sibonginkosi Nyanga a fund manager at Momentum SP Reid said.
WhatsApp is testing making restaurants, airlines and credit card firms pay to contact consumers. There are parts of Africa where WeChat is almost unknown whereas WhatsApp is everywhere from Namibia to Niger.
“I used to have a WeChat account but I deleted it because you will find virtually nobody to chat. With WhatsApp, there are no complications, it’s sim- ple and all my friends use it,” said Nkululeko Mabuza, a 24- year- old social worker in Tzaneen, a large town 400km north of Johannesburg.
Loubser said WeChat is all about making it easier for users with a suite of features to order food take- aways, shop online, search for jobs and transfer money without having to leave the interface.
“We looked very carefully at what the platform can achieve beyond just messaging because people use products when there’s value for them,” he said.
Last year WeChat launched mobile money services, or WeChat Wallet, which allows users to store bank cards and withdraw cash at the auto- mated teller machines (ATM) of a partner, Standard Bank.
The success of telecoms operator Safaricom’s mobile money service M- Pesa in Kenya has convinced investors and executives convergence of financial services and mobile phones offers growth opportunities.
The logic of using cellphones to access financial services in sub-Saharan Africa is obvious: For every 100 000 people there are at least four bank branches and five ATMs but more than 700 cellphones.
Earlier this month WeChat partnered with Stuff, the word’s best-selling gadget and technology magazine, and a unit of household goods retailer Steinhoff to launch a payment feature that allows WeChat Wallet users to scan a barcode along side a product in the magazine.
Riding on Naspers’ pay-television monopoly across Africa WeChat can also be used to cast votes for popular reality shows such as Idols and Big Brother.
Naspers chief executive Bob van Dyk admits the number of WeChat users has not reached a level that would make the platform’s collection of features mainstream. “Because there is so much competition for the chat product you need a certain audience engagement before any of those other products can become mainstream.” – Reuters
WeChat is seeking to capitalise on the region’s vast low-budget market.