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A Two-App Race Emerges in Tencent

05-20 00:00 《财经》杂志 《财经》杂志

  By intern reporter He Shulong and staff reporter Song Wei

  Tencent announced May 6 the establishment of a new business unit — the WeiXin Group, which will be headed by Senior Executive Vice President Zhang Xiaolong. Zhang will report directly to Tencent President Lau Chiping.

  The creation of WeiXin Group, which marks the third round of structural adjustment since Tencent went public in 2004, indicates Tencent’s popular mobile communications app WeChat will enjoy the same status as the company’s iconic product QQ. WeiXin Group is expected to compete head to head with the Social Networking Group (SNG), which runs QQ, as the two overlap in some business areas.

  Tencent, a long-time conservative player, became aggressive and laid out a grand platform strategy this year. Company president Lau Chiping told analysts March 19, 2014 that the tech giant will enter new fields on mobile terminals while consolidating its strong presence in social platforms, video games, and digital media. Vertical areas Tencent seeks to enter include e-commerce, O2O services, Internet banking, and online education. The company will compete directly in areas where it can do well on its own and leave other segments to its business partners.

  In less than six months, Tencent announced stock investment in a number of Internet companies, including Sogou, dianping.com, and Jingdong, which marks the company’s biggest adjustment to businesses including search, local services, and physical goods e-commerce in recent years.

  Given such a grand plan, it is impossible for Tencent to put all its bets on one product. Tencent’s Senior Executive Vice President for SNG told Caijing the company now has two systems: “one is based on QQ and QQ space; the other on WeChat.”

  WeiXin Group’s mission is to build another large platform around WeChat. According to Tencent's official statement, the new group will be responsible for WeChat’s basic as well as open platforms, the development of WeChat-based payment and other extended businesses including O2O, and the development and operation of products such as mailbox and address book.

  As president of WeiXin Group, Zhang Xiaolong will have a bigger say within Tencent, which means WeChat will have easier access to resources as well as internal and external cooperation.

  SNG, as Tencent’s largest and strongest business unit, has three aces up its sleeve: qcloud, guangdiantong, and yingyongbao, which provide the infrastructure for QQ’s commercialization efforts. Specifically, qcloud enables QQ to become closer to brand owners and app developers; guangdiantong makes it possible for QQ to cash in on advertisements; and yingyongbao draws new users.

  Internet analyst Liu Huafang told Caijing that QQ and WeChat are at different stages of the product cycle: QQ, which is now a mature platform, needs advertisements and big data to boost profitability; while WeChat, still in a growth period, needs to innovate and develop a feasible profit model. Besides, QQ space, which is more of a media, is more open compared with WeChat, which is more of a communications tool. Liu said that both QQ and WeChat will capitalize on their own strengths.

  However, the relationship between QQ and WeChat is more than complementary. The two platforms will probably compete directly in fields such as O2O, online communities, and online games, and in their efforts to “connect everything.”

  Full article in Chinese:http://magazine.caijing.com.cn/2014-05-19/114191645.html

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