Tencent, the parent company of leading Chinese chat app WeChat, can now roll out its mobile payments app WeChat Pay for local transactions to consumers in Malaysia, according to Fortune. This is the first time Tencent has been able to introduce its mobile payment app outside of mainland China.
The change comes after Tencent was granted a license by Malaysia and comes at an important time as Tencent aims to grow WeChat internationally. Already, there are 20 million active WeChat users from Malaysia out of a total 980 million WeChat monthly active users.
Extending the full WeChat experience to consumers outside of China is an important strategy for Tencent’s long-term success:
- WeChat is nearing saturation within its domestic market, meaning future growth will depend on international expansion. Adoption of the chat app is widespread among smartphone users in Tencent’s home market — roughly 83% of all smartphone users in China use WeChat. WeChat’s penetration of smartphone users jumps up to 93% in China’s Tier 1 cities.
- And WeChat’s embedded payment feature enables the use of more services, which could drive expansion abroad. WheChat’s success stems from its ability to attract and retain users, partly due to the fact that it’s a one-stop-shop that consumers can leverage to talk with friends, book appointments, make payments, grab taxis, shop and more. Before now, WeChat only offered localized services in China and Hong Kong because of limitations around rolling out its payments product. Enabling consumers in Malaysia to use WeChat Pay to make mobile payments will spur usage of various activities from within the chat app.
Malaysia presents a particularly appealing market for Tencent as it seeks international growth for WeChat.
- Malaysia is one of the fastest-growing emerging smartphone markets.Smartphone adoption in the country is poised to reach 76% by 2020, up from the 69% in 2016. And by 2020, Malaysia will have the highest smartphone penetration rate in all of Southeast Asia. Mobile is the first point of internet connection for many users in Malaysia and targeting this market can help to further WeChat’s global reach.
- The region shares a lot of similarities with China in terms of human behavior,Tencent senior director of corporate strategy and investment Grace Xia says. This suggests that Chinese brands and products may inherently be appealing to consumers in Malaysia.
As Tencent eyes global expansion, it may face backlash from consumers outside of China. That’s because WeChat shares the data it generates from its users with the Chinese government, including names, contacts, email addresses, locations, and any online searches performed within the app. Consumers in Malaysia could be deterred from using WeChat because of China’s data practices.
Source: Business Insider