Globalization of China’s Dominant Social Media App: Prospects for WeChat

• In Event: Chinese State Capitalism: Labor, Corporate, and International Strategic Issues

Abstract

While China’s state capitalism model encourages expansion of domestic businesses outside of PRC borders, government regulation of social media ironically works against firms capturing an international market. In 2018, China’s social media mobile app, WeChat, counted more than 1 billion users. However, aside from overseas Chinese students, scholars, and business people, adoption of the app outside of the PRC was relatively rare. Foreign government suspicion of Chinese monitoring of communications tools, as well as resulting foreign economic regulatory policies, complicate the app’s globalization prospects.

This paper considers the ways WeChat’s parent company, Tencent, is pursuing strategies to overcome these political and economic barriers, move beyond PRC borders, and claim a share of the global social media market.

In its drive to attract non-Chinese users, WeChat developers introduced functions beyond those found on western apps such as Facebook Messenger, Line, and Instagram. The result is a full spectrum of tools that allow seamless communication, social experience posting, electronic payment and commerce, and reception of news, information, and entertainment. The features make WeChat the so-called “one app to rule them all.”

Despite these capabilities, WeChat faces globalization hurdles. Foreign governments worry about communications security, and financial regulators place hurdles on the adoption of the popular WeChat Pay mobile application. Furthermore, foreign consumers are skeptical their privacy will be protected. Other problems such as a lack of basic mobile payment infrastructure, as well as user reluctance to switch to a new app environment, hamper WeChat’s spread outside PRC borders.

Tencent’s strategy includes making overseas corporate media acquisitions to try to avoid foreign political interference; fostering ties with overseas banks and financial officials to facilitate foreign mobile payment systems; expanding abroad Tencent-related enterprises, including ride-hailing; and developing content such as mobile games that appeal to a global audience. The political barrier of potential Chinese government monitoring of WeChat activities, and resulting privacy concerns, however, remains a tricky obstacle to overcome.

This paper incorporates primary source material as well as fieldwork interviews to gauge the prospects for WeChat’s overseas expansion. It argues that key problems for WeChat’s foreign expansion include privacy concerns at the individual level, and political and economic regulatory forces at the local or national government level acting to discourage the app’s adoption. Moreover, at the commercial level, the Chinese app may have difficulty fully displacing established foreign social media apps, such as WhatsApp, Line, or other comparable social media tools.

If WeChat is essentially limited to use within China or by overseas Chinese, the resulting communications disconnect with foreign nationals could lead Chinese citizens and firms to face disadvantages as they seek foreign markets and expand larger economic and social ties outside PRC borders. The result would be detrimental to the state’s goal of continued economic expansion outside China’s borders, and, for many citizens, information isolation within the WeChat app environment.

Author

• Eric Harwit, University of Hawaii