Circa 2010, China: The aftermath of Urumqi riots in 2009 resulted in a ban and blockage of 1.3 million websites in the country. Even large internet companies like Fanfou, the Middle Kingdom’s first microblogging platform, shut down.
The next few years saw a raft of new internet companies launching new products and platforms. Meituan-Dianping, Toutiao, and Didi Chuxing, which today rank among world’s top 20 technology companies, are, in a way, products of the 2010 clampdown.
One such launch made by Allen Zhang, a product geek in China best known for creating and selling Foxmail, happened in 2010 at Tencent office in the southern Chinese city of Guangzhou. Zhang assembled a team of 10 engineers to build WeChat, what is today the world’s largest super app.
At that time, Tencent’s flagship product QQ, a desktop software for communication, was extremely popular. WeChat, known as Weixin when it launched, with a minimalistic design, was in stark contrast to the cluttered design of QQ.
After a historic leap of reaching its first 100 million users in just 433 days, WeChat decided to go global with the product. India, where Tencent already had a presence through travel services portal Ibibo in which it held a stake, was a natural choice to test the waters.
In early 2012, a team of a dozen employees was assembled in Gurgaon to launch a huge marketing campaign.
“WeChat was the first mobile app to launch a television ad in India. There was no expense spared,” says a former WeChat India executive from the time, asking to stay anonymous. Movie stars Parineeti Chopra and Varun Dhawan were roped in as brand ambassadors. There were ad campaigns that ran on TV and radio and in malls.
The app had good early traction. “We had gained about 20-25 mn subscribers during the campaign. For 45 days, WeChat was the top ranking app on Google Playstore,” the former executive says.
Initially, it appeared that WeChat’s China playbook was successful in India.
But like a roller coaster in an adventure park, the WeChat trajectory turned direction and began to nosedive fast. The number of uninstalls increased. There was no stickiness to the app. Soon, there were news reports that suggested that the app could be banned by the government. That was the beginning of the end for WeChat in India.
FactorDaily reached out to Tencent and WeChat teams to get their inputs for the story but didn’t receive any response.
Why Indians didn’t we-chat for long
For its launch in India, WeChat’s parent Tencent assembled a team from Ibibo, including three or four developers, half a dozen people in marketing, and a couple in senior management. The team was led by Rahul Razdan and Nilay Arora. (Arora is the current country head for Tencent.)
“The product was designed with Allen Zhang’s vision and had peculiar features to the effect that worked well in China market but didn’t work well for Indian users,” says Himanshu Gupta, who was the associate director of marketing and strategy at WeChat India, from 2012 to 2015.
For example, WeChat made it mandatory for users to send “add friend requests” which had to be accepted by the other person for the chat to begin. Compared to this, in the case of WhatsApp, you could chat with anyone whose number was on your contacts list and had the app installed. The assumption made here was that if you had someone’s number stored on your phone, you knew him or her.
WeChat’s approach of enforcing “add-friend-requests” was similar to how Facebook works even today, where you can’t see other person’s private content unless they’ve accepted your friendship request. WeChat did this because not only was it a messaging app but also a social app and has a newsfeed called “Moments” which is similar to Facebook’s newsfeed – giving rise to user privacy concerns.
But this added a layer of friction to starting a chat interaction on WeChat, especially in the case of group chats. Chat groups are usually made by a single person (admin) inviting people by adding their phone numbers to the group. But this wasn’t possible seamlessly on WeChat in India since the admin had to first send “add friend requests” which had to be accepted. WeChat had not faced this hurdle of adding friends in China because Tencent’s hit messaging product from the desktop era – QQ messenger – already had over 750 million monthly active users by the time WeChat launched. A user could port her entire QQ social graph to WeChat by just logging in with her QQ ID.
Another design feature in the app allowed users to look up and send add-friend requests to WeChat users nearby. During initial onboarding when users were just checking app’s features, many would tap the “people nearby” feature, which would switch on location sharing by default – including with strangers. Once location sharing with strangers was switched on, it wasn’t very intuitive to turn it off.
“Women used to get a lot of unwarranted messages from men, which was a major turn off and many of them left the platform,” Gupta says. “China probably didn’t have this stalking problem.”
When this feedback was reported to China, the cultural nuance was missed or executives there didn’t think of these features as potential challenges, he adds.
Despite these challenges, WeChat had found a user base that stuck to that app for a year or so until they moved on to WhatsApp. With its 200 million monthly active users in India as of February 2018, the Facebook-owned app, which currently supports 10 Indian languages, has the largest market share among messengers here.
Food and lifestyle blogger Suman Prasad who used WeChat as a post-grad student during 2013 said that a lot of his friends used WeChat for group chats, animated stickers and broadcast messages. “WeChat had great potential as a brand but I believe they couldn’t read the Indian mind better and failed to match the changing preferences of the young customers,” he says.
When it launched in India the size of WeChat app was 40 MB. Most popular mobile phones in India at the time came with less than 200 MB of internal memory. With memory being an issue, WeChat was out of the window at the first roadblock. Also, what set the company a little behind the competition was the limitation that WeChat was only available on Android and iOS versions at a time when India still had a significant Symbian OS and BlackBerry market.
When WeChat was at its peak in India, news reports with claims that the Indian government planned to ban the Chinese app started doing rounds in 2013. “WeChat’s downfall started after a smear campaign that said the government officials planned to ban WeChat. Up until then, most users didn’t even know that it was a Chinese app; they had seen Varun Dhawan and Parineeti Chopra promoting the app,” says the former WeChat executive quoted earlier without a name.
The story of WeChat’s success in China is phenomenal. A tight ecosystem of over a billion users, WeChat is a super app that the Chinese use for everything – to hail a taxi, order food, or buy movie tickets and medicines.
Besides creating local content for India like Diwali stickers and housing some bit of technical support for partners in India, the company’s major focus remained to get more brands to sign up on the platform, to create a China-like ecosystem where brands ran promotions and gave discounts to users to follow them on WeChat, says Gupta. But in order to get more brands, it was essential to have a growing user base and an increasing amount of time spent on the app.
Getting brands on a chat platform is tough. Facebook’s Messenger is still struggling with it. It involves creating a large base of users that spend a good part of their day on the platform, creating segments of these users, getting brands that promote themselves to target user segments, and in the process creating stickiness for the app. WeChat was successfully able to do that in China because it was already the most prefered chat app in the country and had data of millions of users, thanks to the long innings of QQ, its parent app.
With hindsight, Gupta says, if the approach to marketing in India had focused on fixing the product design instead of focusing on brands, things might have turned out differently for the super app. But since WeChat was fighting an extremely competitive battle with Alibaba in China at that point in time, it was less keen to invest in product changes that weren’t relevant to the China market. The idea was to take a product that was doing well in China and go global by doing localisations around the brand and ecosystem partnerships, supported by aggressive marketing.
In China, where the internet was cheaper than in India in 2012, sending video files of, say, 4 MB was not a challenge. WhatsApp compresses a 5 MB photo to 40 kilobytes. WeChat did not compress the files and took many minutes and data to send and receive media files.
“There’s a term called internationalisation of a product, which is loosely used in China to translate the product to English and make it ready for users in another country. But at its core, it is a product envisaged and designed by people in China for the China market,” says the former WeChat executive, citing it as the main reason for WeChat’s failure in India.
Gupta echoes the same concern about the leadership. Even if some changes were made in the product, they were cosmetic and took long to be implemented. “We did get a Blackberry and Nokia Symbian builds for the app but that took more than a year and a half and, by that time, these mobile operating systems which were once big were almost dead, and the product WeChat had already lost all momentum the India market,” he says.
The messenger market in India
By the time WeChat launched in India market, Indians had already got the taste of messengers. There was WhatsApp that was already popular in India, teaming up with carriers like Reliance for a bundled offering at Rs 16 a month. Facebook had launched its messenger. Homegrown Hike had also launched around the same time as WeChat. There was suddenly an influx of messengers, including LINE, Viber, Skype, and Hangouts that offered, voice messages, video calls, free calling and stickers to Indian users.
After the initial customer acquisition tactics like tie-ups with telco provider and free talk-time for successful referrals, each of these products either found their niche or quit operating in India, barring WhatsApp that turned out to be more or less an incumbent in India.
In February 2013, Hike topped on Playstore using a reward based referral program and then sank. A few months down the line, WeChat and LINE also launched their marketing campaigns in India.
LINE, the Japanese app with Korean roots, came to India in July 2013 and reached #1 on app stores for a few weeks, with its own TV ad-based marketing campaign. Soon after WeChat’s TV commercials, LINE launched its own commercial in June 2013 and that October roped in actor Katrina Kaif as brand ambassador.
“In the minds of Tencent management, at least early on, they were competing against LINE and not WhatsApp because both of them were aggressively expanding globally with huge marketing campaigns,” says Gupta, who now heads growth at Walnut, an expense tracking and lending company.
The reason Tencent management was focussed on LINE in India was that WhatsApp was a passive player. WhatsApp was growing organically and there was nothing WeChat could do from a country launch point of view to stop it, says Gupta. But LINE was launching in countries globally left-right-and-centre, not dissimilar to how Uber and various taxi companies fought in a land-grab mode globally.
Around mid-2015, WeChat realised that it had hit a dead end in India. About a year after, Tencent led a funding round of $175 million in Hike in August 2016, raising its valuation to $1.4 billion. Hike, however, is still struggling with its monetization and is stuck with a user base of around 100 million for two years now. Safe to say Tencent’s bet with messengers in India hasn’t gone down well.
India has also witnessed its share of apps that have taken the super app route in India. Sequoia-backed Tapzo that has had its fair share of pivots, from online complaints redressal to a utility app aggregator before it was sold to Amazon Pay in September this year. There’s also Alibaba-backed PayTM that aims to be the WeChat of India.
As opposed to WhatsApp that was primarily built for emerging markets and had features like the low-memory build of the app and compressed media exchange features, players like WeChat and LINE started out in markets such as China and Japan that had a better quality infrastructure. Built for richer media interactions such as stickers, voice messages and video calling etc, WeChat and LINE, rather than fundamentally changing their products to suit the low-end phone markets, which India was in 2013, assumed that the world would eventually move to better quality phones and internet speeds, where their apps would provide a better messaging experience, says Gupta. While that did happen eventually with the launch of Jio in the year 2016 in India, the network effects of WhatsApp by that time had become so strong that no other player was left standing in the messaging space in the emerging markets.
The Chinese learn India
To be sure, WeChat’s problems in India are not unique. Chinese apps and services from other sectors, too, report similar troubles. The world’s largest bike ride-sharing company ofo launched in India in February this year only to wind up operations in less than six months.
When ofo launched in India early this year, the bike sharing market was rife with many players, including, another Chinese leader Mobike, Zoomcar’s Pedl and Bengaluru-based Yulu, among others. These startups were introducing a new segment within urban India which was a level playing field, open to experimentation.
Rajarshi Sahai, who handled ofo’s India operations, says that despite that fact that ofo created its own playbook in terms of ground operations and policies designed specifically for India market, the company took a hit when it came to the agility of its app product. Ofo India team’s attempts to localise or customise the app that was operational in 22 countries and got 32 million hits per day, went through long gestation periods and prioritisation cycles, while its smaller and more agile rivals were faster when it came to improving their apps to suit Indian users.
Sahai says that for Chinese companies mainly those supported by the BAT (Baidu, Alibaba, Tencent) trio, China market is always the core business and the rest of the market is an expansion, which creates some sort of inertia when dealing with the competition here in India.
But, it has become increasingly clear that India as a market cannot be generalised. As Sajith Pai, who works with VC firm Blume Ventures, puts it, India is divided into three consumer segments: the first 100 million, mainly the urban or affluent Indians and are the main targets of indulgent e-commerce brands; the second 100 million classified as the aspiring class; and the last a little over a billion — three segments he calls the splurgers, strivers and survivors.
Pai says that most global companies investing in India, including Apple, Facebook and Instagram are aware of this graph and think of India as a secondary market by targeting the first 100 million. Things may be changing from the WeChat days with a new crop of Chinese companies trying to cater to the new 100 million, including rural India, new internet users and youngsters. Case in point: MX player, NewsDog, Shareit, and UCBrowser that cater to the new internet users in India have a higher chance of surviving in India because they understand the new Indian users better.
Still, unlike China where there is a big government-initiated push for a common language and similar culture, cultural diversity in India, like lack of a common language, city structures, and economic disparity makes it difficult to generalize the Indian market. That’s the lesson that Tencent – and, indeed, the BAT trio – seems to have learnt and are only investing in large Indian companies.
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With additional inputs by Jayadevan PK Updated at 01:13 pm on October 8, 2018 To correct typos in the copy
Updated at 12:48 pm on October 9, 2018 To correct an error in the earlier copy that said most popular phones in India at the time came with less than 100 MB memory. They came with less than 200 MB memory. Also added a caption for a picture.
Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures, Vijay Shekhar Sharma, Jay Vijayan and Girish Mathrubootham among its investors. Accel Partners and Blume Ventures are venture capital firms with investments in several companies. Vijay Shekhar Sharma is the founder of Paytm. Jay Vijayan and Girish Mathrubootham are entrepreneurs and angel investors. None of FactorDaily’s investors has any influence on its reporting about India’s technology and startup ecosystem.