Apple Goes to China: Page 2 of 2

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WeChat for Everything

To start, WeChat offers texting as well as free video calls and instant group chats with the capability of sharing large multimedia files. A GPS function allows you to track where your friends are or to send them your location. WeChat also supports online shopping and mobile payments at physical stores and for utility bills and parking tickets -- and even allows users to split a dinner tab, book and pay for taxis, food deliveries, and theater tickets. Heck, you can even schedule a doctor's appointment within the WeChat ecosystem.

In addition, an Enterprise WeChat service offers the usual chat features, and lets employees track annual leave days and expenses, request time off, and even clock in and out of work. Enterprise WeChat also features a business-oriented collaboration service similar to Slack.

Where Apple, and to a lesser degree, Samsung, have built customer loyalty around the device, WeChat has been able to build loyalty around the variety of services it delivers. Also, a lot of these services lean on QR codes, a technology that has fallen to the rear in the U.S. market in favor of alternatives like near-field communications (NFC). NFC is more convenient, but it's not universally available, where QR codes are accessible from any smartphone with a camera. Business people even use WeChat QR codes to exchange business cards.

Resurrecting a plan that we had discussed in the U.S. market some years back, WeChat has recently introduced what it calls "mini programs." Mini programs are apps that run in the cloud rather than on a device after download.

In the early days of the app market, we used to talk about the two approaches to delivering apps: device-specific apps versus browser-based apps. For reasons of performance and the ability to leverage various device capabilities, device-specific apps came to dominate in the U.S. and most other countries. WeChat is selling the cloud-based alternative, but by using WeChat rather than the browser.

Chinese buyers also tend to favor domestic brands. Apple has now fallen to fourth place in the Chinese market behind Oppo and Vivo, from BBK Electronics Corp., and devices from Chinese electronics giant Huawei Technologies, according to JL Warren Capital. Apple's share of the Chinese market now sits below 10%, down from a peak of 13% in 2015. Weakening Apple's grip is the loyalty buyers have with WeChat rather than with Apple.

Global View

None of this bodes well for Apple in a cost-sensitive market, particularly as that rumor has it that the next-generation iPhone, due out later this year (hopefully), may fetch prices up to $1,400!

Drawing conclusions about mobile adoption from one country to the next is difficult given economic and cultural nuances. WeChat is unique in the way it has evolved from a simple texting platform to a multifunction mobile service complex that has ingrained itself in almost every aspect of Chinese live, business or personal.

It's a fairly sure bet that Silicon Valley elites have studied WeChat's success, but no one has come up with anything as pervasive and far-reaching as the app. Of course, the U.S and Chinese markets are very different, and a U.S. version of WeChat might not catch on. However, the WeChat developers most definitely had a clear understanding of the needs of the Chinese market and came up with a homerun mobile service for the most populous nation on earth -- not a bad strategy.

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