How the WeChat Ban will Impact Personal and Business Users
Everyone is asking - will WeChat really be banned in the US? How will this impact WeChat users?
WeChat has reported over 1.2 Billion monthly active users in the first quarter of 2020, so even though only a portion of these users resides in the US, a significant number of people will still be impacted by the impending ban.
Most people are concerned about how this would prohibit Chinese who are living abroad from communicating with their friends and family in Mainland China, but what most discussions have missed is how this ban would impact businesses that are using WeChat to connect with their customers.
In this post, we will outline how the WeChat ban will impact both personal and business users.
HOW PERSONAL USERS WILL BE IMPACTED BY THE WECHAT BAN
WeChat is a power app, amalgamating a ton of functions into one app, allowing personal users to hail cabs, pay utility bills, even donate to charity, and manage their investments. The most common function for personal users though is still the messenger function, where they use the chat function to stay connected with friends and family living in Mainland China. They would also share their news updates by posting onto WeChat Moments, a function akin to Facebook newsfeed.
Personal users also include salespeople who use the app for work. In fact, most people in China use WeChat for work. The app is used for work chats, to negotiate pricing and details with clients, and important documents are sent and signed via the app.
Salespeople provide pre and post-sales service to Chinese shoppers on the app, and this ranges from retail salespeople, home bakers, to realtors sharing property details and floor plans via the app. It makes sense to service clients on their preferred channel of communication, and for the Chinese, WeChat is this channel. Chinese shoppers commonly place preorders to salespeople over the app, and if you assume that they can easily switch over to email, then you are wrong because they rarely use email for business conversations.
If anything, people should be concerned with how the WeChat ban will impact businesses versus personal users.
HOW BUSINESSES WILL BE IMPACTED BY THE WECHAT BAN
As we just mentioned, most business conversations with Chinese businesses take place on WeChat, and without this method of communication, US businesses would find themselves receiving slower responses than usual if they switch to email, since it's not the preferred method. Slower business correspondence is just the beginning.
Businesses that have invested time and money into establishing and building a presence WeChat with their WeChat Official Accounts (which are branded accounts like Facebook pages) will lose access to these accounts and the ability to stay in touch with their customers on WeChat.
Imagine brands that invested years growing their following to tens of thousands of users suddenly losing access to posting WeChat updates. Again, this is a lost marketing channel, and often, this is the only Chinese digital channel brands have invested in to connect with Chinese consumers.
Other investments such as WeChat Mini Programs (see below discussion) would also be lost.
Within this past year, WeChat has also launched WeChat Work, a complementary tool to WeChat Official Accounts to help businesses stay in touch and manage their relationships with clients, colleagues, staffers, and management. Amongst its many tools, it has functions such as employee HR training, CRM, digital performance reporting, live streams, and online meetings.
This tool came in handy especially during COVID, with its functions that allowed staffers to report their health conditions digitally via the app. Daily, weekly and monthly retail performance for various store locations could also be sent in on WeChat Work, making remote management easier for companies with multiple branches.
To help school districts distribute the latest information easily to schools, teachers, parents, and students, WeChat Work helped school districts on board all vested users onto WeChat Work, where all parents from the same school or district could be grouped into one chat, and information and resources could be easily distributed.
The WeChat Work app also has the ability to set up live streams and online meetings for thousands of members, which helped retail brands, shopping centers, and other consumer brand salespeople to conveniently demonstrate their products to their customers on WeChat. These functions were available to all companies with a WeChat Official Account, and now with the WeChat ban, all of this convenience will disappear.
HOW RETAIL WILL BE IMPACTED BY THE WECHAT BAN
This is just the first layer of personal usage because there are other groups of users businesses would be concerned about, and these are the potential tourist traffic that will (hopefully) resume post-COVID travel restrictions.
In 2019, China accounted for 90% of the growth in the personal goods luxury market, and according to forecasts, and market research authority Bain projects that China will account for over half of the world's luxury market by 2025.
While the rest of the world has reported a decline in luxury goods spending, China has reported a growth of 2% in the first 4 months of 2020 despite shops being closed.
Why would the WeChat ban matter?
Without access to WeChat, as Chinese shoppers are traveling abroad, they won't have access to pay by WeChat Pay, which is a digital payment service tied to their bank account in China, which lets them make purchases quickly and easily by scanning a QR code. WeChat Pay is a service used by over 900M people in China. There are alternatives such as Alipay, but removing one of the most convenient ways for shoppers to pay seems counterintuitive for both the shopper and the businesses hoping to attract their spend.
Brands have invested in developing WeChat Mini Programs, which are essentially eCommerce shops on the WeChat platform that allows shoppers to browse catalogs and make purchases, again using WeChat Pay. With the removal of WeChat from the US, brands who have invested in this platform will lose WeChat Mini Programs as a revenue stream.
While this list covering how the WeChat ban would impact personal and business users is extensive, it definitely isn't exhaustive, as there are many other functions within the WeChat ecosystem that will disappear from the US once the ban is in effect.
If you are wondering how the ban will impact you and your business, and want to seek alternatives to building relationships with Chinese consumers, contact us at info@catalysagents.com and we can provide at least 3 alternatives to help your business.