The globalization of WeChat, a messaging application owned by Tencent Holdings Ltd, may facea bump in the road after the Chinese Internet giant decided to reduce promotional activities forthe app in overseas markets.
Pony Ma, founder and chief executive officer of the Shenzhen-based Tencent, said onWednesday that the company will stop overseas commercial promotions through hardadvertisements as the app's user growth has been plateauing in overseas markets.
"We have spent a lot of money to promote WeChat in overseas markets during the last twoyears, but the effect is not very obvious now," Ma said in a press conference in Hong Kong.
The move is seen as a drastic change in WeChat's globalization strategy as Ma announced ayear ago that Tencent would invest heavily in marketing and popularizing its WeChat services ininternational markets.
Ma did not reveal the specific amount of the investment. But in 2013 alone, Tencent spenthundreds of millions of dollars for the internationalization of WeChat.
"Instead of pursuing growth in user numbers, Tencent will strengthen cooperation with music andgame operators to build a better ecosystem with better services," Ma said.
WeChat, the most widely used messaging app in China, had 468 million monthly active users atthe end of September 2014.
Ma did not reveal the number of WeChat's users outside China. But Martin Lau, president ofTencent, said during the same event on Wednesday that "the absolute majority" of WeChat'scurrent users are based in the Chinese mainland, while others are mainly from Southeast Asiaand Hong Kong.
Lu Jingyu, an analyst with Internet consultancy iResearch Group, said the decision may suggest asetback for WeChat's development in overseas markets. "The competition among mobilemessaging apps in overseas markets is fierce with a number of powerful players, such asWhatsApp," she said.
However, Lu said given WeChat's solid development inside China, the stumble in overseasmarkets can hardly hurt its business performance.
Tencent said on Wednesday that its fourth-quarter profit rose 50 percent as the companygenerated more money from selling games and advertising to more than 1 billion users of itsWeChat and QQ messaging services.
Net income climbed to 5.86 billion yuan ($941 million) in the three months ending Dec 31, theHong Kong-listed company said in a statement compared with the 5.93 billion-yuan average of11 analysts' estimates compiled by Bloomberg.
Lu said that the top priority for Tencent this year is to further WeChat's commercialization.
WeChat kicked off an advertising program at the end of January, allowing advertisers to sendinformation to its users. The move is seen as a major step to boost advertisement income asWeChat, a social networking tool, is able to target specific demographics such as gender, ageand location, via big data technology.
