WeChat Expands in Europe in Bid for Global Advertisers, Payments

(Bloomberg) -- WeChat, China’s most popular social media and messaging service, has launched a new bid in Europe and the U.S. to develop its payments offering and win new advertisers.

Owned by Tencent Holdings Ltd., WeChat is looking to launch an office in the U.K. and another European country, alongside its existing presence in Italy. Tencent, which has an established office in San Francisco, is also looking to grow its WeChat team in the U.S., targeting advertisers and payments providers.

“We needed to make a step closer in serving European brands,” said Tencent Europe director Andrea Ghizzoni, in an interview with Bloomberg.

WeChat, which also hosts payments and brand pages, has more than 889 million users in its home country, yet remains largely unused outside of its home country.

It is not the first time WeChat has attempted to win over Western users. In 2013 the app hired soccer star Lionel Messi in a high profile campaign outside of China. “There were lots of downloads” of the app, said Ghizzoni. “However stickiness was slow.”

WeChat is now focusing more on business-to-business, encouraging Western brands to sell products on the WeChat platform. The service is courting “high-value” brands in countries like the U.K. and Italy, Ghizzoni said in a Bloomberg Television interview. Burberry and Chanel are already high-profile clients on WeChat’s platform.

In Europe, the focus is first on fashion and luxury goods, and will in time expand to travel and broader retail services. WeChat is hoping its expansion in Europe will convince more high-profile brands onto the platform, not only to reach consumers in China, but also Chinese tourists visiting Europe.

Goldman Sachs estimates that 220 million Chinese tourists will travel overseas by 2025, up from 120 million in 2015.

“Tencent could be following Chinese travelers to Europe and the U.S., as many of these consumers are going overseas for shopping,” said Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service. “It would make sense for brands to advertise on WeChat which is a large and effective platform.

Payments Push

Tencent’s payment business is booming, as its average daily transactions topped 600 million a day in December. Chinese consumers are using the service to pay for everything from ride-hailing to food takeout.

But while WeChat has been one of the leading providers in offering chat-based payment systems, its global competitors have been ramping up the competition.

Facebook Inc., which owns WhatsApp, has been expanding its payments offering within its messaging apps, while Alibaba Group Holding Ltd.’s finance affiliate has been busy pushing Alipay in Europe. In August, Ant Financial, Alipay’s parent, announced a partnership with Ingenico Group SA, a French payments group, to allow Chinese tourists to pay for goods in Europe via the group’s e-wallet platform.

“We are talking to different payments institutions in Europe,” said Ghizzoni, “in order to integrate them into WeChat.”

Ghizzoni flagged the U.K.’s high-profile payments industry as a major reason for setting up in the country. WeChat is working with media agency Digital Retex in the U.K., who are helping set up an initial office in Mayfair. The messaging app will add more staff, from IT to operations, over the next year.

“Tencent could be trying to do what Alipay is doing,” said Sun, “but there’s much more uncertainty in terms of when the business could take off, as it would need to overcome many regulatory hurdles.”

To contact the reporters on this story: Giles Turner in London at gturner35@bloomberg.net, Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Giles Turner