China’s biggest web company by revenue has just posted its Q1 2013 financial report. Tencent (HKG:0700) reports rocketing revenues and profits for the whole group, which covers products across social media, gaming, advertising, e-commerce, media, and more. Tencent’s quarterly revenues hit US$2.161 billion, up 11.5 percent on Q4 last year, and up 40.4 percent from the same period last year; net profits reached $649.4 million in Q1, up 17.3 percent QoQ or 37.4 percent YoY.

Tencent makes China’s biggest social export, WeChat. In today’s report, the company revealed that it now has nearly 195 million monthly active users on the social messaging app (194.4 million to be precise); that’s up 23.1 percent on the previous quarter, which is up 228.4 percent in a year. WeChat has over 300 million registered users, and is likely to exceed 400 million some time this month. As we noted last week, WeChat’s significant number of active users puts it close to surpassing Whatsapps’s 200 million actives, though about 90 percent of WeChat’s user-base is within mainland China, so it’s not that much of a global success yet.

Other social numbers:

• QQ instant messenger hit 825.4 million monthly active users, up 9.8 percent on Q1 2012. QQ’s peak simultaneous users reached 173.0 million, which was down 3.3 percent across the year.
• Qzone, the broader social network around QQ, got up to 611 million monthly actives, up 5.9 percent in a year.
• QQ Game Platform saw peak simultaneous users of 9.2 million, up 5.9 percent over the same period.

In other financial data, value-added services accounted for 78.7 percent of revenues in Q1 this year, reaching $1.72 billion. That’s up 13.6 percent from the last quarter. Online gaming revenues increased 19.3 percent over the same period to amount to $1.21 billion. That was mostly down to China-area gamers on things like Crossfire, and was boosted by increased gaming activity during Chinese New Year.

Founder, chairman, and CEO Pony Ma says in today’s report:

During the first quarter of 2013, we saw broad-based growth in user engagement and revenue across our key activities. This growth has enabled us to fund investments in longer-term opportunities such as WeChat international user acquisition, online video content aggregation, and e-commerce footprint expansion, while maintaining a healthy expansion rate in earnings and cash flow. We saw both strategic and financial benefits from our portfolio of investee companies, including a further special dividend from Mail.ru.

We will continue to invest proactively in innovation and technology, and to cultivate our open platform, in order to capture the mobile opportunities ahead and strengthen our position as the leading internet platform company in China.

WeChat hasn’t really been monetized so far, but Tencent will soon endow it with social gaming integration similar to what has been done by rival apps Line and KakaoTalk.

Find the full report on Tencent’s investor relations page.

The company’s stock price has been jumping around quite a bit over the past half year, reaching heights of over $280/share in November 2012 and early March 2013, but also dropping repeatedly to below $250/share. Its current price sits at almost exactly $250/share, and Sina Tech’s report on the stock buyback hypothesizes that Tencent is looking to calm things down a little bit, and perhaps boost investor confidence in the stock.

Whatever the reason, if the company continues to buy back stock over the course of Friday, it will likely approach the $100 million mark. Luckily, Tencent is one of the few Chinese internet companies that has that kind of cash to throw around. Even if WeChat’s monetization is still in the early stages, the company is still making boatloads off its games and other services.

(via Sina Tech)

Tencent’s iconic penguin gets to grips with the company’s latest full-year financials.

Hong Kong markets have just closed, and Tencent (HKG:0700), China’s biggest web company, has released its 2012 full-year and Q4 financials. With Tencent hoping to have a global success story with its WeChat messaging app, more eyes than ever are on Tencent. The headline figure from today’s financial report is that full-year revenues were up 54 percent in 2012 to hit US$6.994 billion. Let’s just say $7 billion.

Most of Tencent’s growing revenue ($5.09 billion) was from “internet value-added services”, including things like gaming and virtual products. After all, it’s China’s biggest gaming company as well.

With a growing push into e-commerce, $704.4 million of all that revenue came from its online stores, such as Paipai and its open platform QQ Buy.

Tencent’s operating profits for 2012 stand at $2.46 billion, up 26.3 percent on the 2011 figure.

WeChat and Social

The latest version of the WeChat app

Disappointingly, Tencent made only two bland references to WeChat’s overall progress, mentioning “substantial growth” in 2012 and an emphasis on “marketing investment to acquire users for WeChat” – both of which were obvious already. The financials also said that WeChat Moments – the Path-like social network inside the messaging app – has “enjoyed rapid user adoption.”

On its other social platforms, Tencent reported monthly active users on its Qzone web profiles (sort of a mix of MSN and Facebook) “increased by nine percent year-on-year to 603 million at the end of 2012.” As for its Facebook clone Pengyou site, it saw a 22 percent boost in monthly users to reach 247 million. The ubiquitous QQ instant messenger hit 798 million monthly active users.

In addition, its Twitter-esque Tencent Weibo hit 87 million daily active users by the end of the year. That’s out of its 540 million registered users. But the microblog remains out-hyped by the identically-named Sina Weibo.

Getting back onto the subject of gaming, Tencent’s QQ Game Platform saw peak concurrent users reach 8.8 million in the fourth quarter of 2012. That’s the casual, social gaming side of its many online title offerings.

2013 targets

Looking to the year ahead, Tencent teased possible “applications, games, and location-based activities” arriving in WeChat and its mobile QQ IM apps.

While Tencent might be worried in private that its big earners – stuff like games and advertising – are reliant on desktop and not well adapted to mobile, founder and CEO concludes that he’s pleased with the Shenzhen company’s push onto mobile screens:

During 2012, widespread smartphone adoption brought both disruption and opportunities to the China internet industry. At Tencent, we began to see early results from substantial investments we have made, and continue to make, in mobile internet products. Tencent now provides many of China’s most popular smartphone apps for activities such as communications, social networking, web browsing, games, news, and music, among others. These apps enable us to reach users who are increasingly spending time on smartphones, extend our ecosystem from PCs to mobile, and provide new mobile-specific features unavailable on PCs. During the year, we also introduced a powerful targeted advertising system leveraging our social networks, built the market-leading open platform in partnership with third party developers, diversified our game revenue internationally, and ramped up a sizeable e-commerce business. As a result, we achieved healthy increases in revenue and earnings in 2012, while continuing to invest aggressively in platforms, innovation and technology in order to enhance value to our users and drive long-term growth for our company.

We’ll drop in on Tencent’s post-earnings conference call later and post any juicy details that might emerge.

Find the full report on Tencent’s investor relations page.

Tencent (HKG:0700), makers of the popular WeChat messaging app, is to open an office in America this year as the Chinese company focuses on taking WeChat global. This was confirmed by Tencent corporate development group vice president Zhang Xiaolong in an email to employees this morning and which was seen by Caijing.

The paper says that the new US branch will be a customer relations department for WeChat, which has over 300 million users.

WeChat – known as Weixin to Chinese users – first went global in April 2012 when the English branding was created. As you can see in the graph below, that seems to have accelerated WeChat’s growth even further, though Tencent has never released figures for the numbers of overseas users. However, Justin Sun, director of international WeChat operations at Tencent, told us last year that WeChat is seeing a growing ratio of overseas users and is proving to be a hit in Southeast Asia, America, and across the Middle East.

Tencent already has offices for its gaming operations in San Francisco; it’s not clear if the new office will be nearby – or precisely when it’ll open. We’ve reached out to Tencent at Shenzhen HQ and will update if we hear back [UPDATED:] who tell us: “We recently put together a small project team for WeChat to study the US market and explore future potential opportunities.”

WeChat is up against established messaging apps like Whatsapp, as well as a host of innovative Asian-made rivals. Aside from messaging, WeChat has a feature called Moments that allows users to share albums of photos and other things, making it a challenger to Path and Facebook as well. The biggest rival app out of Asia is NHN Japan’s Line app, which is also expanding aggressively into overseas markets.

Here’s WeChat’s growth in users thus far:

Caijing

Alibaba’s Jack Ma (left) and Tencent’s Pony Ma (right) are unlikely new biz partners.

China’s insurance regulator has confirmed approval, say sources, of a major new online insurance joint-venture between two Chinese web giants. As was first proposed last August, the new business sees e-commerce company Alibaba teaming up with social and gaming-oriented Tencent (HKG:0700), who – along with the country’s top insurer, PingAn (HKG:2318) – will soon launch this online-only joint-venture that will be called ZhongAn.

Neither Tencent nor Alibaba have commented on the apparent approval, pending official word from the China Insurance Regulatory Commission (CIRC) itself.

Unlike traditional insurers – like PingAn – the forthcoming ZhongAn company will not open brick-and-mortar stores across China. The new business will reportedly focus on liability and guarantee insurance, such as for homes and possessions. It’s not clear how much of a financial investment this entails.

Alibaba, which runs online malls like Tmall and Taobao, will be the top shareholder in ZhongAn with a 19.9 percent stake. Tencent (makers of QQ and WeChat) and PingAn Insurance will each own five percent. There are also six smaller shareholders, including online travel booking site Ctrip.

E-commerce rivals forced to work together

With China having over 200 million e-commerce shoppers at present, and an anticipated 420 million e-shoppers by 2016, these companies will be hoping that the populace is ready and keen to handle its financial services online as well.

Both Tencent and Alibaba are old hands in the online finance business, as they run major e-payments platforms (Tenpay and Alipay, respectively). Plus, Alibaba has been micro-lending to small businesses on its e-commerce platforms for quite some time. Nonetheless, it’s still a major business move by the two web companies.

Tencent also has its own e-commerce business, making it a rival to Alibaba in several areas. But it’s likely that China’s strictly regulated financial sector necessitated the two rivals working together for this new business.

(Source: GlobalTimes; Image from Techweb.com.cn)

The WeChat messaging app seems to be China’s biggest social media export to date. But, apart from Tencent telling us that the “focus is Asia,” no one knows where WeChat is proving popular. Keen to find out where the app is doing well, the China-oriented consultants Value2020 have come up with this neat heatmap.

We’re told that the map is collated “based on app stores’ rankings” of WeChat, balanced by a “percentage of smartphones connected to the internet” in that country. While it’s far from an official way of tracking WeChat’s near 300 million user-base, it seems like a decent approach to find such elusive information. Of course, download numbers and app store tallies don’t equate to registered or active users, so that has to be thrown in there as a disclaimer.

In demand in India, Malaysia

The WeChat heatmap reveals that Tencent’s Asia strategy is paying off, with strong popularity for the app in places like Malaysia. Indeed, Tencent’s country manager for that area revealed a while back that WeChat has one million users in Malaysia, so that’s a useful, solid reference point. The Value2020 team says that India is actually the second-most popular area for WeChat outside of its native China. So long as the app’s censorship slip-up last week doesn’t put off overseas users, it looks like WeChat is building up a strong bulwark against Line and Whatsapp in some crucial, mobile-oriented markets.

In terms of recent trends, we’re informed that the messaging app is now growing even faster in India than it was last year, and it has been taking off in Spain, Mexico, and Argentina since last summer. Here’s the heatmap that Value2020 cooked up:

[Source: Value2020]

For more fun graphics like this one, check out previous entries in our infographic series.

The evidence.

Yesterday we broke the story of how WeChat, the world’s biggest Whatsapp-style messaging app, was apparently censoring words that are deemed “sensitive” on the Chinese web right now. In what looked like a case of keyword filtering of certain Chinese text (which could be replicated by many, but not all, users around the world), WeChat was not permitting some phrases to be sent via the app. After contacting Tencent (HKG:0700) last night, now the makers of the hugely popular app have responded.

Referring to the case as a “glitch”, the full statement given to us reads:

A small number of WeChat international users were not able to send certain messages due to a technical glitch this Thursday. Immediate actions have been taken to rectify it. We apologize for any inconvenience it has caused to our users. We will continue to improve the product features and technological support to provide better user experience.

Indeed, testing out the offending phrase today, it does now work within WeChat.

Incriminating evidence

But there’s clear evidence (see the screenshot collage above) of very specific “sensitive” phrases being blocked by the app – particularly the Chinese name of the outspoken magazine Southern Weekend, which has been embroiled in a battle with authorities over a fiery editorial in its New Year’s edition – it’s hard to see how it was a technical error.

But what about that warning that many saw? It’s as clear as day in many screenshots. “The message “南方周末” you sent contains restricted words. Please check it again.”

Yes: Restricted words. That’s no error message. It’s very far from being: Ooops, our servers are a bit busy right now, please try again a few minutes later.

If so, why was WeChat (known as Weixin in Chinese) not blocking the word “coffee” in Chinese, or “boobies”, but it was very specifically prohibiting, in many instances, the name of that magazine. And a controversial cult group. And perhaps more Chinese-language politically taboo words. Unless the hidden meaning of the “technical” issue in the Tencent statement is that keyword filtering was turned on by mistake.

In the long run, so long as the app safeguards free speech for all other languages, the damage from this incident might be contained. Censorship is a fact of life in China and on the web in the country, usually instigated by the media and web companies themselves so that they avoid getting in trouble with authorities. That’s how it works.

But this kerfuffle has shown that, if a web company wants to expand overseas – like Tencent with WeChat, or Sina Weibo and its new English version this week – then the legal and cultural practices of the Chinese web have to be shaken off. Oh, and iron out the “glitches” too.

[Extra screenshot evidence courtesy of The Next Web and @hu_jia on Twitter]

Right now, the Chinese name of the outspoken magazine caught up in a tense struggle of wills with the government – Southern Weekend in English, 南方周末 (nan fang zhou mo) in Chinese – is censored in Chinese on WeChat. But it’s not just restricted to users in China (where the app is called Weixin), and typing that name in the Chinese language is now blocked globally. The restriction notice says (pictured):

Click to enlarge.

The message “南方周末” you sent contains restricted words. Please check it again.

We’ve tested it out going from users in China to Thailand (blocked), Thailand to China (blocked), and even Thailand to Singapore (blocked); the prohibited words are not sent at all. The name of the magazine can be sent in English.

While some long-standing bugbears of Beijing – like the name of a certain cult group – are already blocked on WeChat, this is the first major case of topical censorship seen on WeChat that we know of. It might seriously affect the app in overseas markets if users feel unease over these kinds of restrictions – even if it apparently doesn’t affect English words or phrases.

All media outlets in mainland China are required to operate a form of self-censorship to keep themselves in line with what authorities don’t want being discussed. This is often highly visible on Sina Weibo, China’s most popular Twitter-like social site, where ‘sensitive’ words or phrases are blocked on a very regular bases.

It’s shit like this that caused us to declare 2013 as the worst year ever for tech in China.

(Hat-tip to @Weigu on Twitter for spotting this; UPDATE: See another example and screenshot from this Twitter user)

In an all-too-rare instance of web companies and content providers teaming up to give users exactly what they want, China’s video sites are currently thriving, packed full of legit and fully licensed movies and TV shows from across the globe to watch, on-demand, and mostly for free. It’s somewhat ironic that Chinese web users will find it easier to stream the latest episode of Breaking Bad or watch the entire back-catalog of House, or view a recent Hollywood blockbuster, than their counterparts in the US.

Among the many strong contenders are video-streaming services from Chinese web giants such as Baidu (iQiyi), Sohu (Sohu TV), Youku, LeTV, PPS, and – the nation’s biggest online company – Tencent (HKG:0700), with its Tencent Video portal at V.QQ.com. To get a sense of the scale of Tencent Video, and why it even needs to compete in this pricey and crowded sector in the first place, we talked to Alex Liu (pictured below), general manager of Tencent’s online video department.

Alex states that Tencent Video is no longer playing catch-up, and is already a top choice for Chinese viewers:

iResearch’s UserTracker September 2012 report on video sites for web and PC clients shows Tencent’s 275 million monthly user coverage was more than Youku’s 266 million, making Tencent Video the number one platform in the industry. [… And] the October monthly coverage was 272 million, leading Youku again by six million.

There are a lot of metrics out there, of course. [UPDATE: It's also worth noting that the iResearch data mentioned above does not include mobile/app views, so it's not a full reflection of the market. Factoring in mobile video views, Tencent Video might not be top]. When we last got a sneak peak at some ComScore data a few months ago, it showed that the stickiest video streaming site in China, in terms of viewing time, was Youku, which was being used for 698 million hours of web video viewing. Tencent Video was third with 474 million hours of eye-ball time. But Tencent’s portal looks to be growing with the strongest year-long growth in the industry by iResearch’s stats [1]. In terms of importance, Tencent recently declared web video, among its very many products, to be one of its top five goals.

To Hollywood and beyond

Alex Liu.

Aside from all the stats, what these video sites need is quality, big-name content to bring in viewers – viewers who are dissatisfied with the dull and safe programming on CCTV, the state TV broadcaster. That means things that young Chinese really want to see (unlike CCTV), such as Korean romantic series, Taiwanese game-shows, American dramas, topical Chinese dramas and comedies, new Hollywood movies, the latest manga. And all that will bring in advertisers. Alex explains:

Tencent Video has always emphasized the importance of investing in the [broadcast] rights to TV series to create a TV viewing platform with diverse, high-quality content, and broad, total coverage. Tencent video already has 61 TV series with more than 100,000,000 plays, and our coverage includes 85 percent of the year’s popular TV content. In 2013, Tencent video wants to cover 80 percent of the content on the top satellite TV stations, plus have exclusives each month, and we’ve already signed agreements with 15 hot shows.

That extends even to Hollywood and other nations:

As far as overseas content, Tencent Video’s Hollywood film theater is already online, including nearly 400 films across 20 genres. We also have 24 series and more than 1,000 episodes of American TV on Tencent Video, including a worldwide web exclusive for the first 13 seasons of CSI, and 500 episodes of Korean soaps from MBC will also be exclusively shown on Tencent Video.

Self-produced shows

All these video-streaming rivals have pushed up the price of web broadcast rights in China, with 30 episodes of one Chinese drama costing as much as $4.6 million last year. Many sites are therefore producing their own content – even dramas – to bring in viewers. Alex adds:

Original content has always been a source of competitive strength for Tencent, and was established early on as one of Tencent video’s strategic directions. At present, Tencent video has successively released [lots of Chinese dramas] and other news, sports, entertainment, and finance; plus Tencent original programs. [… We’re] planning “Burst Forth 2013,” a strategic plan to produce 100 microfilms and 100 web series over the course of the year.

Mobile cinema

Tencent – which also makes the huge messaging app WeChat, which it has launched worldwide – is the nation’s biggest web company by revenue – and by the sheer weight of registered users. Its QQ instant-messenger is used, it’s no exaggeration to say, by pretty much everyone in China. That gives the video portal a big boost in terms of reputation, already registered users, traffic, and its perceived power as an advertising platform. Alex insists it’s a “dual platform for marketing” that includes displaying ads on the Tencent Video mobile apps (for Android, WP, iPhone, and iPad), the Windows PC app, and of course on the website too. But Alex won’t be drawn to give a number for how many video views come from the smartphone and tablet apps.

The V.QQ.com site is different from Baidu’s iQiyi – and Hulu – in also having user-generated content (UGC) in the form of videos, but, we’re told, “less than 10 percent of Tencent Video is UGC.” It’s mostly social stuff that comes from the company’s many social services, such as WeChat, QQ, QZone, or the Facebook-esque Pengyou.

Paying up?

The new Tencent Video section for Hollywood movies – with support for paid streaming. Click to enlarge.

Although Tencent doesn’t lack the resources to buy all this content or monetize the videos from advertising, some of the streaming content requires a small fee to watch – usually as little as 2.5 or 5 RMB (40 to 80 US cents). We’ve seen the web company do this kind of thing for a long time, including on QQ where it has 30 million paying members. For the video site, the payment experiment is still very new, launched last month to coincide with the new “Hollywood film” section of the portal, here. Alex explains more fully:

Tencent Video is currently testing the waters of the user payment model. This November when we were pushing out the Hollywood theater [section], we tested user payment models, asking between 2.5 and 5 RMB for each film, or 20 RMB [$3.20] for a month of membership to watch unlimited movies. Through the implementation of this user payment model, Tencent Video will give users the newest, the hottest, and the most classic Hollywood films, to give users an exclusive platform for a Hollywood-level experience.

At present the films there include Clash of the Titans, Inception, Green Lantern, and more including animation, science fiction, comedy, and also thrillers among 20 total genres and 400 high-definition North American films. Taking this year’s Oscar contender Argo as an example, it premiered on October 12th in the US, November 15th in Hong Kong, and then just 40 days after the initial premiere it was first available on Tencent Video on November 21st, breaking a new record for online arrival speed.

Despite Chinese web users being very used to e-commerce and paying for things online, it can be more of a challenge to get them to cough up for digital content. Nonetheless, a very reasonable price coupled with a quick roll-out (and better streaming quality than pirated movies), should help to make it a persuasive and attractive proposition.

We’ve seen rival site Youku do the same kind of thing with its Youku Premium channel that focuses on top movies. Back in June of last year, Youku revealed that it had seen 200,000 paid transactions for its library of more than 300 movies. That sounds pretty good, but it’s a small fraction of the hundreds of million of visitors to these kinds of sites.

For China-based fans of films and TV series, they have more high-quality choice online than ever before – all while having to endure less ads than on TV. And that sounds like a great reason to turn off the TV and tune into the web.

Big thanks to my colleague Charlie for Chinese-to-English translations!

The first is a sort of matrix presenting China’s various social networks, classifying them according to relationship type (do they connect real-life friends, or strangers?) and the user’s needs. What’s most interesting here I think is Tencent’s (HKG:0700) properties, including old reliable QQ instant messenger, which spans both strangers and acquaintances.

Looking at Tencent’s other presences which spawned from its QQ userbase – like its Qzone social network, its Weibo microblog, as well as the Weixin chat app (which is being marketed abroad as WeChat) – it’s hard not to be impressed with Tencent’s social portfolio. Of course, none of this information is really new, but seeing China’s major networks laid out in this manner sort of puts them in a new light, a light that is quite flattering for Tencent.

When I think about how Tencent (and now Line and Kakao) have leveraged the user base of their respective chat services, it makes me wonder why Microsoft can’t pull off something similar with MSN Messenger. (Because it’s Microsoft?).

Desktop Favorites

The report presented China’s most favored desktop software in a similar manner, claiming that due to the slow speed of the internet in China in its early days, that desktop software has become popular in comparison. What’s stands out in the chart below is not the classification of various desktop applications, but rather their comparative size of their user bases.

Again Tencent stands out, but so does rival 360 [1]. Sogou’s IME, Xunlei’s P2P client, and Microsoft’s Internet Explorer (ughh…) also have pretty impressive numbers, as you can see below. [h/t Global Voices]

MIS Asia is reporting that Tencent (HKG:0700) claims 400 percent growth for its WeChat app in Malaysia since June, and currently has more than 1 million users in the country. Louis Song, the country manager for Indonesia, Malaysia, and Singapore, commented on the app’s progress in the country to date:

We are very proud to achieve a great and healthy base of subscribers in the Malaysian market in just five months. Our team is committed to continuously improve the user experience and this will definitely be the impetus for WeChat to achieve even greater heights.

Reportedly, a number of Malaysian celebrities are using the service to communicate with fans, and that likely helps WeChat in terms of visibility.

Currently the Android version of the app is ranked 12th overall in the free app category in Malaysia, but it has been one of the top ten communication apps since back in August. On iOS it has been doing even better, and is currently ranked fifth among all free apps, and second in the social networking category.

WeChat launched in Indonesia back in September and it looks to be performing well in there too.

Much like UCWeb’s mobile browser which recently surpassed 1 million Android users, WeChat is an example of a Chinese company that is leveraging the power of app stores to reach consumers around the world.

Remember how China’s biggest web company, Tencent, has had a runaway success with its WeChat messaging app? Well, rumors suggest that the WeChat app – known as Weixin in China – is about to get even more useful and become equipped with local deals and discount coupons. This will happen via the acquisition of a company called TongCard by Tencent (HKG:0700), which Sina Tech suggests is a done deal to the point that TongPay operations are already being subsumed into Tencent’s Beijing offices.

TongCard, founded in 2006 by CEO Deng Yu, is a platform for retailers to reach out to consumers via promotions and coupons, and is one of China’s top O2O companies, with mobile apps as well as a massive network of 6,000+ retailers onboard. The TongCard homepage claims that its service has 5 million active daily users.

The rumor suggests that all the TongCard features will find their way into Tencent’s WeChat/Weixin app after the acquisition, bringing all those coupons to the messaging app’s 200+ million users. It’d also see Tencent make a huge leap in its O2O service strength, growing to beat major web companies and startups operating in this space. And so it’d help Tencent and WeChat surpass rivals such as local coupons startup DDMap, or Baidu (NASDAQ:BIDU) with its deals-equipped Maps app.

If the acquisition comes to pass, the TongCard capabilities might be tied with Tencent’s own e-payment system Tenpay, which we know will soon appear within WeChat.

[Source: Sina Tech - article in Chinese]

China’s Tencent (HKG:0700) calls WeChat its “most important app,” the likes of which they’ve “never seen before in 10 years” at China’s biggest web company – nor ever before from a Chinese web product. And that’s coming from the nation’s social media and gaming giant, which boasts well over half a billion users on its IM-oriented QQ and QZone service. Expressing all this enthusiasm is Justin Sun, director of international WeChat operations at Tencent.

WeChat might have fewer users – just over 200 million – than Tencent has with QQ, but the Whatsapp-esque group messaging app has, Justin says, “great potential to be popular internationally.” And that’s a new thing. It’s started already, he reckons, and reveals that non-Chinese users of the app are increasing globally – to the point that Chinese users of WeChat “several months ago were the majority,” but not so much now.

[UPDATED: To make the context clear, WeChat's users are still mostly Chinese, but recently that ratio is balancing out much more as global users adopt it. I've adjusted my title, too, which wasn't clear enough].

The actual user break-down is a closely guarded secret at this point, but Justin – from his office in the firm’s Shenzhen HQ – conceded that the “focus is Asia” for now. He adds:

The big [WeChat] markets are Hong Kong, Taiwan, Singapore, Malaysia, Thailand, Vietnam. […] We’re really growing in the US and Arabic regions.

As a measure of its success outside of China, it might be useful to look at the number of likes on the official Facebook pages of WeChat and its rivals: Whatsapp has 2.1 million likes, Kakaotalk a mere 45,000, and WeChat fares a bit better with 122,000 likes so far.

Even without concrete numbers for WeChat’s global reach, it’s still a marvel to see a Chinese web product (the app is known as “Weixin” in Chinese) make an impact overseas – especially a social one. We’ve seen it before with apps like UC Browser or Camera360, but a broader service has not before made the leap before.

In terms of languages, Justin says, the Asia focus “doesn’t mean we’re not serving others – we do Arabic, for example, and we’re looking at Turkish and more now.” But expansion takes more than a bunch of translated words…

Expansion partners

Though Tencent doesn’t yet have an overseas office for WeChat, Tencent is taking it on a country-by-country basis with local partnerships on the ground, which provide “operational help” and support with some promotional activities – perhaps as with the professional models promoting the app recently in Kuala Lumpur (pictured above). “We’re going to keep doing things ourselves first and keep those tight business partnerships with others.” But there seems to be no set plan for some formal overseas offices for the app’s operations.

But the company isn’t seeing pushing worldwide as a new thing for them. Justin points out: “WeChat positions itself to be international. And Tencent is international, with lots of investors from outside China.” Plus, the company has game development studios in California – though they’re not part of the WeChat team.

Open to Facebook, Twitter, and more

As if it’s not rare enough to see a Chinese social service expand overseas, WeChat is aiming to do it by being identical for Chinese and overseas users – well, apart from the “Weixin” name in China, and a lack of support for things like Facebook. But it’s an encouraging development in China’s web scene, which often feels like the Galapagos Islands – some fantastical and far-flung rocky outpost of the web where everything has evolved in total isolation. Well, apart from a bit of cribbing.

And so WeChat is emphasizing – as Tencent itself has been doing in recent years – that’s it’s an open platform. Justin stresses, “We must be connected and open to Facebook, Twitter ad Instagram. We must have the same strategy as them – we’re open.”

WeChat does this with plug-ins, sort of like web browsers have add-ons. So WeChat’s Facebook integration is an option for you to actually use, or leave untouched, or uninstall the plug-in altogether. Plus, other apps can use the app’s API to create an easy way for users to share a snippet of info via WeChat.

The teams emphasizes that it’s open to feedback from overseas users too, and the WeChat crew listens tofeedback via email, the Facebook fan page, and various app store comments.

Gaming and monetization?

Rivals like Line and Kakaotalk are pushing monetization hard with things like sticker stores and social gaming integration. And Whatsapp has its faintly ludicrous annual subscription fee. As for WeChat, Justin says that Tencent is not thinking of monetization and “it’s not important” right now. He points to the birth of the company’s huge IM service, QQ, which grew by user acquisition for many years before it then got monetized with everything from virtual currencies to social games.

Justin says that any app or game can already integrate with WeChat to make it easy for users to share info via the messaging app. But that’s not quite the full social gaming platform that we at this blog reckon will eventually spawn from WeChat. But time will tell. Justin reckons that WeChat “will be more open next year to gaming,” though that’s not an admission that it’s a coming feature.

As for the next update to the app, he promises it’ll bring new features – “We have new ideas every month” – so that the app will “become more comprehensive.”

What features would you guys like to see in the app? What can persuade you to ditch Whatsapp, or Facebook Messenger, and get you and your friends onto a new service?

We’re seeing a lot of struggling Chinese e-commerce sites these days, with a number of smaller e-tailers imploding under the weight of costs in the B2C sector. Some have failed spectacularly; others reached the exit. Luckily for the team at 500CCC.com – or “500City” as it’s called in Chinese – they’ve been acquired by China’s biggest web company, Tencent (HKG:0700).

The acquisition has been confirmed by 500CCC executives, but the financial terms of the deal haven’t been revealed. The site remains operational, but rumors in the industry for months have suggested that the site was close to collapse.

500CCC has two offices, one in Beijing and one in Guangzhou.

What is Tencent’s interest in the gadget e-tailer 500CCC? Well, China’s social media and gaming giant is also doubling down on e-commerce these days, running QQ Buy (a B2C open platform), Paipai (C2C), and 51Buy, which sells only gadgets. Speculation is that the acquisition is aimed at boosting 51Buy with, initially, acquired talent – and later merging the two sites into one. So the smaller e-commerce site seems to have been rescued, though it’s unlikely its brand will go on much longer.

Just last month, the once-promising Redbaby, which sold infant’s clothing and supplies, was acquired for $66 million by Suning, a major electronics retailer that’s also pushing hard into e-commerce right now. That exit also came amidst rumors of the collapse of the site – and represented a cheap sale after hundreds of millions of dollars of VC funding had been ploughed into it over the years. Others, like Yaodian100, have vanished without trace.

[Source: Sina Tech (in Chinese); via Marbridge]

For more fun graphics like this one, check out previous entries in our infographic series.

The Tenpay app for iOS.

The world’s biggest messaging app, WeChat, is getting support for mobile payments in China thanks to its parent company, Tencent (HKG:0700). The expanded capability of the social app, which recently amassed more than 200 million users, has just been outlined at a press conference, and will come in tandem with the company’s Tenpay online payment platform.

It’ll allow WeChat users – or, “Weixin” as the app is called in Chinese – to generate a QR code that relates to a payment among friends, which can then be scanned with the QR code reader that’s inside the mutli-platform messaging app. Or payment detail links can also be shared via WeChat if that’s more convenient.

On a larger scale, this could be adopted by major companies that already use WeChat for social marketing, including retailers like Starbucks and Dairy Queen, to allow mobile payments to happen via the WeChat app. We suspect that the Tenpay app will need to be installed too, and that most of the action will actually happen in that. Still, it’s an interesting new twist on cash-less payments, with a nice social twist, in China.

The GM of Tencent’s Tenpay, Lai Zhiming, says the social payments aspect is timed to coincide with the seventh anniversary of Tenpay.com, which can be used for payments on an array of Chinese websites. Its main rival is Alibaba’s Alipay, and is also up against the banks’ UnionPay alliance. Tenpay has 190 million users, and is used by 400,000 merchants; the company claims that RMB 450 billion ($71.2 billion) was transacted on its platform in 2011.

[Source: TechWeb; via TechinAsia Chinese]

Tencent’s (HKG:0700) WeChat is successful, not only in China but it is also gaining traction in other Asian regions. That is only achieved with a lot of hard work and countless hours of late coding, UX planning, and executing.

It’s rare seeing big companies like Tencent acting as agile as a startup. So the WeChat story has so far been a good one to follow so far. Chinese companies expanding internationally is not especially common, making Tencent’s story all the more interesting.

A Tencent representative who we spoke to recently told us that WeChat success isn’t as easy as pushing the app to its large user base across QQ, Qzone, etc. There is a lot of hard work to be done. We were told that the WeChat team usually works until 5am (no kidding!) in the morning just to get things completed. The Tencent rep told us:

We hire very talented people; we hire the most hardworking people in the industry. Chinese people are working crazy hard – the WeChat team works until 4am or 5am; that’s normal, that’s the whole team, we’re not talking about a certain division, that’s the whole team working very late.

The WeChat team values feedback very much just so they could improve their products. The more local the better, as they look to add in more localization specifics for users in Indonesia. “That’s the difference between ourselves and our competitors,” said the representative.

We asked why the team is willing to work till so late into the night to make WeChat a success. The Tencent rep told us that the team is a motivated bunch, saying:

Everyday I wake up, I ask myself, “What drives me to work?” My dream is to have more people use my product [WeChat] – that becomes my happiness. Every team member shares the same goal, the same dream, so you can largely make them work past 2 or 5am to make this product the most successful. We don’t do that by ordering [them], but everybody is doing that for themselves.

Also catch: Tencent’s Plans to Localize WeChat in Indonesia

Photo: jp.techcrunch.com

Forbes has announced its list of the world’s 100 most innovative companies, and at first glance there are a number of big surprises. Looking past Salesforce, which took the top spot, one might be surprised to find Chinese search giant Baidu (NASDAQ:BIDU) at number five, and then flabbergasted to see Tencent (HKG:0700), which is widely known for its blatant copying, as the 11th most ‘innovative’ company.

Before we all throw our challenge flags [1], I should clarify that Forbes’s methodology doesn’t quite measure innovation directly, but rather it says it is measuring how much investors bid up a stock price above its existing value.

At a fundamental level, the reason investors bid a company’s stock price above the value of its current business is that they are expecting new growth. They are expecting new income streams to emerge in the future. Where does most growth come from? Primarily from launching new products or services, or entering new markets. This requires innovation.

Maybe so, but I think Tencent also requires an asterisk.

But in all fairness, both Baidu and Tencent do appear to have interesting plans for expansion [2], and in that sense I’m sure anyone who invests in them will do well. Baidu’s big plans for mobile, even if a little delayed, are promising indications that the company’s success on the web can continue on mobile.

In total, China had seven companies in Forbes’s top 100.

Looking east to Japan, where eight companies made the list, Rakuten (JSD:4755) showed well in seventh place on the innovation rankings. While I don’t know if there are any technical innovations from Rakuten that really stand out in my mind, I do like its expansion plans as well, particularly its strategy of acquisitions and sharing know-how and feedback between regions. Nintendo, who hasn’t really innovated much of anything since Wii [3], is ranked 45th.

As for other Asian companies on the list, India had five companies ranked, including Infosys. Surprisingly, no South Korean companies made the cut.

Apple and Google were ranked 24th and 26th respectively.

Vancouver-based social games developer Eruptive Games recently announced a partnership with Zynga (NASDAQ:ZNGA) to bring its Citizen Grim game to Facebook (NASDAQ:FB). And while the title hasn’t yet been pushed or promoteds on a large-scale, the advanced graphics and zombie shooting action promise that this title should do well. I spoke to the company’s CEO Julian Ing this morning about his thoughts on the recent Zynga partnership, as well as his plans to bring Citizen Grim over to Asia.

Eruptive recently announced $1.1 million in funding, and the new Facebook game (which you can find here) is its primary focus right now. I should point out that Citizen Grim is still in beta, but Julian notes that the new partnership with Zynga will be a huge boost for them as they prepare for the full launch.

What Zynga brings to the table is a lot of traffic, just masses of traffic. It’s a cost effective way to get players on our game. […] We’re still in the production roadmap, still tweaking and tuning the game mechanics, working with Zynga to help optimize the game with their feedback.

Julian also noted that he’s excited they they will be able to bring the game to Zynga.com as well. He notes that while Zynga is not really known for having a strong mobile foothold yet, if things go well, there may be an opportunity to work with Zynga on mobile. “We want to walk before we run,” says Julian.

Making adjustments for Asia

Citizen Grim on Facebook

So is Eruptive eyeing the Asian market right now, as so many other western developers are? Julian says Eruptive is very excited about Asia, and is considering coming into China by working with internet giant Tencent (HKG:0700):

It’s very early stage right now, I think we’ve just had a couple of discussions with Tencent. I understand the complexity of the Asian market and the industry though. We’re very much aware of that.

But as far as Citizen Grim is concerned, with its 1940s American theme, there may have to consider some adjustments in order to figure out what would work best. And Julian explains that in order to succeed on that front, they still have a little more homework to do in order to understand the best approach:

If were going to port over to Tencent and have them publish us, it wouldn’t just be a simple port, we have to start changing our copy as well, changing the graphics to be more suitable for the [local] market. We want to make sure that for whatever market we’re in, it’s really suitable, and that we do it right first time. We would be stoked to go over to China at some point and to work with Tencent, we just want to make sure that our team is aligned to work on that project, That when we go in there we do it with our guns blazing.

For Russia, With Love

Citizen Grim on VK

I asked Julian if there were other markets in the region that Eruptive was looking at, and he pointed out that Citizen Grim has actually already launched in Russia on VK.com yesterday. So actually, the first launch of Citizen Grim was not on Facebook, but actually on VK.

That network, which is very Facebook-like in its appearance and interface, is said to have about 119 million accounts (although I’m not sure of their active user total).

Julian also pointed to Japan and Korea as markets that they are considering as well, as places where Citizen Grim could be ported/localized. But as for exactly how they go about doing that, he isn’t quite certain yet.

We would probably need a dedicated team, or find third party parters who can carry that forth for us — and the latter might be the better route, if we can find a company that understands the nuances of the culture and how to maximize profitability for games in Asian then it would make a better strategy going forward.

The Rovio Model

Julian also emphasized the importance of building a brand with staying power, as opposed to building just a hit game. He explained that they want to be on multiple platforms and media, and says that a Citizen Grim graphic is on the way, and a possible movie as well. In that sense, he says, the model of Rovio who has experienced success with the Angry Birds brand is a good one to learn from.

It’s important that we do a brand that can last for years to come, rather than a one-shot game that only lasts a say, a year or a year and a half.

We’ll have to wait and see if Citizen Grim can endure as long as it intends. It’s certainly an ambitious plan, but the the social gaming industry, especially in Asia, has many zombies of its own lurking in the shadows which Eruptive will have to navigate past.

Aside from all that news to read, Tencent played host to Olympics TV streams, and lots of social media talk about the Games on its QQ forums and Twitter-like Tencent Weibo. But, as we reported earlier this week, rival microblog service Sina Weibo won the hypothetical gold for getting more traffic during the event.

Nonetheless, Tencent’s users across all its services actually won out. Of all those, 77 percent of posts were made from a PC, with just 23 percent from a mobile. The most talked-about sportsperson during the Games was Kobe Bryant, betraying the Chinese obsession with basketball. Surprisingly, no Chinese athletes made it onto the most-discussed list. One oddball entry is South Korean swimmer Pu Taihuan, who was up against local hero Sun Yang in the 1500m freestyle swimming. Though Sun won the gold, a bit of a beef between the two men propelled Pu to social media notoriety for a while.

One consolation for Tencent in its rivalry with the Sina Weibo service is that the former has a greater number of sports stars among its verified users. Here’s the whole infographic:

For more fun graphics like this, check out previous entries in our infographic series.

And so a lot of names now familiar to Chinese online consumers have expanded their market share. Tmall went up from 39.9 percent to 41.5 percent share in the time between 2011 Q4 and 2012 Q2. Huge gains, too, for Chinese web giant Tencent (HKG:0700), which is finally succeeding in its e-commerce efforts, coming from almost nowhere to grab (an albeit distant) third place with its fairly new QQ Buy site.

Lots of other specialist e-tailers have grown healthily, with Suning, Amazon (NASDAQ:AMZN), Dangdang (NYSE:DANG), Vancl, Coo8, and Yihaodian all having expanded their market share slightly. Here are the most recent stats, which we’ve taken the liberty of putting into English-language charts:

And now compare those new figures with the situation (data also from Analysis International) from six months ago:

As for the entire B2C online retailing sector in China, it grew to take in 98.84 billion RMB (US$15.65 billion) in transactions in 2012 Q2 alone, which represented growth of 21 percent from the previous quarter, and up 82 percent year-on-year.

[Sources: Analysis International @ Eguan (1) and (2) (articles in Chinese)]

So Tencent’s made-for-Indonesia Qute messaging app has more than a million users. That makes me curious to find out what is it all about and how is it different from the 100 million user strong WeChat. On surface, there isn’t too much of a difference since both WeChat and Qute are mobile chat apps. You type, you send, you chat — that’s about it.

Diving deeper still, I find that Qute is extremely social, but is pretty much the same as WeChat. Discovery seems to be at WeChat’s core whereas Qute puts it right at your face. And as you know if you’re a long time reader of this site, Indonesia really does love social. Qute is fun if you’re really looking to making more new friends, or perhaps someone to be more than a friend..

Qute search allows you to find other users based on gender and region. Unfortunately, it isn’t capable of allowing users to search based on location. WeChat, on the other hand, allows both location-based and gender search. Qute also doesn’t have address book matching like WeChat does. So finding friends on Qute is a norm.

So how do users connect via Qute? Every Qute user has a unique number. Indonesians are accustomed to connecting via a Blackberry pin number. So connecting via a Qute number should be just fine in Indonesia too. Qute, though made by Tencent, doesn’t allow users to use their QQ number to log in. I tried and it failed. So this app really is a standalone for Indonesia.

All in all, Qute and WeChat don’t really have many differences between them. Qute obviously has more Indonesian users than WeChat. The users surrounding me on WeChat are mostly Chinese (I’m in Jakarta now), and I confess I’m quite surprised to see so many of them in Indonesia. Qute is fun to use, but it isn’t well-optimized for a smartphone. And perhaps it is meant to be this way since its features cater mostly to lower end phones. But the sticky features are there; it’s social and allowing users to find friends from a specific gender works very well. Of course, it’s also popular because Tencent is pushing it hard, like this campaign that gives users a chance to win $1,050 for recommending their friends to use Qute.

Tencent’s (HKG:0700) big push into e-commerce is continuing with the rumors in Chinese media that the company is opening up its QQ Buy online store to 300 businesses to open up virtual storefronts. By the end of the year, 1,000 major B2C sellers will be on the QQ Buy site. It’ll be a challenge to market leader Tmall, and also the gadgets-oriented 360Buy.

While Tencent has confirmed that it’ll make a major financial investment in its QQ Buy platform to help businesses get onto it this year – said to be 1 billion RMB (US$158.7 million) – it has not been revealed which brands or major wholesalers will open up on the B2C site. When QQ Buy first launched in October of last year, it was restricted to consumers in just a few cities, but now that has opened up to users nationwide. Some other e-tailers already use QQ Buy as a storefront – such as WalMart-backed YiHaoDian, and the online clothes store V+.

China’s e-commerce landscape is a two-horse race between the afore-mentioned Tmall and 360Buy. Tencent’s efforts are coming late, but are backed by the web giant’s huge financial clout. Just yesterday we reported that Tencent’s market cap has hit $66 billion and had thereby surpassed Facebook in terms of total value.

Mark your calendars: China’s social media giant has surpassed America’s leader in terms of the total value of their shares. Yes, Tencent’s (HKG:0700) market cap is greater than Facebook’s (NASDAQ:FB) right now, with Tencent’s market capitalization currently at HK$419.84 billion – that’s US$66.6 billion – compared to Facebook’s $62.24 billion.

[UPDATE July 20th: Thanks to a reader for pointing out that I hit the wrong currency conversion option, using Chinese RMB rather than Hong Kong dollars. So, doing the correct conversion, the Tencent market cap was actually $55 billion yesterday, still somewhat short of Facebook's level. Sorry for the false alarm. But it's going to happen soon!].

Tencent listed on the Hong Kong Stock Exchange in June 2004 priced at HK$3.70 per share. It’s trading right now at HK$228. It’s a significant moment for Tencent, which runs a number of social services in the country that are the biggest in their field: the biggest in social gaming; the biggest in group messaging apps with WeChat; the biggest in instant messaging with QQ, the biggest in online profiles with QZone; and the biggest in microblogging with Tencent Weibo [1].

If we look at the country’s top social services – in this excerpt from an infographic on China’s rising social media – you’ll see that three of them are Tencent’s:

But Tencent is not invincible. It has struggled in a number of crucial areas as well. One of the biggest failures has been in e-commerce where its own efforts – with Paipai for C2C selling, and QQ Buy for B2C and online storefronts – have come to little, and been out-gunned by Alibaba’s Taobao and Tmall sites. In mobile, too, it hasn’t co-ordinated quite the same coherent mobile strategy of some of its rivals, like Baidu and Alibaba, which have gone so far as to create their own mobile platforms and smartphones.

Nonetheless, Tencent is a force to be reckoned with both at home and abroad, and its rise in value and continued diversification should serve as a lesson to Facebook. Remember when Facebook bought that group messaging startup called Beluga? Well, nothing came of it. It was just an acquisition for talent. But when Tencent saw the potential of group messaging apps for smartphones, it went ahead and created its own – WeChat, or “Weixin” in Chinese – and it’s now the most used app of its kind in the world with over 100 million users. And it did that pretty organically, without forcing its QQ users into it. Facebook, as Zuckerberg surely knows in private, is a bit of a one-trick pony, and is very vulnerable to, say, social gaming companies pulling out, or to the rise of Google+. But there’s no-one that could take Tencent down in one fell swoop.

[Hat-tip to Asia-based startup luminary Benjamin Joffe - and judge at our Startup Arena contests! - for communicating about this in a tweet. He’s @benjaminjoffe on Twitter]

Looks like Tencent has launched a new Android apps search engine that’s called Haina (pictured above). The search engine allows users to not only search but also see ratings, download counts, and screenshots of the apps before downloading. The app search function is very similar to Google Play’s. The major and perhaps the most important difference is that this Android app search engine is tailored for the Chinese market. Every app featured is in Chinese.

Tencent has been pretty active in introducing services for the Android platform. It also owns an Android app store that opened last September and also has this “iTunes-esque” application for Windows users to sync their apps with their Android phones. Yesterday we also heard rumors that Tencent has invested in Lewa, an Android-based OS. This series of events seem to suggest that a new QQ Android smartphone could well be on the way.

If that is true, it will add to the already very crowded market of homegrown Android-based phones in China. The mobile space is heating up in China and everyone is banking on Android. Google could well sit back happily as usage increases and it gains a foothold in China – not through search but through mobile, which will certainly be a big market in the future.

[Hat tip: CIW]

A China-based angel investor has let slip that Chinese web giant Tencent (HKG:0700) has invested 50 million RMB (US$7.9 million) in Lewa Tek, a local startup that develops the Android-based Lewa OS ROM (pictured above). Though not confirmed by either LeWa or Tencent, it’d suggest a major push into Tencent’s own Android-based ecosystem, perhaps with a view to having its own QQ smartphones and mobile platform.

The investor in question is Wang Lijie who has invested in Lewa. Shanghai-based Lewa was started up in April 2011; its Lewa OS focuses on budget handsets that it calls “thousand yuan smartphones” – ones that cost $150 or less to buy unlocked. Tencent already has its own experimental Android ROM called Tita (see it here), but the company lacks a solid mobile platform of its own at a time when so many other Chinese web companies – such as fierce rivals Baidu and Alibaba – have affordable and convincing smartphones already for sale.

Chinese media reports that Lewa and Tencent already work together on a few aspects of Android platform security, so the two parties are well acquainted.

Although Tencent might lack its own high-profile mobile platform right now, it is already well represented by its own cross-platform apps for its numerous social and gaming services. And it has made attempts at a full OS before, most recently with the Android-based iQQ OS that launched with some partner hardware last November. It’s not clear if iQQ survives, but a dearth of any kind of coverage of that venture in the Chinese press this year suggests that it failed.

We’ll update if this investment gets confirmed.

[Source: PConline - article in Chinese]

Exactly as we’d heard was about to happen in recent rumors, it has just been announced officially that Groupon’s (NASDAQ:GRPN) joint-venture in China with Tencent, called Gaopeng, will merge with its larger daily deals rival FTuan.

The whole deal was overseen by China’s web giant, Tencent (HKG:0700), which not only owns half of Gaopeng but also has an undisclosed stake in FTuan. The financial deals of the merger have not been revealed. Groupon will be a minority shareholder in the new company, as it was in Gaopeng – but we’re not sure how “minor” it now becomes.

The merger will create a new company that’ll be headed by FTuan’s CEO, Lin Ning, but means that the two Gaopeng and FTuan brands and websites will continue as they are.

In this evening’s announcement, the new entity’s CEO, Mr. Lin, said:

China’s daily deals market is moving from investment-driven to operation-focused, and I believe the merger will position us well to further scale our operations and deliver innovative products to our customers. The multi-brand strategy after the merger will enable the new company to serve the segment needs of merchants and consumers in lifestyle e-commerce and mobile internet.

It is indeed the first major deal we’ve seen in China’s fragmented and costly daily deals market, where the current market leader is the startup Meituan. FTuan was in fourth eighth place last time we looked, while Gaopeng was still losing market share way out of the top ten.

Tencent’s new CEO of its recently spun-off e-commerce division said:

The new joint entity will combine the strengths of FTuan and Gaopeng to better serve consumers in the daily deals market in China. We believe group-buying is a natural leverage off our large user base.

Meanwhile, Groupon’s Jason Harinstein, commented:

For Groupon, this transaction is the next logical step in our strategy to strengthen our investment in China. Tencent has been a great partner, and we are excited to continue our partnership with them. We are also looking forward to working with the FTuan team to provide Chinese consumers and merchants with more compelling offerings.

Tencent’s (HKG:0700) chatting app WeChat, which went global just a few months ago, has gained particular traction in Southeast Asia, especially in Vietnam and Thailand.
The Chinese internet multinational’s VP of international business Poshu Yeung told a gathering of tech journos in Bangkok this week that he estimates the app has about 200,000 to 300,000 users in Thailand alone, based on download figures.

That pales in comparison to the estimated 100+ million users of Weixin, the original Chinese version of the app, but it’s a nice start for Tencent. Poshu was in town for a board meeting for web portal Sanook.com, Thailand’s most popular website and a local partner with Tencent for three years. He said that Thailand has been particularly important for feedback on the new global version of the chatting app.

We like Thailand a lot because of the Chinese culture here, the Asian culture, and because it’s close to China. […] No one goes international and then goes straight to the US. Southeast Asia is the more obvious choice because its closer.

Poshu said that Tencent isn’t doing any marketing for WeChat in Southeast Asia outside of social media, but they certainly aren’t skimping on Facebook, where TechInAsia noted recently they are advertising heavily in Singapore. In addition to the Facebook ads, they are monitoring responses from Facebook and Twitter closely. “It seems like Thai users are really liking the product from the feedback. That’s what makes this market so exciting,” he said.

WeChat joins a tough field of competitors in Southeast Asia, where WhatsApp and Line are firmly established as favorites. Poshu maintained that WeChat’s advantage is that it plans on customizing the product to local markets, rather than simply translating into local languages.

That seems to be the talking point throughout the company, as Tencent’s regional director of global mobile Suyang Zhang emphasized localization in Indonesia at our Startup Asia Jakarta 2012 event this morning. In India as well, Tencent is teaming up with local gaming company Ibibo to promote WeChat.

As for a monetization model, Poshu said that isn’t even in the picture at the moment.

The mobile app industry will continue to evolve over next three years. We would rather spend three years building a user base and providing nice products than monetizing. […] Our business principle is very straightforward. If you have the hearts of the users, you will be able to figure out a monetization model down the road.

Tencent's iconic penguin mascot surfs its way to social gaming success.

A seasonal survey of China’s online gaming market by Analysys International reveals some stellar growth up to the end of 2012 Q1 – and that Tencent (HKG:0700) has extended its lead as the country’s mavens of social gaming. Back in 2011 Q2, the Shenzhen-based web giant dominated with 29.5 percent of market share by revenue, but that’s now up to 33.7 percent.

The whole gaming sector has grown to be worth US$1.78 billion in terms of revenue in China. That’s 9.5 percent growth from the previous quarter.

There was a bit of a shuffle below Tencent, as Netease (NASDAQ:NTES) moved up from third to second spot, now claiming 17.3 percent of domestic online gaming revenue. Shanda Games (NASDAQ:GAME) saw no growth – despite its new World Zero title – and consequently got demoted to third.

Tencent runs China’s biggest social network with its QQ empire of IM, social networks, and social gaming. Earlier this week, we looked at the QQ Games exclusive tie-up with PopCap to launch Plants vs Zombies Great Wall Edition. It also operates some more hardcore MMO titles such as Crossfire. Indeed, social gaming is a large part of the reason behind the company having far-and-away China’s richest web portal.

Here’s the interactive chart for market share by revenue among China’s gaming services (2012 Q1):

(View the pie chart as a static image).

The online gaming market as a whole saw 33 percent year-on-year growth. When we last looked, last summer, it was at 8.7 billion RMB ($1.36 billion at that time), but the new figures show the industry has expanded to the point where it reels in 11.26 billion RMB ($1.78 billion) up to the end of 2012 Q1:

[Sources: Analysys International 1 and 2]

The new Chinese-themed Plants vs Zombies Great Wall Edition has arrived, bringing new scenes and levels to PopCap’s popular gaming title. The new version is available now for Android – but only in Chinese. Bad news for local gamers is that the game is not really free – the app contains the conventional PvZ game with the Great Wall levels as paid extras. So you can’t even see the stages on the ancient wall without coughing up at least 2 RMB (US$0.32) to buy some virtual items.

As we reported last week, the new version is a tie-up between PopCap and local social media/gaming giant Tencent (HKG:0700). As such, it’s a part of Tencent’s QQ Games platform, and so Tencent is guilty – er, I mean, responsible – for the rampant monetization in the game that keeps you off the ramparts until you’ve paid up. Worse still, when I tested it out I saw the graphics are pretty lousy and fuzzy – and my phone has only a middling 800×480 resolution. And it’s really buggy, throwing up error messages when loading. Plus it paralyzed my phone’s ability to take screenshots – and so I’ve sourced images from CNmo instead. It sounds like a bit of a disaster – and it is. The more user-friendly and accessible approach taken by Rovio with Angry Birds would’ve gotten the Plants vs Zombies Great Wall Edition a lot more traction. As it currently stands, there’s not so much excitement for the game online. On the bright side, the game has no ads.

Here are a few screengrabs:

You'll have to buy virtual items before you can access the new special levels at all. Below you can see the same old selection of plants, bombs, and other items.

We heard PopCap CEO, David Roberts, talk at a Q&A in Beijing last week, where he explained that another special Chinese edition of the popular zombie-bashing game will come later this year, based on the Three Kingdoms legends.

Grab Plants vs Zombies Great Wall Edition as an APK file from the QQ Games download page.

[Screenshots source: CNmo - article in Chinese]

Tencent (HKG:0700), one of China’s largest and oldest web companies, got restructured into six separate units last week so as to make it more adaptive and lean. And now the new CEO of the freshly-formed e-commerce division, Wu Xiaoguang (pictured below), has suggested that its online retailing ventures – Paipai for C2C selling, and QQ Buy for B2C – are near the mature stage where it’d make sense to go for a subsidiary IPO. No time-frame was given for this, however.

Mr. Wu added, in a recent internal memo reported by the Chinese media, that the restructuring would allow the e-commerce division to use more flexible management strategies and to more tightly seize hold of the whole vertical, from offline logistics to new product development on the sites.

Despite Tencent’s huge social media user numbers for its iconic QQ IM service, the Shenzhen-based company hasn’t managed to translate that into e-commerce success, missing out on the initial growth stages in the industry to Alibaba’s Taobao and Tmall sites, and then in the more recent few years failing to get ahead of more specialist e-tailers such as 360Buy and Dangdang (NYSE:DANG). That has left Tencent being, in this sector, in the quite odd situation of being an oft-overlooked also-ran. Indeed, Wu Xiaoguang admitted that his subsidiary’s operations will likely incur financial losses as it invests and tries to expand.

Tencent's new e-commerce head, Wu Xiaoguang. (Image from iFeng Tech).

Tencent starting its online shopping efforts in 2006 with Paipai, aiming to tap into the amateur shopkeeper craze that was started by Taobao in China after it crushed eBay (NASDAQ:EBAY). Now, says Wu Xiaoguang, the company’s e-commerce venture is in a mature third-stage of growth in which it needs to succeed whilst also adding value to the industry and consumers. Amazon is cited in his memo as a successful example of an e-tailing platform – though Tencent’s challenges are greater, having far more competition in the country and trying to compete on a much wider catalog of products. As if all that is not enough, Mr. Wu also name-checks mobile commerce as something that his unit needs to master.

I hope he’s getting paid well, as that’s a huge task to take on. In our most recent look at B2C e-commerce market share in China, QQ Buy is way down among the very numerous “others” operating in online retail.

[Source: iFeng Tech - article in Chinese]

• Corporate Development Group (CDG)
• Interactive Entertainment Group (IEG)
• Mobile Internet Group (MIG)
• Online Media Group (OMG) [1]
• Social Network Group (SNG)
• Technology and Engineering Group (TEG)

The company’s CEO, Pony Ma [2] says that he hopes that this reshuffling will give Tencent the ability to better respond to new opportunities in the internet world. He outlines what he sees as the company’s main targets:

Our goals are: to strengthen our social networking services, to embrace the expanding global online games market, to extend our presence in mobile Internet, to integrate our online media platforms, to nurture our search business, to build out our e-Commerce platforms, and to enhance our capabilities to incubate new businesses.

Tencent recently announced its first quarter results for 2012, reporting a record quarterly profit of 2.95 billion RMB (about $466 million). It’s QQ instant messaging platform has grown to a staggering 752 million users, which is up 12 percent on the same time in the previous year. It Qzone social platform had 576.7 million user accounts, up 9.7 percent on the year before.

CrowdStar's Top Girl

Readers may recall a couple of weeks back that we reported about social game developer CrowdStar, and its partnership to bring its Top Girl franchise to the GREE platform. And today there’s more news from the company, as it is building more significant gaming alliances in the Asia region. CrowdStar will be creating localized versions of Top Girl for China via a partnership with internet giant Tencent, and one for South Korea through mobile games developer Gamevil.

For Chinese localization, CrowdStar could certainly do worse than to tie up with Tencent. We have already seen prominent games like Zynga’s Cityville, EA’s The Sims Social, and most recently PopCap’s Plants vs Zombies come to China via partnerships with Tencent. When we last looked at industry wide revenue figures, Tencent was China’s gaming leader, accounting for 29.5 percent of of all online games revenue back in the second quarter of 2011.

CrowdStar says that its localized versions of Top Girl and Tower Town titles will be released for Apple’s iOS, and distributed by Tencent across the Greater China region (including Hong Kong, Taiwan, and Macau).

As for Korea, Gamevil will localize Top Girl for Android and promote it on the nation’s major carriers (SK Telecom, KT, and LG) giving it the potential to reach a significant portion of Korea’s 20 million smartphone users.

CrowdStar’s head of global business development, Randy Lee, noted the company’s Asia ambitions in the announcement:

In the U.S., Top Girl Android debuted as an exclusive on the Amazon App Store in December after the iOS version of the game saw enormous popularity, surpassing one million downloads in 10 days. We’re optimistic about seeing more impressive results with our new partners in Asia.

Earlier this month CrowdStar announced that it raised $11.5 million in a new round of funding, moving away from Facebook games in favor of a “much bigger opportunity” in mobile games.

Popcap’s China invasion continues. The popular Plants vs Zombies (PvZ) game was first placed exclusively on Renren last year in May. And about one year later, this past Friday, it was announced that the game will be made available to Tencent’s users through its QQ Game Center.

This PvZ version on Tencent (HKG:0700) is also a much more localized version than the one on Renren. Besides being adapted to Chinese user behavior, PvZ Great Wall will see new Chinese zombies and maps. It’s scheduled to be released on May 18, 2012. Interestingly, PopCap has also made PvZ available on Java for the millions of feature phone users in China.

The PvZ Kingdoms version, as you might expect, will combine the gameplay with the famous Three-Kingdoms stories. This game will play differently as it focuses on hero level up through training and campaigns. PvZ Kingdoms is still under development and is scheduled to be launched in Q3 2012. Both PvZ Great Wall and Kingdoms will be free to download for QQ Game Center, Android, and Java phones. David Roberts, general manager of PopCap Games commented on China and the partnership with Tencent in a statement:

China has always been one of the most important areas for PopCap Games in Asia Pacific. It’s so amazing to see that Plants vs. Zombies is so popular here in China, so the new edition has kept our commitment of ‘In China, For China’. We believe the high quality of PopCap’s games and the strong base of Tencent platform, along with our experience on Plants vs. Zombies’ brands, we are perfectly positioned to deliver the ultimate game experience – PopCap style.

The move to put PvZ on Java based phones is an intriguing one. It would be very much welcome in Southeast Asia too, especially Indonesia where features phones still rule. Perhaps another opportunity for PvZ would be on mig33, where I believe users would go gaga over it. While China is a key market for PopCap, it also has its eye set on Southeast Asia, particularly Indonesia.

Coincidentally, Evan Spytma, regional director of SE Asia, Australia and New Zealand at PopCap Games, will be speaking at Startup Asia Jakarta on June 7 at 9:40am to 10:10am. In that session, our China editor, Charlie Custer will pick his brain about PopCap’s plan in Southeast Asia.

[Image credit: Geekpinoy.com]

Towards the end of 2010 there was a very public, 10-week long battle between two Chinese web companies, Tencent and Qihoo 360 (NYSE:QIHU), that caused alarm at how online data privacy was not being taken seriously. But that whole controversy will flare up again tomorrow as Qihoo takes Tencent (HKG:0700) to court in southern China, accusing the social media giant of abusing its market dominance in the way it bundles some apps together. It is seeking as much as 150 million RMB ($24 million) in damages.

This accusation goes to the very core of what caused the initial software and PR battle – see the timeline of the so-called “3Q war” on Wikipedia – back in September of 2010 when Tencent bundled its QQ Doctor anti-virus app into its dominant QQ instant-messaging app. That trod on the toes of Qihoo, which started out as an anti-virus vendor before its recent diversification into social media. Some would say that the resultant altercation was actually about revenge, rather than being about whether the QQ app was reading users’ PC files, as Qihoo alleged at the time. In September last year, almost a full 12 months after this first ignited, a separate verdict from a Beijing court ordered Qihoo to recompense Tencent to the tune of 400,000 RMB ($62,530 at the time) “for slander and unfair competition.”

Now Qihoo wants its day in court, and that will come tomorrow at the Guangdong Provincial High Court, right in Tencent’s home province. Qihoo will be hoping that China’s standing anti-monopoly laws will deem Tencent’s bundling of an anti-virus app with its IM app as such an anti-competitive breach of law. The company is likely to claim that users were being held hostage with the QQ Doctor app, being forced to install it and then disable any other anti-virus apps they might have from other companies, such as Kingsoft, Rising, or Qihoo’s own offerings.

We’ll update tomorrow if there are significant developments on the first day, or wait for the final ruling.

The ‘Internet Society of China’ (ISC) has today released a paper entitled Written Proposal on Resisting Internet Rumors that aims to use a mixture of education and stricter regulations to prevent gossip and hearsay spreading across the tightly-controlled Chinese internet. Coming just nine days after authorities punished China’s two largest Twitter-like sites for failing to suppress political rumors, it comes across a lot like the much-vaunted “war on terror” whereby the Bush-era US government sought to defeat any rogue elements that might harm it.

Trouble is, both rumors and terrorism are abstract concepts, and you can’t win a war against a concept. And as an unjust war breeds a new generation of malcontents driven to extreme actions, so a new wave of internet clampdowns, regulations, and censorship will create even less transparency in Chinese politics and the web that might drive netizens to more conjecture and gossip. China’s microblogs, like Sina Weibo and Tencent Weibo, already have an expensively large crew of staffers engaged in self-censorship, deleting posts that contain keywords that threaten “social stability” (a new propaganda watch-word which is mentioned several times in today’s ISC paper) and banning users as well. On top of that there’s the newly-implemented ‘real name’ policy on the Weibo services that’s supposed to squash rumors by making people feel responsible – or scared? – about what they tweet to their microblogs. But, Sina (NASDAQ:SINA) and Tencent (HKG:0700) are swamped, and the punishment for most is just a deleted comment. Weibo users know this, and so are still engaging in gossip – even of a political nature – amidst the grim darkness of the lack of transparency in both government and news and web media who comply with all media regulations or else face being shut down.

And so a war on rumors is now underway, characterized by greater surveillance of ordinary folks as if everyone is somehow guilty. Just like how the war on terror massively bolstered the US and UK police state. But where the west has seen advanced face-recognition cameras, and full-body airport scanners, Chinese authorities already have all forms of media in a strangle-hold; it just needs to get a tighter grip. Trouble is, there’s not too much else that can be done – the recent false coup rumors saw the afore-mentioned Weibo clampdown on commenting along with six people arrested for propagating the initial rumor. What else is there? Arrest hundreds? Demand that Twitter-like sites have a built-in delay of a few minutes? Require people submit their tweets via fax to the local police bureau? OK, that last one is plain facetious. But how can progress be made in banishing rumors online when Chinese web users see no light, no progress, from authorities themselves?

8 Ways to Banish Rumors?

The ISC paper – see it here (in Chinese) – today puts forward eight points for how the web can be made to have only “a positive impact on economic, political, cultural and people’s lives,” and not engage in behavior that can cause “a major social nuisance, serious violations of civil rights, harm the public interest” or “also endanger national security and social stability.” Seven of the eight put the onus on web companies and people themselves, with little in the way of self-awareness that the media landscape might need to be altered as well. Here are all the pointers in summary:

1. The first point in the white paper calls for a greater “awareness of the law” as it exists already along with tighter “industry self-regulation.”

2. The next one gets more lyrical, suggesting that the web be geared towards promoting “Chinese culture, a socialist culture” and “healthy web content” such as “spreading scientific theories.” And while that’s great, it doesn’t address the human need for news.

3. Enhance “social responsibility” of those working in online media to vet content, and greater “corporate social responsibility” to “resolutely cut off Internet rumors” on forums, microblog sites, and anywhere else online.

4. “Strengthen internal control mechanisms” at web companies and ensure active “content screening.” Very similar to the third point, really.

5. Employers should be encouraged to have their “website employees conscientiously fulfill their legal responsibility” in making an ethical and healthy web, and better “distinguish” those netizens who will be more likely to propagate rumors. Again, a lot of overlap with points three and four.

6. All social media “shall comply with the government’s internet ‘real name’ authentication requirements” which are already in place on the major Weibo platforms.

7. [Media/web companies] should “listen to the opinions of web users, and work hard to rectify the issued noted by the public.” Finally, a glimmer of awareness of what’s the root cause of the frustration of many on the web! But this seems superfluous alongside the calls for more efficient controls.

8. “Strive towards the majority of internet users actively supporting web companies in resisting and banishing online rumors.” This is an especially vague one, and has the air of turkeys voting for Christmas.

And that, in all its vague and blustery glory, is all that the ISC paper has to offer.

To get an idea of how opaque things are – and getting worse by the year, to be frank – in both online and offline media, note that the official line on the recent Weibo punishment and arrests was deleted from the website of state news agency Xinhua. Here’s the blank page. Let’s not speculate why. But plenty of netizens are still writing, retweeting, and commenting on rumors – and precisely because it’s getting harder and harder to get objective news.

That leaves Sina and Tencent – and whichever web company will have the next social media success – struggling to sift false rumors (along with the very many keywords which are currently banned for utterly opaque reasons) from thousands of Weibo tweets per second. And that too sounds like an unwinnable war.

[Hat-tip to William Farris on G+ for spotting the ISC article]

Leaked images suggest that China's Tencent will soon launch this Draw Something clone.

No sooner has the smash-hit social game Draw Something been bought up by Zynga [1] than we hear that China’s Tencent (HKG:0700) has already cloned and localized it. The promo images (above and below) suggest that the crafty remake will be called Guess What and will soon appear in an iPhone version.

Since it might be impractical to use Chinese characters in the Pictionary-style game, it seems that Tencent’s Guess What will rely on the romanization – aka: pinyin – so that all the possible letters can be included as a clue. From this leaked image, it appears to be inevitably integrated with Tencent’s own QQ Games platform:

Tencent is China’s social gaming giant, running the full gamut from the most casual of social games right on up to MMO titles like Crossfire.

However, let’s not forget that Zynga (NASDAQ:ZNGA) isn’t exactly innocent of such light-fingered lifting, having essentially purloined its iconic FarmVille game from the Chinese social network Kaixin.

Quick to the Draw

But wait! From browsing the iTunes App Store, I see that even Tencent has been beaten to the draw by a tiny Chinese game studio called MelonZone. Its Draw Something clone is called You Draw I Guess (pictured above) and instead uses Chinese characters, with the apparent main clue being how many characters are involved. It was released on March 31st. Check that out on iTunes.

Tencent PR staff, meanwhile, were not immediately available for comment, perhaps because it’s the first day of a three-day public holiday in China. We’ll update and test out the Tencent game once it goes live.

[Source for Guess What news: Techweb - article in Chinese]

CyberAgent’s Net Impact Jakarta conference yesterday had a fun mixture of Japanese, Vietnam, and Chinese Internet companies. Among them was Tencent, whereby Sean Zhang, director of Tencent’s Mobile Global division, shared some background information about Tencent and also briefly spoke on the company’s plans to engage the Indonesian market.

Yes, you read that right. Tencent (HKG:0700) has set its eyes on Indonesia. In fact, Zhang shared on stage that Tencent already has a team of ten in Indonesia and is looking to hire more as it expands its operations.

Smartly, Tencent noted that Indonesia is very much a mobile centric nation. The Chinese internet giant is thus planning to introduce the QQ browser (we reviewed the mac version here) and also a Whatsapp-like mobile app, Qute, to the Indonesia market.

I was actually puzzled why Tencent chose to bring in Qute rather than Weixin, a popular group messaging app in China, owned by Tencent. I threw that question during Q&A and got an interesting answer.

Zhang explained that Weixin is mainly used by high-end smartphone users who are on Android or iPhones. While Qute can be used for feature phone users, which constitutes a large group of people in Indonesia, where they can enjoy group messaging services even without data plans. That group messaging app resembles Pinch, a solution developed by Affle.

It is a pity that we couldn’t find more time with Zhang to learn more details on Tencent’s plan in Indonesia. But both of us agreed to meet again soon. Coincidentally (or unfortunately for him), we are staying in the same apartment complex in Jakarta which makes meeting up way easier! Stay tuned!

Starting this morning, Baidu (NASDAQ:BIDU) is adding search results from Chinese microblog site Sina Weibo, giving its search engine users quick access to tweets on trending topics.

The very recent tweets will show in a box clearly marked ‘newest weibo results’ on the first page of a Baidu search for any names or phrases that happen to be popular/trending [1] at the time. For example, if I search for ‘Windows 8’ in Chinese, I get three relevant Weibo tweets (as pictured above).

As is inevitable when linking to random microbloggers, the results can be a mixed bag, so only one of the tweets proved useful in my test, taking me to a video news report about the Windows 8 launch. One way for Baidu to improve this is by taking you to the actual tweet page, not the Weibo user’s homepage (as currently occurs). Also, it would be useful to scroll through some more microblog results, as can be done with Google’s collated Twitter search results.

This initiative by Baidu isn’t entirely new, as the search engine giant has already tied up with three other microblog sites in China: Tencent’s (HKG:0700) Weibo, plus the less used Netease (NASDAQ:NTES) and Sohu (NASDAQ:SOHU) Weibo platforms as well. So, today the picture is complete with added support for the Sina (NASDAQ:SINA) service. Even though Tencent’s site has more registered users – a whopping 300 million – today’s addition is important because Sina’s service seems to have the most buzz, more media mentions, and allegedly also has the lion’s share of wealthier urban users.

Announcing the new Sina Weibo searches, Baidu’s executive assistant, Zhang Dong-cheng, said:

We process billions of search queries on a daily basis, and many of those queries are related to the real-time information found on microblog posts. With this deal between Baidu and Sina Weibo, Baidu has completed its integration of high-quality content from China’s four leading microblog platforms.

In the same joint Sina-Baidu press release, Sina’s VP, Peng Shao-bin, said that his company’s Weibo service sees “100 million microblog posts daily” and can thereby provide “quality real-time information.”

Exactly two weeks from today, all microblog sites must start to enforce ‘real name’ tweeting, meaning that any users who have not submitted their names and national ID numbers to the web companies will no longer be able to post. That could cause the number of daily microblog posts to fall off a cliff.

With grim inevitability, we see that the Chinese social media behemoth Tencent (HKG:0700) has today launched a Pinterest clone called Dutu. Like all such social pinboard sites, it’s all about sharing and collecting interesting images.

The site, at dutu.qq.com (pictured above), comes fully integrated with Tencent Weibo, its popular microblogging service, as well as a user’s wider QQ account. This makes Dutu into, potentially, the world’s biggest Pinterest-like site from day one. If someone is already signed-in to the Tencent Weibo web app, then Dutu allows users to share anyone’s publicly pinned photos with just one click.

It’ll be interesting to see if the company’s main microblog rival, Sina (NASDAQ:SINA), feels the need to copy this as well. Sure, Sina Weibo already has image storage and photo libraries way beyond what Twitter offers, but the Sina Qing light-blog concept was a bit of a flop, so perhaps a Pinterest-like offering of its own would gain more traction.

Tencent’s clone comes just a month after similar imitations by other major Chinese web companies, such as Renren’s Plaza, and Qihoo’s awkwardly-named I Like.

[UPDATE one hour after publishing: The CEO of one of China's largest startup Pinterest clones which is called Mogujie (lit: Mushroom Street), says that his site has 6 million registered users. Also, it's interesting to note how simple Tencent's Dutu is, compared to Mogujie or Renren's Plaza, as those latter two are mostly focused on sharing images of clothes and linking to e-commerce sites so as to drive traffic to a user's own online store].

EA (NASDAQ:ERTS) announced today that its popular gaming franchise, The Sims, is going to make its way into China via the Tencent (HKG:0700) Open Platform. EA says that The Sims Social is in development at its Beijing Playfish studio, and it will be known as Mo Ni Shi Guang in Chinese, which literally translates into ‘Simulation Time.’

Of course, The Sims Social launched on Facebook last year, but as most of our readers know, Facebook is blocked in China. So instead Chinese fans will be able to access the game via Tencent’s social gaming network QZone. Closed beta testing is said to be already underway, and an open beta is coming soon.

Last year we saw Zynga partner with Tencent to bring Cityville over on its Open Platform. Similarly, this past November Japanese gaming giant GREE ported its popular SpyWars title to Tencent via its Open Platform for Community for smartphones.

Check out the screenshots below to get an idea of how the Chinese incarnation of The Sims Social will look. These come courtesy of the @PlayfishBJ Tencent Weibo account.

Some of you might have read this article where it quotes Stephen Bell, a Shanghai-based partner at Trinity Ventures, who says he hears this gloomy sentiment all the time: “In the U.S., students think, ‘If I build something good, Google will buy me.’ In China they think, ‘If I build something good, Tencent will copy me.’”

Many Chinese startups (or startups that are based in China) fear that once they have a good idea, Tencent (HKG:0700) would easily and quickly copy the ideas, given its vast amount of resources, experience and users, leaving the startup with no room to compete in the Internet industry.

However, Leo Wang, an angel investor in mobile Internet startups and founder of China’s Mobile 2.0 Forum, believes that there are ways that entrepreneurs (especially those based in China) can build their product such that Tencent will find it difficult to compete with you. I listened to him give a talk recently in which he shared 10 key ways in which startups can fend off Tencent:

1. Believe In Your Own Product

It makes no sense when you are building a product and you do not even believe in it. You need to have the strong belief that your product will work for your users, before you being able to build a good product. A good product will materialize when you believe you have the capability to build such products.

2. Make Your Product Addictive

Leo draws parallels between development of a product and the invention of medicine and drugs. You need to make your product in such a way that it becomes like a drug. Not literally; but making your products really sticky is important, so that once users start using them, they can never quit. So think — how can you develop your product in that it is not just medicine (where you take it only when you need it), but develop it in ways it becomes addictive (like a drug). Tap into the inner motivations of your own users to want to use your product again and again. When it becomes sticky, the brand loyalty stays, which makes it difficult for bigger players like Tencent to enter the market.

3. You Need An Artist

Just like how all of us are drawn to beautiful objects and people, you need to build your product such that it is pleasant to the eye. Undoubtedly engineers are important people who will contribute to building the infrastructure, but the team needs an artistically-minded graphic designer who can beautify and package your product in the most presentable way possible. Leo strongly encourages startups to hire designers. If not, he suggests hiring girls for your team because ladies are better in terms of aesthetics (no wonder the PO designer is a girl).

4. Focus On A Specific Group of People

It is only natural to be greedy. However, not all products are able to cater to everyone. Identify and narrow into a specific target market, e.g. women aged 18 to 35 who are living in China, which itself is already a large pool of people. Many great companies start from targeting specific target groups. Look at Apple, didn’t they start from a niche target audience as well?

Leo Wang, in an image from his website.

5. Be Your Product Evangelist

You need to aim to change the behavioral patterns of users. Think of how you can relay the information to change these users. They know it when they see a good product, but they need someone who can educate them on how to use your products before they can start to get into them.

6. Aim to Revolutionize

You are not creating a revolutionary product when you copy. What is the point of copying when someone else is already doing the same thing? Do it better than them. Find out what is lacking in the existing products and introduce new features as well as value-added services to the existing product. A well-crafted localization can fit the bill here too.

7. Execute Well

Ideas are often little more than bullshit when you do not execute them effectively. Good products are gradually developed during the operational phase — when the team receives feedback from users and improves the product accordingly. Do not ever stop trying to understand your users’ wants and needs. Pay attention to every single operational procedure of your business. Your hard work will pay off when you execute your product well.

8. Take Advantage of Shortcuts

There are many open platforms which allow you to tap into existing users. Instead of building your own database, consider third-party login (e.g. using a Tencent or Sina Weibo account) and go viral with your product. Besides, with these open platforms, it makes registration smooth and seamless, which acts as an added incentive for users to sign up with you.

9. Act Fast

Internet giants like Tencent are really clumsy as compared to startups. Startups do not have to go through layers and layers of red tape and organizational hierarchy to make a decision. We have greater flexibility and agility so this means we should always act fast and move even faster than these giants.

10. Make Your Product Viral

In Leo’s opinion, there’s no such thing as marketing. He believes a good product speaks for itself. When you are building your product, build it in a way that it will become a talking point amongst people. Develop it so that it’s so awesome that your users will egg their friends on to use it as well.

What do you make of these 10 tips? Are they enough to stop a startup getting crushed by the Tencent steamroller? Hit the comments with your thoughts.

Leo Wang giving his talk about Tencent. (Image source: Penn-Olson staff)

China’s social media giant Tencent (HKG:0700), which is also the market leader in online gaming in the country, has licensed Crytek’s CryEngine3 for its next multiplayer online game. The game is thought to be at only the embryonic stage and won’t see a release this year.

The gaming business site Gamasutra reports that this is the eighth such Chinese web company to license the powerful gaming engine, including previous iterations. One other licensee is Changyou (NASDAQ:CYOU), which is a close rival of Tencent in the serious gaming sector.

Tencent is already working with CryTek and is the official distributor in China of the flagship Warface (pictured above) title, a military shooter game which uses CryEngine3 for its impressive visual effects and graphics. Here the game is called ‘warfront‘ and is run from wf.qq.com.

We recently saw stats emerge that showed the entire gaming market in China was worth US$7.1 billion in 2011, with MMO platforms seeing 30.2 percent growth from the previous year.

Here’s a five-minute video of Chinese gamers in action on Warface:

[Source: Gamasutra]

This cartoon comes from the popular manga "Pony Ma challenges the regulators" (just kidding, that's not a thing...yet)

Real-name registration systems are all the rage in China these days. And by “all the rage,” what I mean is “increasingly mandated via government intervention.” Just within the past few months, we’ve seen microblogging services, online payment systems, and even public transportation implement regulations that will require users to have their state ID numbers on file. So it’s no surprise government regulators are now looking at Tencent’s (HKG:0700) QQ chat software, which is by far China’s most popular IM service.

Indeed, at a recent meeting of industry leaders and government regulators, People’s Congress representative Xue Juanchen talked about how many crimes perpetrated by youths used the internet and asked Pony Ma whether or not Tencent was considering a real-name system for QQ. Other reps expressed similar opinions, saying they hoped QQ would not become a tool for criminals.

Pony Ma said the company had indeed considered it, but was concerned about the privacy implications and the potential for leaked data from hacks. Then he started talking about the criminal side of things, and it sounds like he got fairly annoyed with the accusatory tone of the conversation, because he apparently snapped:

“When people arrange prostitution over the phone, is that the telecom operator’s responsibility?”

Pony Ma's prostitution example becomes a headline in the Southern Metropolis Daily

The line quickly made headlines in the Chinese media, as did his statement that as far as online crime was concerned, “[Criminals] use Baidu to search for [illegal products], QQ to communicate with the sellers, and Taobao to complete the transaction.” Although all of those companies have systems in place to help prevent criminal activity, Ma’s point was that ultimately criminals should be held responsible for crime, not the platforms they use to facilitate it. Ma suggested that a real-name system for QQ was fundamentally at odds with efficiency and privacy concerns, and that the subject would need further discussion and analysis.

It’s good to see someone sticking up for user privacy rights here, so our hats are off to Pony Ma, even if his stand on privacy is also a bit self-serving as it protects Tencent’s profits, too. That said, it’s be pretty clear which way the wind is blowing in China right now when it comes to real-name systems. Pony Ma’s willingness to defend user privacy is great, but we fear he may get steamrolled anyway. Either way, we’ll be watching closely to see if QQ does indeed go the way of the microblog and implement real-name requirements.

[Southern Metropolis Daily via Sina Tech]

Chinese internet giant Tencent (HKG:0700) has today announced the opening up of its Tencent Cyberlaw Research Center and accompanying website. It boasts a team of experienced legal practitioners and researchers – of whom more than half have doctorates – who will write, lecture, and co-operate on national and global issues relating to e-commerce, online gaming, IP law, security and hacking, and internet-related competition law.

The site, at law.tencent.com, features a mix of legal cases, professional advice on cyberlaw, and a series of video lectures. As the site quietly soft-launched a month ago, it already has a great deal of content, which is a blend of original and aggregated stuff.

The review of the Cyberlaw Research Center on Tencent-owned QQ Tech describes it as a kind of “corporate social responsibility” venture that will “promote improvement of China’s Internet law.” And so Tencent will be putting an undisclosed sum of money into research as well, which goes to partner universities and institutes such as Beijing University, and the Chinese Academy of Social Sciences.

Tencent is one of China’s biggest web companies, encompassing social networks and IM, social gaming, e-commerce, its Soso.com search engine, lots of mobile apps, and many other things.

[Source: QQ Tech news - article in Chinese]

Lhasa's Potala Palace shown in the new Soso StreetView feature at maps.soso.com.

The Chinese search engine Soso.com has added a Google-esque ‘StreetView’ feature to its online maps. It launched over the weekend, and initially covers just three areas – the modern city of Shenzhen; the ancient Tibetan capital, Lhasa (pictured above); and one scenic mountain region. More cities in China are being visited by Soso’s StreetView camera cars, and will go online in due course.

Soso is run by social media giant Tencent (HKG:0700), and so this very expensive new feature – which market leader Baidu (NASDAQ:BIDU) doesn’t have – shows that Tencent is taking its search engine and complementary parts very seriously. Indeed, we saw earlier this month that Soso had surpassed Google to become China’s second most popular search engine.

No, that's not Paris... The entrance to Shenzhen's 'Window on the World' theme park in Shenzhen.

Soso’s StreetView – still in beta – has all the usual dragging, zooming, and dropping pins that we’re all familiar with from Google’s, which rolled out in 2007. It also has a night-time mode, so that you can feast your eyes on some neon-lined streets. Tencent is based in Shenzhen, which likely explains why it’s the first major city to get this feature. One smaller but very experienced mapping company has already rolled out its own camera cars in China, which means that Soso’s effort is not the first.

But, there are two bugbears with this: one is that it’s Flash-based, and the other is that Soso’s StreetView fails to work in most modern browsers, and I had to fake using an old version of Firefox in order to get it to work at all. It’s probably fine on IE7 or something. That’s some old skool thinking.

Google has rolled out its StreetView in the Greater China area – such as Hong Kong, and parts of Taiwan – but it’s inconceivable that the American company would get permission to do the same thing in mainland China.

In related news, Baidu launched a satellite view on its online maps service last month.

[Source: 36kr - article in Chinese]

Sina headquarters in Beijing

Guest author Julia Q. Zhu is a leading expert on international e-commerce in China and the Asia Pacific region. She formerly held multiple management positions for Alibaba Group, China’s largest e-commerce company. Prior to Alibaba, Julia worked for iResearch in Beijing, China’s equivalent to ComScore. Follow Julia on Twitter @juliaqzhu.

On December 16, the Beijing Internet Information Department issued a new set of regulations titled the “Beijing Microblog Development Management Regulations.” The regulations require new users of microblog services to register with their valid personal identification details prior to gaining access to the site. Should a new user fail to enter this information, he or she will only be able to view microblog posts, but not create their own. According to official statements, microblog operators like Sina (NASDAQ:SINA) and Tencent (HKG:0700) will have to implement the changes within the next three months.

Are the new regulations bad for China’s micro-blogosphere?

Many Internet analysts view the new regulations in a negative light. They feel that as a result of the new regulations, the number of microbloggers in China will decrease substantially. These analysts also contend that netizens will not be as willing to share information freely on microblog sites, now that their comments can be traced directly to their true self. While there is some degree of truth in their argument, the regulations are not all bad.

Take for example, the following online poll in which 1,248 Chinese netizens participated:

Chinese netizens are surprisingly much more optimistic and supportive of the regulations according to the survey. Of the 1,248 respondents, half of them believe that the policy could help foster a healthier microblogging environment, and reduce false claims and slander on microblogging platforms. Only 25.8 percent of respondents selected they will stop using microblog sites as a result of the regulations. 

It’s true that some Chinese microbloggers may have concerns about microblogging under the government’s supervision. But on the other hand, if Chinese netizens do freely express their opinions and criticisms about society and under the government’s supervision, it may demonstrate their commitment to free speech online and help foster a sense of social responsibility among their fellow netizens. 


Another benefit will likely be a reduction in micro-marketing companies who use fake “Da Hao Weibo Accounts” (aka zombie accounts) to accomplish marketing microblogging campaigns for their clients. These companies will undoubtedly crumble as they will no longer be able to create thousands of fake “follower” accounts. In this regard, the policy actually helps create a more transparent microblogosphere and forces marketers to adopt innovative practices to attract new followers rather than relying on deceptive business practices. 


According to this past June’s China Internet Network Information Center (CNNIC) data, the number of microbloggers in China reached 195 million – an increase of 208.9 percent in the last six months. The massive explosion of microblogging has forced the Chinese government to take real action as it continues its ongoing efforts to monitor and manage sensitive content on the Chinese web. We will have to see what impact the new regulations have on Chinese microblogs over the coming months; however, I assure you not all of the results will be bad.

Click to enlarge.

Photos of a presentation purport to show a secret, upcoming Tencent (HKG:0700) product called Free Talk, which would be a Skype-like VoiP service. From looking at the slides (pictured right; click to enlarge) it’d presumably offer free calls – using mobile data instead – between phones on different phone networks, which might be disruptive to China’s three mobile telcos. If it also enabled calls to landlines, then that’d be quite a breakthrough for a local service.

Tencent is China’s social media giant, and already has apps that allow voice and/or video communication between smartphones using GPRS or 3G data – such as a recent update to QQ instant-messenger, which added video IM on some handsets; and its Facetime-like video calling service Weishi. Pure voice calling, however, is a niche that it has not yet filled. And with hundreds of millions of China’s netizens and mobile users having QQ numbers (i.e. accounts), that’s a sure way to get some traction.

It’s not clear why Tencent would make this separate from existing services, or in what way it’d be implemented. The slides mention “iPhone,” suggesting that it might be a conventional app for iOS and probably Android as well. One possibility is for it to be built in to its upcoming Android-based iQQ phones.

The two photos in question were sauced from a Weibo user – @互联网的那点事 – who’s often a reliable source of leaks in the local tech scene.

I’ve not played Spy Wars yet, but it does sound kind of addictive with ‘plot twists worthy of a spy novel, a variety of exciting spy tools, and thrilling battle.’ You can check out a few screenshots from the game below, and try it out if you’re interested. This will be Taito’s first social game on Tencent’s Open Platform for Community, which is standardized to be compatible with the GREE platform.

Readers may recognize Taito as the same company that recently helped bring western game developer PopCap (of Plants vs Zombies fame) to the GREE platform for the Japanese market.

It’s impressive to see how well GREE’s expanding network is allowing games to span geographical boundaries with what appears to be little effort so far.

Deal! Credit: fcbarcelona.com

Tencent (HKG:0700) has been very good at bringing celebrities on board its Internet services. But recently, the Chinese Internet giant seems laser-focused on sports celebrities. After recently landing Cristiano Ronaldo, we learned that it has decided to bring an entire Football club to its range of Internet products. That football team is none other than FC Barcelona, one of the largest and most successful teams in the world.

In the agreement, Tencent is tasked to develop a Chinese site for FC Barcelona. Tencent will also help FC Barcelona to create a digital presence on QQ, Qzone, Pengyou, and Tencent Weibo. Users can expect to see FC Barcelona branded mobile games and apps soon with this agreement. However, the content will be vetted through the football club before going live.

It is a win-win situation for both parties. FC Barcelona obviously wants to have more influence and reach in China. While Tencent can provide users with FC Barcelona-related content in Chinese.

This move could also help to reanimate many dead accounts who are fans and want to follow FC Barcelona news. And of course, it’s a “muhaha” moment for Tencent as it adds yet another big, recognizable brand to its range of products, especially Tencent Weibo. I believe FC Barcelona will not be allowed to have an account on Sina Weibo if there’s an exclusivity clause attached to the agreement.

Interestingly, Dídac Lee, the director of new technology at FC Barcelona explained that this is the first time Tencent has signed “an agreement with global reach.” Indeed it seems to have made Lee a very happy man. He added:

[Tencent’s] executives have told us how satisfied they are, not only because we are a great Club, but because we also share common values.

(I wonder what those common values are?)

I’m looking forward to seeing how Tencent executes their digital promotion of FC Barcelona in China through its digital channels.

Hat tip: +Robin Moroney

Tencent (HKG:0700), China’s social media giant, has been really good at building Android apps of late, but it has always lacked a coherent mobile platform, despite a couple of shaky, flaky attempts. Perhaps hoping for a case of ‘third time lucky,’ today we have a glimpse of the Android-based iQQ mobile OS.

Essentially, it’s not much more than an Android skin – or, a ROM – with a bunch of Tencent’s existing Android apps (such as Tencent Weibo, QQ instant-messenger, and QQ Browser, etc) whacked in there. Needless to say, Google’s (NASQAQ:GOOG) ecosystem gets the boot – which is theoretically fine, this being an ‘open’ OS – replaced instead with Tencent’s own Android app store, QQ Mail, and even the company’s own Soso search engine.

In what looks to be the first iQQ iteration, it’ll be sold on a Tian Yu W808 handset (pictured above) – made by the same OEM that created Alibaba’s first Aliyun phone.

The iQQ W808 phone packs an Nvidia Tegra 2 processor, and comes with a 4.3-inch screen (with a pretty standard 800 by 480 pixel resolution) and is based on Android 2.3, which is the newest version until the upcoming v4.0 gets a widespread rollout. The price is set at 2,980 RMB (US$469). That’s none too cheap, and makes it quite a bit more expensive than a number of more attractive phones at grey import prices (such as the cooler HTC Desire S), and a full 1,000 RMB pricier than the more powerful Xiaomi phone.

Tencent’s previous effort last year was the HiQQ Android-based platform, which got about as much media coverage as a ‘watching paint dry’ contest, and was aimed at much cheaper devices that Chinese mobile telcos could sell for as little as 1,000 RMB with subsidies. This iQQ effort looks just as unconvincing, but at least it has better specifications. It’ll be interesting to see how it stacks up against Baidu’s more carefully customized Yi OS – also based on Android – which has been revealed but has yet to announce its hardware partner or hit the shelves.

[Source: QQ Tech news - article in Chinese]

Tencent (HKG:0700), the Chinese social media giant, is taking its QQ Browser app global having signed a deal with the American third-party Android app store, Getjar. Right now, QQ Browser is being heavily promoted on the Getjar frontpage – on both desktop and mobile – and has already amassed over three million downloads. This Android international version now supports three-languages: English, Indonesian, and Hindi.

QQ Browser for iPhone and Android is cloud-powered – as emphasised by its icon – and states that by unloading the compacting of images via its own web servers, it can save users a great deal of time and 2G or 3G data. In fact, Tencent claims it’ll help you browse two-times faster than a standard browser. Of course, that’s the hallmark of Norway’s Opera browser – and clearly Tencent has decided that it was worth adopting.

Tencent's QQ Browser product page on Getjar.com.

Web browsers have become a new battleground in recent years, especially amongst China’s web firms, who see free browsers as a way to keep users in your ecosystem – or at least to keep people thinking of your brand. The most popular Chinese-made web browser at the moment is the indie UC Browser, made by UC Web, which went global even earlier – and last month rolled out officially in India.

This move by Tencent will heighten the animosity between the two companies, which are currently locked in a lawsuit in which UC Web accuses Tencent of anti-competitive practices. Interestingly, this whole spat started as a dispute about the two companies’ mobile web browsers.

Tencent’s browser has an iPhone version, but it has not yet been released in English.

Here’s the QQ Browser page on Getjar. For the sake of impartiality, here’s UC Browser (Market link) as well. But, personally, I much prefer Japanese-made Sleipnir (Market link) because of its neat gesture-based actions.

Tencent Director Liu Chiping said of the deal, “We’re very happy to have founded close strategic relations with Shunwang, and we hope to engage in deeper cooperation with them through bilateral use of [our] communities, games, videos, and other entertainment products, help net cafe users immediately find more internet apps and content, and provide them with the service that allows them to conveniently enjoy this content.”

Shunwang was founded in July 2005. After just three years, it claimed to provide its software service to over 93,000 Internet bars and have at least 46 percent market share in the industry. Its Internet bar management software, iCafe8, follows a freemium model. Internet bars can use the software for free but have to pay for premium service such as automated and safe upgrading of games, financial management tools, and advertisement revenue.

Shunwang also has two other products: a media and advertising platform (for ads selling) and a digital entertainment marketplace.

While the internet cafe is still a viable business in China, it’s a bit difficult to understand what Tencent’s strategic intentions are here (except for pure massive distribution through Internet cafes), as net cafes are slowly being replaced as users turn to tablets and mobile phones to access the internet from anywhere. As China’s economy develops and these devices become more affordable to Chinese consumers, it’s likely fewer and fewer people will turn to internet cafes. It’s tough to imagine that in ten years’ time internet cafes will be as prevalent in China as they are now.

On the other hand, the net cafe’s primary customer — students who want to play games away from the watchful eyes of parents and teachers — aren’t likely to go anywhere, and it’s possible that Shunwang has plans to expand their platform into other areas of computing rather than keeping it limited to net cafes. Only time will tell!

[Original release from Shunwang, via TechWeb]

Tencent (HKG:0700), China’s social media giant, has thumbed its nose at Apple (NASDAQ:AAPL) by releasing a desktop ‘App Assistant for iPhone’ (pictured above) that effectively replaces iTunes. Tencent’s new app syncs iPhones, iPads, and even any iPod Touch with Windows PCs, transferring over your mp3s, e-books, photos, contacts, and apps. As a bonus feature, it makes Apple’s new CEO, Tim Cook, swear like a fisherman in a storm.

The new App Assistant for iPhone was launched as an early beta late last week, and follows a similar foray into mobile syncing territory by the company with its ‘Assistant for Android’ phones, which we looked at back in August.

It’s not clear if Tencent’s new syncing app facilitates jailbreaking and pirating of iOS apps. But the fact that it boasts of easy “one-click installation of ‘.ipa’ files” is a clue that it’s not exactly resistant to pirated apps.

Unwilling to screw up my own device to try out this Tencent app, the main window looks a bit bare. But this is where all the syncing and uploading goes on.

We’ve already seen that phenomenon from the iTools app from a Shenzhen web company that actually guides you through the jailbreak process. Bizarrely, Tencent’s app seems to have been given the ‘iTools’ nickname – as seen on its homepage – suggesting that Tencent (which is often mocked in China for being unoriginal) has lifted the name from the smaller Shenzhen team. Tencent’s syncing products also very closely resemble a longer-standing Chinese app called Peapod, which hooks-up and syncs Windows and Android devices.

iTunes is already offered with a Chinese localisation, and a (limited) official Chinese app store, but that doesn’t seem to have stopped these handful of alternatives from emerging. This is perhaps a by-product of the huge number of grey-import (and, by extension, very likely jailbroken) devices circulating in China, which float freely outside of Apple’s usually very locked-down ecosystem. Indeed, China Mobile (NYSE:CHL; HKG:0941) claims to have just over 10 million iPhone users, despite not even being the Apple-sanctioned carrier in the country.

Although Apple once exhorted people, with a cavalier approach to adverbs, to “think different,” I don’t think this is what the departed Steve Jobs had in mind.

Check out the App Assistant for iPhone on its homepage. It’s available for Windows only.

UC Web CEO Yu Yong-fu at the Beijing press conference. (Image source: TechWeb)

According to a report from Marbridge Consulting, UC Web, the Chinese mobile browser company with Lei Jun as one of its co-founders, today said that it was bringing a lawsuit against internet giant Tencent (HKG:0700) for unfair competition.

At a press conference in Beijing, it showed a partnership agreement where Tencent stipulated that handset makers “not promote products made by rival companies including UC Mobile,” as well as Qihoo 360, and Sina.

The friction between the two companies goes back to claims from Tencent that its QQ mobile browser was the market leader, which UC Mobile says was a fabrication. In addition, the company’s CEO Yu Yongfu (pictured above) alleges that the QQ browser interface is over ‘90 percent identical’ to theirs.

On a related note, UC Mobile just recently surpassed 20 million overseas users, showing that its more than just a domestic success. It uses its own rendering engine, rather than running on Gecko, Trident, or Webkit. Lei Jun also revealed that UC Web has over 100 million users and is growing quickly each month at the recent Disrupt Beijing event.

As for Tencent, it has often been accused of copying products from the ‘little guys’ and pushing them out of business. We recently heard the company’s CEO Pony Ma speak at Techcrunch Disrupt, where he shared his own thoughts and experiences on entrepreneurship in China.

Arthur Chow from 6waves Lolapps. Yes, I forgot to take a new photo of him...

During the course of the Disrupt Beijing event that finished yesterday, I caught up with Arthur Chow (pictured right) from 6waves Lolapps, the Hong Kong and San Francisco-based gaming company, to chat about its plans for getting onto social gaming platforms in mainland China.

This new leg of the company’s journey kicked off only last weekend, with the announcement of its acquisition of Chinese game studio Smartron5. Arthur explains that he picked up this young company because it comprises an “experienced team doing AAA titles.” It also snags them Gage Galinger, who’s behind such gaming ventures as Blizzard and Starcraft, and he will now become 6waves Lolapps’ VP of content development and will lead operations in China. It brings the whole company up to about 170 employees, including the new Beijing operations.

Explaining the assets they’ve now acquired, Arthur points out:

Gage knows consumers’ preferences and how social games work … [Smartron5] will help us make games that can be exported, like to Japan or Korea, on Mixi or CyWorld.

It’ll also bring the company faster into mobile gaming, and they’re now hiring engineers and designers for that. The team has not yet decided whether to opt for premium or freemium for its China-oriented mobile games once they arrive on the scene.

6waves Lolapps' social game Ravenskye City, which is huge on Facebook right now.

Coming to China

6waves Lolapps is now planning out a serious and broad push into China as soon as possible, and is, Arthur says, looking at all serious options, such as Sina (NASDAQ:SINA) Weibo’s new gaming platform, Tencent’s (HKG:0700) QQ Games, Kaixin, etc. “Tencent is the platform you can’t ignore. So that makes perfect sense for us.” He adds:

For a game to be successful in China, it needs community management – like, maintaining relationships with users, and getting user feedback that you can channel back [to developers].

There’ll be “a game for China in two to three months” and they’ll pick a popular title for its first release that it can learn from , such as a resource-management game. Ravenskye City (pictured above) is actually the company’s biggest game, with about three million gamers on Facebook, so that’s one feasible option for its first social title in China.

“Kaixin001’s pursuit of user experience and its open attitude makes it a good fit with us. This investment is Tencent’s implementation and upgrade of its open platform strategy,” said Tencent’s President Martin Lau in a statement.

The deal should have been closed a couple of weeks ago but it’s interesting that Pony Ma, founder of Tencent, didn’t bring up the topic at Disrupt Beijing today. But Ma did say that Tencent is looking toward to being a more “open” Internet company and is working with third-party developers and gaining their trust.

And as for Kaixin001, it’s certainly good news for the team to have fresh funds available, especially after its rival’s Renren’s IPO earlier in the year and a long-awaited IPO which seems unlikely to happen.

Kaixin001 has lost much of its steam after a heated battle with Renren, which saw the Kaixin.com domain being owned by its rival. You can click here to read more about the fight between these two Chinese social networks, which includes comments from both sides too.

Rather awkwardly clutching a toy penguin, the Portuguese footballer Cristiano Ronaldo started tweeting on Tencent (HKG:0700) Weibo yesterday, in an attempt, he wrote, to “be closer to my Chinese fans.”

Tencent Weibo might get less media coverage than its Sina (NASDAQ:SINA) microblogging counterpart, but it actually has more users, and its celebrity tweeters have a lot more followers. Cristian Ronaldo – who now plays for Real Madrid – might be hoping to soon have as many fans on the service as the Chinese athlete Liu Xiang, who at the moment has 23.4 million fans. That’s more than double the figure of Sina Weibo’s top celeb, the actress Yao Chen.

Cristiano Ronaldo’s debut on Weibo appears to be either a paid-up promotional gig, or some clever marketing by some sponsors. He not only tweeted a photo of himself clutching the Tencent QQ mascot (pictured above) – that cutesy penguin – but also came prepared with a Tencent-made promo video (embedded below).

It’s not clear if the footballer is authoring his own tweets, or whether this is all done by faceless marketing staffers. Either way, now that Tencent Weibo has an English interface, it’ll be easier for him/them to navigate the site. His first tweet said:

Hello QQ users! I’ve opened this account to be closer to my chinese fans and happy to share exclusive contents with you. Stay tuned!

Cristiano – who has the affectionate nickname C Luo in Chinese – already has 110,000 followers, who are likely keen to get some insights into his acting footballing skills.

Take a look at C. Ronaldo’s Weibo page; and here’s the promo video:

Bang on schedule, Tencent’s (HKG:0700) major play in the B2C e-commerce marketplace opened this morning. Called QQ Buy, it’s the internet giant’s push against the dominance of Alibaba (HKG:1688), especially its brand-oriented TMall site.

The new Buy.qq.com will have a similar focus on well-known brands and labels, and also apes TMall’s move to allow rival, specialist e-commerce sites to open up virtual storefronts. We’ve already confirmed with Tencent that OKBuy, WalMart-backed YiHaoDian, 51Buy, V+, Kela, and TianTian are all on-board. It’s an attempt by the two major players to be the Chinese consumer’s choice of one-stop online shopping.

QQ Buy is making a gradual roll-out across the country, and currently it can only ship to customers located in one of China’s 31 provinces and municipalities, Guangdong, which is home to Shenzhen, China’s true economic powerhouse. But from today anyone can browse the site – but most of the country can’t actually get any item shipped. I wonder if that’ll cause some initial frustration.

Tencent’s new platform is bad news for the struggling Dangdang (NYSE:DANG), and the upstart 360Buy, as it has a comprehensive 3C (computers, communications, consumer) product section.

Tencent already has its own C2C e-commerce site, Paipai, which it will maintain as a rival to Alibaba’s Taobao.

You might like to check out the nice-looking tribute page to Steve Jobs at QQ Buy, from which you can buy anything from Apple’s current line-up, and browse a timeline of Steve’s past devices.

Three companies related to Qihoo 360 (NYSE:QIHU) have to apologize to Tencent (HKG:0700) and compensate it 400,000 RMB (US$62,530) for slander and unfair competition, according to a Beijing court verdict yesterday. The so-called “3Q War” between 360 and QQ is finally over.

Both Qihoo’s 360 Security suite and Tencent QQ are enormously popular pieces of software in China – 360 for anti-virus; QQ for IM and social gaming. 360 Security grabbed huge market share by promising to be free of charge forever. The controversy flared up last year when Tencent released its QQ Doctor app – as a free supplement to its IM app – which threatened some of 360’s core interests by promising to scan user’s computers for malware for free.

And then things got ugly last autumn, when Tencent updated and revamped QQ Doctor to become the QQ Computer Manager. It was done somewhat stealthily, and suddenly Tencent’s app was now a direct 360 competitor. But alarm bells rang nationwide when some claimed that the new QQ Computer Manager app had the ability to scan and read – and maybe transmit – any file on your computer, even when it was not running. In response, 360 released its own app within just a few days, called QQ Privacy Protector, which claimed to thwart Tencent’s new app. Its interface showed, with big red labels (pictured below), files on a user’s computer that it claimed had been accessed by QQ’s newest anti-virus app.

Qihoo's Privacy Protector app accusses the QQ free anti-virus app of scanning and reading sensitive computer files.

In late October, Tencent posted a statement on its corporate website denouncing 360’s “unfair competition.” They wheeled in some big-hitting buddies as back-up, as it was jointly signed by Baidu, and anti-virus firm Kingsoft, among others. Then 360 released QQ Bodyguard to prevent totally the scan action of the QQ Computer Manager.

A Tencent QQ app message appeared on users' desktops, telling them they needed to uninstall Qihoo 360's anti-virus suite.

The conflict escalated to its ultimate peak on the 3rd of November last year. This time Tencent responded fiercely, claiming QQ (the entire IM/social app) wasn’t compatible with 360, and showing users who had both apps installed a pop-up message (pictured right) telling them they had to uninstall 360 Security Guard. With the intervention of authorities at this point – with the controversy now making national news, and even getting some international coverage – the conflict stopped quickly. It’s not clear if the claims against Tencent’s app – that it could read sensitive user files – were true or not.

Millions of netizens were involved in this confrontation, as they saw two web giants bickering publicly, and as their own computers showed pop-ups denouncing the opposing company. It was all pretty weird for a few weeks. Unfortunately, both companies disregarded netizens’ interests in the whole kerfuffle. But now that anti-virus war is over, and 360 has to cough up the compensatory cash.

The Qihoo vs Tencent rivalry is not all finished, of course. Now Qihoo has its own group messaging app to compete with Tencent’s Weixin, which launched last month. Hopefully this new arena of competition between the two will not turn ugly as well.

[News source: CNBeta; with background history from Baidu Baike]

There are reports emerging this afternoon that Chinese e-commerce site Vancl will file its US IPO prospectus in October with a view towards hitting the tickers in the fourth quarter. Vancl has two B2C sites: its Vancl.com own-brand fashion label, and Vjia.com (also known as V+) which is its open platform that sells numerous well-known clothing brands.

This is not official. Sources in the industry, as reported by Sina Tech News, say that Vancl is hoping to raise up to US$1 billion from a US offering. China International Capital, Citigroup, Credit Suisse, Goldman Sachs, and Morgan Stanley are apparently lined up to underwrite Vancl’s bid.

Vancl is rumored to have cut 5 percent of its staff this summer, but that’s not too dramatic a number, and might indicate only a bit of belt-tightening at the company. Compared to one daily deals site in China that has shed 80 percent of its staff, Vancl appears to be in fine health. Indeed, with 1.2 percent of market share of China’s entire B2C segment (shown in red in the graph below), Vancl is curently the leading fashion-specialist e-tailer in the country.

There’s immensely strong competition in China’s B2C sector, where both Alibaba (HKG:1688) and Tencent (HKG:0700) recently invited fellow online shopping sites onto their own open platforms. Vancl itself has opted to launch storefronts on both the revamped TMall.com and the soon-to-open QQ Buy.

Currently, there are no major Chinese web/tech IPOs officially lined up in the States, owing to ongoing global financial troubles, and the summer of turmoil amidst Chinese tech firms on Nasdaq and the NYSE. Two upcoming Chinese-US IPOs were cancelled recently – those of Shanda’s Cloudary, and Xunlei.

Nonetheless, daily deals site Lashou, and books and 3C e-commerce site 360Buy (shown in green in the graph above) are rumored to be lining up for their own IPOs in 2012. Vancl, it seems, could beat them to the tickers.

[Source: Sina Tech news - article in Chinese]

Tencent’s (HKG:0700) upcoming B2C open platform now has a name, URL, and firm launch date. Dubbed QQ Buy, and for the moment at the second-level domain Buy.qq.com, it’s set for a tiered launch in some provinces in China starting October 11th.

The website is up already. but only running a promo page (pictured above) with a launch-date ticker. It also shows a scrolling gallery of global brands that will be featured across its numerous B2C stores. It doesn’t mention which other e-commerce sites will be jumping onto its platform, though Tencent has confirmed with Penn-Olson that six are lined up so far: OKBuy, WalMart-backed YiHaoDian, 51Buy, V+, Kela, and TianTian. They’re presumably all keen to take advantage of a storefront on their larger rival.

On Monday, the market leader, TMall – an Alibaba (HKG:1688) product – announced its own open platform, with 38 fellow e-commerce sites getting flagship stores. Although the announcements come a mere three days apart, Tencent is actually a full three years behind the e-commerce forerunner in China. TMall launched in 2008 (initially as a part of Taobao.com), and got its own domain in November of last year.

It marks a growing rivalry between two of China’s web giants that were previously in very separate areas – Tencent in IM and social networking; Alibaba in B2C and C2C. But both companies are spreading their wings and invading each other’s space more and more: first Tencent with its tentative first step into C2C e-commerce with PaiPai; and Alibaba getting more social with its AliYun mobile OS.

Alibaba CEO Jack Ma said recently that he likes to give rivals sleepless nights, which in turn benefits society through price cuts and better service. Tencent will be hoping to make Mr Ma sleep less well once Buy.QQ.com gets into full swing. Place your bets in the comments below.