Apple Now Accepts WeChat Pay in China

In a statement sent to multiple Chinese media outlets today, Apple said iPhone and iPad users in China can now use WeChat Pay as a payment method for App Store and Apple Music purchases.
"We are glad to offer users in mainland China the option of WeChat Pay for their favorite mobile app or Apple Music products. We continue to be dedicated to provide multiple simple and convenient payment methods for customers within the Apple ecosystem," Apple said in an official statement today.
WeChat Pay is the second most popular mobile payments service in China, with an estimated 39.5 percent market share as of the first quarter of 2017, according to Beijing-based research firm Analysys. By comparison, Apple Pay's market share was estimated to have been just one percent in the first quarter.

WeChat itself is an incredibly popular app in China that allows users to pay for services, chat, hail a cab, watch videos, play mini games, and more. Since the app can be installed on Android, some analysts believe WeChat is a threat to Apple by way of reducing the iPhone's competitive advantage in China.

Nevertheless, Apple CEO Tim Cook recently said WeChat's creator Tencent is one of its most important developers.

"I see Tencent as one of our biggest and best developers," said Cook, speaking on a conference call in early August. "They've done a great job of implementing iOS features in their apps, and we're looking forward to working with them even more to build even greater experiences for our mutual users in China."

Apple has also accepted Alipay, the most popular mobile payment service in China with 53.7 percent market share, since October 2016.

Tags: China, WeChat

Discuss this article in our forums

WeChat App in China Described as Apple’s ‘Toughest Rival’ as iPhone 8 Launch Nears

Apple's difficulty in garnering a larger share of the smartphone market in China has been looked at recently by The Wall Street Journal, which described the ubiquitous mobile app WeChat [Direct Link] as the iPhone's "toughest rival" in the country. Citing data from QuestMobile, on average WeChat is said to have captured nearly 35 percent of each user's monthly smartphone usage time, averaging about 1 billion monthly active users in total.

The problem for Apple is that WeChat is an entire ecosystem, with one app allowing users to pay for services, text, call cabs, watch videos, play mobile games, and access cloud-based "mini programs," or apps that don't need to be downloaded to a device to be used. Because all of these WeChat features are universal across smartphone brands, analysts speaking with The Wall Street Journal questioned whether or not Apple is "losing its edge" in China.


Specifically, Apple saw a sales drop in Greater China (including Hong Kong and Taiwan) in the first half of this past fiscal year, with revenue falling 13 percent in the period. According to analysts looking towards the launch of the iPhone 8, that device's success "largely depends on sales in China."
Skeptical investors are asking whether consumers in China will pay $1,000 for a new iPhone, when they spend more than 60% of their phone time inside a system from Tencent or from rivals Baidu Inc. and Alibaba Group Holding Ltd. “That’s the question: Is Apple losing its edge?” said Katy Huberty of Morgan Stanley, who remains optimistic about Apple’s prospects in China.
Apple has been making moves recently to focus on China, including naming Isabel Ge Mahe as vice president and managing director of Greater China, who is said to ensure that Apple's products and services appeal specifically to China users. Just this weekend, Apple also removed VPN apps from the China App Store, a move that could potentially help Apple gain favor with Chinese authorities.

Some iOS 11 features -- such as the new QR code scanner in the Camera app -- are also seen as a way for Apple to appeal to users in China who are used to having these abilities on hand with WeChat. If Apple doesn't continue to bolster its software, solely relying on upgraded hardware changes might not be enough to convince iPhone users to stick around, according to analyst Ben Thompson.
Tailoring software for the market could be critical to keeping the iPhone competitive. Otherwise, Mr. Thompson wrote, Apple runs the risk that the phone’s appearance becomes the only thing that matters when Chinese consumers buy a new device.

Such a shift potentially would force Apple to overhaul its entire business model, moving to a system where it releases a new-looking phone annually rather than every other year, as it does currently.
In terms of market share, market research firm Warren Capital noted that Apple and the iPhone have taken fourth place in China, behind Oppo, Vivo, and Huawei. Apple dropped to fifth place in terms of smartphone devices shipped in Q4 2016 (with Xiaomi added into the mix along with the previously mentioned Chinese brands), and in April Kantar Worldpanel's data noted that iOS dropped to its lowest share of the China smartphone market since 2014.

Thompson points to WeChat as a major reason only 50 percent of China-based iPhone owners stayed with Apple when purchasing a new phone, while in other countries that number is closer to 80 percent on average. Since users spend so much time within WeChat and rarely see any other advantages to owning an iPhone, the app "has turned Apple into just another vendor in China," which analysts see as particularly problematic for Apple as the iPhone 8 launch grows nearer.

During a visit to China earlier in the year, Apple CEO Tim Cook told local media outlet Caixin, "We're not just someone who's here to access the market. We've created almost 5 million jobs in China. I'm not sure there are too many companies, domestic or foreign, who can say that." Ultimately, Cook said that Apple isn't afraid of the challenges it faces in China, telling the site that Apple is "here to stay."

Related Roundups: iPhone 7, iPhone 8
Tags: China, WeChat

Discuss this article in our forums

Apple Takes Risk By Telling Chinese Chat Apps to Disable ‘Tip’ Functions

Apple has told several Chinese social networking apps to disable their "tip" functions to comply with App Store rules, according to executives at WeChat and other companies.

The tip functions in Chinese messaging platforms are free to use and allow people to send authors and other content creators monetary tips through transfers to mobile wallet accounts. However, according to The Wall Street Journal, Apple has decided that tips are equivalent to in-app purchases – similar to buying games, music, and videos – therefore Apple is entitled to a 30 percent cut of every transaction.

WeChat on iPhone

The move by Apple appears to be a way to eke out additional revenue from Chinese iPhone users as part of a broader effort to increase its market share in the country. According to research firm IDC, Apple's market share in China dropped from 16 percent in Q1 2015 to 9 percent in Q1 2017, while the iPhone has fallen to fourth place behind Chinese brands Oppo, Huawei, and Vivo.

On the other hand, Apple's App Store revenue in China overtook its U.S. App Store revenue in 2016 and became the biggest App Store market in the world. Making the tip function an in-app purchase in China's wildly popular chat apps would seem to be a sure-fire way to increase Apple's revenue. However, Apple's pressure on messaging platforms like WeChat is a risk and threatens to alienate huge Chinese companies.

Some social-networking apps have likened Apple's tactic to arm-twisting, according to The Wall Street Journal. Apple is said to have told chief executives at two companies that if they refuse to make the change, updated versions of their apps won't be made available and they could be kicked out of the App Store. "We don't charge anything as the platform, but Apple gets 30 percent for doing nothing," one of the executives reportedly fumed.

The annoyance stems from the way the tipping culture is viewed in China. Chinese app developers see tipping as fundamentally different from in-app purchases because users only tip voluntarily as a mark of appreciation when they consume content. But the biggest worry for Apple could be whether the Chinese government decides to intervene and side with the tippers.
One executive says his company is talking to the Ministry of Industry and Information Technology, a regulator, about whether Apple is imposing unfair rules by turning tipping into in-app purchases. MIIT says it isn’t involved. The People’s Bank of China, which regulates electronic payments, didn’t respond to a request for comment.
Apple has suffered at the hands of Chinese state regulators before. But Apple also risks frustrating China's biggest company Tencent Holdings Ltd, the developer of WeChat, which has 938 million active monthly users. The messaging service works almost like an operating system all of its own, boasting multiple mini-apps that allow users to pay bills, book hotels, browse media, and more, without ever having to leave the chat platform. The nature of the system itself could be a threat to Apple's app revenue, while WeChat is arguably more important to Chinese smartphone users than any individual phone brand – iPhone included.

WeChat is in talks with Apple to try to find a new solution to the tipping problem and come to an alternative agreement, according to people familiar with the matter.

Tags: China, WeChat

Discuss this article in our forums

WeChat Launches Cloud-Based, iMessage App Store-Like ‘Mini Program’

wechat-appPopular Chinese mobile app company WeChat [Direct Link] congratulated Apple on ten years of the iPhone earlier this morning, with founder Allan Zhang posting photos online from the iPhone's unveiling in January 2007.

Simultaneously, WeChat parent company Tencent Holdings launched a suite of cloud-based smartphone apps that analysts believe suggests WeChat intends to "play a leading role in the next decade" of the smartphone software business (via The Wall Street Journal).

The new platform is called "Mini Program" and is made up of a collection of apps, all stored in the cloud, that users can access without downloading or requiring storage space on their smartphone. Although seemingly a direct counterpart to the iOS App Store and Google Play Store, a Tencent spokeswoman speaking with The Wall Street Journal said that the company "maintained regular dialogue with Apple" throughout the development of Mini Program. WeChat also deliberately avoids calling it an "app store."
The company has taken care not to describe Mini Program as an app store, saying it doesn’t have a central location to distribute applications. Apple doesn’t allow third-party app stores in its iOS App Store. Tencent also dropped plans to include the word “app” in its name, calling the features “programs” instead.

“Apple won’t let us call it App Accounts, which might turn out to be a good thing,” Tencent Chairman Pony Ma wrote on his WeChat account in September, as Mini Program began beta testing.
Although Mini Program provides experiences and programs similar to iOS apps, none are located in a "central location," akin to the actual App Store app on iPhone and iPad. Programs are instead discoverable through third-party means, like scanning a QR code or finding a new program in a search result. The programs are said to provide small but useful functionalities, similar to the simplified apps on the iMessage App Store.

wechat-app-2
WeChat itself began as a chat app in China and has slowly evolved into "a digital Swiss Army Knife," including extra features that let users stay up-to-date on the news, pay bills, check their bank accounts, buy tickets to the movies, and more. Mini Program is yet another feature addition to the popular app, but analysts believe it will take a while for both developers and users to get the full use of the programs.
Industry experts say the first mini-programs are less sophisticated than most conventional apps, with fewer features and functions. “For heavy users, the experience on apps is still better so I don’t think this would threaten the status of app stores,” said Zhu Xiaohua, product supervisor of online question-and-answer platform Fenda.

“Mini Program is not a simple substitute,” said Hong Bo, a Beijing-based tech analyst. “It will take a fairly long term for developers and users to get used to it.”
For Apple, the iOS App Store continues to account for a large portion of the company's revenue, with $240 million in sales on New Year's Day 2017 -- the "busiest day ever" for the App Store. In total for 2016, App Store developers made $20 billion, which the company said was up 40 percent from 2015. The iMessage App Store is also growing, with 21,000 apps now available for users to download, up from 1,600 last September.

Tags: China, WeChat

Discuss this article in our forums