WeChat: behind the scenes at China’s most successful app

With more than a billion daily active users, WeChat dominates daily life in China. It isn’t just the default option for social networking and chat, it is also the leader in mobile payments; taxi, restaurant, movie-booking and retail apps. These all open inside WeChat, providing a seamless and integrated service for upwardly-mobile Chinese users.

Many westerners are sceptical about successful Chinese software companies, bearing in mind Facebook’s absence and Google’s exit from the market in the early 2000s.

But WeChat didn’t get an easy ride. It had to fend off dozens of domestic competitors when it was launched, and it had to keep innovating to stay ahead. Most observers now rate WeChat as offering a superior user experience than its western counterparts today and its innovative features are now being copied by others. 

But how did WeChat gain such a strong market position?  While some aspects of the WeChat story are well known, there is virtually nothing written about how WeChat works from the inside. This is in large part because its founder, Allen Zhang, despite enjoying rock-star status in China, rarely gives interviews.

In this article, we provide an analysis of WeChat’s internal innovation process, how it created the original product, how it stays abreast of user needs and how it remains innovative and agile even though it has more than 2,000 employees.

The article is based on exclusive interviews with Allen Zhang and ten other senior executives, as well as extensive desk research.

Where it all began

WeChat was the brainchild of Allen Zhang, a legend in China’s tech sector. Zhang created Foxmail in the late 1990s, and when his company was bought by Tencent in 2005 he led the development of QQ Mail, which became one of China’s top mail service providers.

In 2010, with mobile messaging starting to take off, Zhang formed a skunkworks operation: 10 people working in a ‘little dark room’ in Guangzhou, one-and-a half-hour’s drive from Tencent’s head office. This was a controversial move.  Zhang’s team was in competition with another internal team who were also creating mobile messaging applications. 

The new offering competed directly with Tencent’s existing Mobile QQ (originally a desktop messenger service and the cornerstone of its social networking and gaming services at the time).  And the notion of a free messaging service was not popular with the giant mobile operators, as they were making good money from SMS services.

Pony Ma, Tencent’s CEO, allowed Zhang’s team to proceed in an internal ‘horse race’ with the other unit.  Perhaps because of Zhang’s previous experience with QQ Mail, he was able to streamline the development and build a prototype far more quickly than the competing unit. 

WeChat launched in January 2011, initially as a texting service.  Rapid growth began with the introduction of voice messaging in May, then another breakthrough product, Moments, was released in April 2012, allowing WeChat users to create an intimate and private communication circle with their choice of friends.

If step one was about building user numbers, step two was the creation of a platform, with some services provided by third parties, not just by WeChat.  Central to the platform logic was the launch of WeChat Pay, a product that would enable users to buy products directly through their smartphone. But there was the inevitable chicken-egg problem: how do you get vendors to accept a mobile payment service when there are no users? And how do you get users when there are no vendors?  

The solution was the Red Packets feature, which quickly became one of the WeChat’s signature offerings. Building on the ancient Chinese custom of giving red envelopes filled with money at weddings and special occasions, Red Packets was a clever way to enable users to send small amounts of digital money to friends online.

It quickly took off, and soon users were linking their WeChat Wallet with their bank accounts. That led to growth on the other side of the platform, with retailers, public transport providers and restaurants all signing up to the service.