In China, debate rages around which of the Ma’s (Pony at Tencent; Jack at Alibaba) is the greater wealth creator for shareholders. There’s no such debate in South Africa where Naspers’ Koos Bekker – thanks to the Tencent investment – is in a class of his own. With Tencent having conquered much of China and Africans leapfrogging straight into mobile internet, it was only a matter of time before Pony Ma and Bekker pressed the button on their plans to replicate Tencent’s Chinese success on this continent. As the FT’s Andrew England reports in this piece, that strategy has now begun in earnest. Their immediate target is Facebook. The biggest losers, though, are sure to be the likes of MTN, Vodacom and other Africa-focused mobile operators whose profitability is boosted by soon-to-be extinct SMS charges. – Alec Hogg
By Andrew England
One of China’s largest internet companies is intensifying its efforts to crack the African market with a bid to disrupt Facebook’s WhatsApp with a rival messaging service.
Tencent has teamed with Africa’s largest media company, Naspers, to introduce its social media app across the continent. The service, WeChat, has more than 650m active monthly users in China, and it is cheaper than SMS.
The Chinese-South African joint venture is betting on the rapid growth of smartphone sales to young people, who are increasingly using their mobile phones to shop, bank, search for jobs, listen to radio and order taxis and takeaways.
Naspers holds a 46.5 per cent stake in Tencent, making it one of the highest profile examples of South African and Chinese companies joining forces to expand across the continent. Its initial investment of $34m for the shareholding has paid off spectacularly, helping Naspers become South Africa’s biggest company by value and its chairman Koos Bekker to become a billionaire.
Brett Loubser, the head of WeChat Africa, said the average African would have their first ever experience of the internet through their mobile device.
“They’ve missed the entire desktop, PC, laptop, whatever thing, and because of that, I think we’re seeing innovation come out of Africa from a mobile perspective that is just leagues ahead of anywhere else on earth really,” said Mr Loubser.
WeChat offers users services far beyond the simple messaging functions available in WhatsApp.
In an apparent bid to tie in other services to its system, WeChat has also launched a $3.5m venture capital fund to invest in new tech companies offering services that the app could offer. It has already invested in Money for Jam (M4JAM), a micro jobbing (casual work) service.
It is also introducing a “digital wallet” service in partnership with Standard Bank, Africa’s largest lender by assets, which is part-owned by China’s ICBC bank. This enables users to conduct financial transactions and make payments using mobile phones, even to recipients with no bank account.
Mr Loubser declined to say how many users it had in Africa, but he acknowledged that competition was intensifying. World Wide Worx, a Johannesburg-based technology research company, estimates that WeChat, launched in the African market in 2014, has about 6m registered users in South Africa, compared with about 14m active WhatsApp users.
“Given that WhatsApp is eight years old, we’re five years late to the party, and I think where we are at right now we are happy with,” Mr Loubser said.
He added: “WhatsApp has possibly the highest market penetration of any country on earth in South Africa. Fighting that as a newcomer is really tough, but in other African territories, smartphone penetration is pretty much non-existent: that’s an open market.”
WeChat’s short-term focus is on building its presence and offerings in South Africa, the continent’s most industrialised nation, where it has a team of 31 staff and scores of services available on its platform.
But it is also active in Ghana and Nigeria, the continent’s most populous nation, where it has a team of three and is working with Nigerian start-ups such as Jobberman, an online employment service, and Traclist, an online fashion shopping service.
(c) 2016 The Financial Times Ltd.
