7/22 TBC Insider Digest
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Insider Digest 7/22/21: Huang Qifan on Consumer Internet, WeChat Mini Programs Past and Present, and The Future is Globalization
This week’s posts are fewer than normal because I ended up taking a whole day to finish a deep-ish dive on Genki Forest for TechCrunch, which will come out on Sunday behind their paywall. I’ll ask the editor if I can share it with you guys, but either way, I’ll write up some of my learnings and revised opinions after talking to the company.
Announcement: Oh boy, a new edtech policy has come out as I’m writing this … perhaps that’s what we get together to discuss? See you at FRIDAY 7/23/21 6AM PST / 9AM EST / 9PM Asia Time on Zoom!
7/18/21 Huang Qifan Comments on Consumer Internet
Huang was the former mayor of Chongqing and now Vice-Chair of the National People's Congress Financial and Economic Affairs Committee, and an adviser to the China Finance 40 Forum.
Per Huang, there are 4 main problems right now that highlight problems with all of consumer internet:
Companies burning money in an effort to scale up and obtain a monopoly. This makes everything into a zero-sum game and destroys the economy's ability to allocate resources optimally. [And specifically for ecommerce,] once there is a monopoly, the costs for merchants end up being even higher than selling in an offline supermarket. This seems directly targeted at Alibaba ...
Using human weaknesses to design products and acquire traffic. This refers to Chinese apps using pornographic or otherwise crass / sensational and often misleading tactics to hook users. Basically, think of the worst kinds of clickbait. Most of the content apps engage in this behavior, with Weibo consistently being one of the worst offenders.
Monopolistic online platforms taking asymmetric measures to collect information from users and infringing on their privacy. Oh boy, this is probably referring to everyone, but we already know that is coming.
Discriminatory pricing. In doing so, the platform has divided the user base into different classes, but this actually means that the consumer internet company has not yet found a profitable business model. Unreasonable business models such as these are not viable. This was one of the practices specifically highlighted in the antitrust regulations, and multiple companies are guilty of it, but Didi has been one of the more frequently cited ones as far as I can tell.
Click through to read what he has to say about the industrial internet, which is what the government is promoting.
7/20/21 WeChat Mini Programs - Then and Now
I compared what WeChat mini programs looked like in 2018 vs in Q4 2020.
For Shopping: WeChat mini programs actually declined in % of users compared to 2018, mainly because of Pinduoduo. The ratio of App to WeChat mini program users in 2018 is 2.5x, but in 2021, that is 3.6x. I would guess this is because Pinduoduo has been weaning itself off of WeChat mini programs for a while, pushing for native app installs. Also, Alibaba has grown significantly since then.
For Travel: WeChat MPs increased significantly in % of users compared to 2018. In fact, there are almost 50% more users on WeChat MPs than there are on native apps. Where the ratio in 2018 of app users to MP was 1.5x, now that has completely reversed to 0.7x.
For Life(style) Services: WeChat MPs have also increased in % of users, but not as significantly. WeChat MP users of the top apps are about 70% of native app users. The ratio went from 2.0x app to WeChat MP in 2018 to 1.4x today.
Click through to see detailed graphs like the below on the distribution of traffic for the most popular apps:
7/22/21 A Common Thread Across All Chinese Tech & Consumer Companies: Globalization
This isn't anything revelatory, but the common thread across all Chinese tech & consumer companies today is globalization. Well, technically quoting one of my upcoming livecast interviews, it's either going rural or going abroad, but I'm finding that going abroad is a much bigger theme than I thought. Mainly, it’s a $240Bn market, according to some estimates, so no matter how you cut it, there are multiple unicorns to be had there, even with no growth, which isn’t the case. The space is growing quickly.
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