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China chat apps thrive despite heavier censorship

Wednesday, August 13, 2014 - 01:40

While tighter rules on censorship and 'moral values' may hold WeChat's expansion back in some foreign markets, Reuters' Jon Gordon argues it'll have little effect on profits or its China user base.

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If you believe the tech investor thesis that mobile messaging apps like WeChat will eventually grow into the highways of the e-commerce world, then China's decision to tighten regulation of homegrown players may seem like an unnecessary red light. Unexpected though? Not so much. Long wary of social media, the Chinese government may now require real names to be attached to all messaging accounts, according to early state media reports. And for public accounts -- like those held by corporations -- users must now agree to comply with the socialist system, social moral customs, and public order, among other things. That may not sit so well with foreign multinationals who've adopted the platform to reach consumer audiences in China. For end users, the changes aren't so friendly either, but that doesn't necessarily mean an exodus is the next step. While Weibo -- basically China's take on Twitter -- certainly lost users and ad revenue after a similar crackdown, WeChat is quite a different animal -- used primarily as a messaging system rather than an open exchange. Plus when it comes to chat, there are scant few alternatives. Smaller Chinese competitors like Alibaba's offering face the same restrictions, and foreign competitors Kakao Talk and Line are more or less blocked in China. Investment banks remain bullish on Tencent's prospects. Credit Suisse suggesting WeChat Search could actually be landscape-changing for mobile users in China. And indeed, having more user information baked into its chat service can only help the firm better target its e-commerce and advertising operations. (SOUNDBITE) (English) REUTERS REPORTER, JON GORDON, SAYING: "So while this turn to increased censorship and socialism may limit the appeal of WeChat at least to a degree overseas, here in China the promise for e-commerce remains unspoiled, both in terms of its user base and its financial outlook." ENDS

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China chat apps thrive despite heavier censorship

Wednesday, August 13, 2014 - 01:40