After WeChat and Alibaba: Now comes the next generation of Chinese super apps

Nine of the twenty most valuable Internet companies worldwide now come from China. Everyone knows Baidu, Alibaba and Tencent, but what about Meituan-Dianping, Toutiao and Douyin? Which business models are the Chinese companies pursuing? What sets them apart from Western apps and what makes them so valuable? OMR introduces the high-flyers from the Middle Kingdom and shows how they are targeting Western markets.

Allegedly, Meituan Dianping wants to go to the Hong Kong Stock Exchange in June 2018 and place there ten percent of his shares for six billion US dollars. That would be equivalent to a business valuation of $ 60 billion – and would make this single Chinese company almost as valuable as all German listed digital companies combined. What makes the two apps of the company so special?

Meituan Dianping: The all-rounder is already switching to the German market

If a Chinese tourist opens the Meituan app in Berlin or Hamburg, he sees his city trip almost ready on his smartphone screen. In clear UX design there are the Brandenburg Gate, the Reichstag, the Museum Island or the Miniaturwunderland including ticket prices, user films and photos, with route suggestions and tour bus tickets. In his area he sees all the restaurants including reviews and phone number. If he wants to shop, Galeria Kaufhof offers him a discount of four percent on all purchases, and Swarovski and Samsonite even offer discounts of ten percent – the locations of the shops are of course displayed. Soon the Meituan user can go there with an orange bike from Mobike, because the Chinese bike sharing startup was just bought by Meituan and should be integrated into the app as fast as possible.

display

For a German tourist in Beijing, it would be as if his Google Maps, Booking.com, Trip Advisor, Zalando, Groupon, Yelp, Deliveroo, Mytaxi, City Bike and nebenan.de accounts were merged into a single app. She would give him some suggestions on how to get to the Forbidden City the fastest, which bus company to visit the Great Wall, if there are group discounts for his friends, where to find the shopping mall with the guaranteed shopping discounts, where he has the highest rated silk fabric stores and where he can find German bakeries. So much concentrated service for its 320 million Chinese users, nearly one in four Chinese, is likely to be one of the reasons for Meituan’s targeted valuation of $ 60 billion.

Meituan is everywhere – from car wash to karaoke night

Meituan (translates as “beautiful in the group”) starts in China in 2010 as a simple Groupon clone for bargain hunters and in 2015 bought the Yelp-inspired review portal Dianping. Since then, Meituan Dianping has been the most agile player in his two apps in the huge Chinese O2O business, “Online to Offline Business”, and has plowed through pretty much all retail industries and services ever since it was founded. Meituan has long outgrown the initial group shopping model and its food delivery platform. Over the past few years, it has been selling cinema and sightseeing tickets, supplying food, arranging restaurant, hotel visits and car washes, engaging in the wedding, beauty and karaoke industries, and entering e-commerce.

Last year, Meituan entered the bed and breakfast industry and taxi business and started lending mobile phone charging devices. In April 2018, the mega-startup then bought the bike-sharing company Mobike with its orange-colored bicycles, which are already driving on German city streets. “In services of daily life, Meituan now completely covers the food, living and travel sectors,” observes an industry expert.

Meituan: Hard-won market leadership in the O2O business

Meituan is struggling in tough markets with small margins and extreme competition, as shown by the Beijing company itself: infamous for its rugged corporate culture, restructured after the Dianping merger, rigorously leads its employees to sales targets, and fires them offhandedly when they do not reach this. This is obviously the price for O2O market leadership, where it is not about cutting-edge technology, but about retail. According to Chinese media reports, 320 million people at 4.37 million traders in Meituan in 2017 purchased goods and services with a gross value of $ 56 billion.

Among the investors is Tencent, which explains why you can sign in to Meituan with his WeChat account and go with Mobikes. Tencent was previously invested in the orange bike shaver. Nevertheless, Chinese observers of the tech industry suspect that the IPO comes too early and only because Meituan urgently needs cash. The tech company should therefore first concentrate on the integration of its many business areas.

Bytedance: An empire of smart entertainment apps from Toutiao to Douyin

Quite unlike Meituan Dianping, Bytedance, the AI ​​company behind the entertainment apps Toutiao, Douyin and Musical.ly, has a current valuation of $ 30 billion. With the help of personalized artificial intelligence recommendation algorithms, it aims to provide its users with aggregated media content as entertaining and sticky as possible. Short videos become more and more important for the startup. Unlike all other China Unicorns, neither Alibaba nor Tencent have invested in Bytedance and Baidu’s takeover rumors have not yet been confirmed.

Founder Zhang Yiming appears as a contentious young tech star who has just had a public exchange with the Tencent CEO. Bytedance appears to Meituan as a modern, young, internationally oriented media company, which last November, the mainly celebrated in America short video app Musical.ly for a total of $ 1 billion. Founder Zhang Yiming, a 36-year-old software engineer from the southern coastal province of Fujian, wants to make his company “as boundless as Google.”

Toutiao is not a news but an entertainment app

The superstar in the Bytedance portfolio is the Jinri Toutiao (“Daily Heading”) news app with 120 million daily users. Launched in 2012, Toutiao first made use of the news on all major and minor news portals in China and aggregated it only on mobile – until the Chinese publishers filed a lawsuit in 2015 and Toutiao had to negotiate copyright agreements with the individual media outlets. At the end of 2017, 1.1 million content creators were registered on Toutiao.

Also due to existing copyright conflicts Toutiao now relies heavily on user-generated content, especially in the form of short videos. What makes so many millions of Chinese addicted to the app is their finely tuned recommendation algorithm. Toutiao is just overflowing with everything one loves in China in her free time: food, gaming, karaoke and dance videos. Hard messages are shown dutifully at the beginning of the feed, but then played subordinated. In contrast to the feeds of Facebook and Instagram, the recommendations are not based on the behavior and interests of friends.

Infeed Advertising is becoming more important than performance marketing

With great concern, the Baidu search engine is likely to witness the rise of the “referral engine” Toutiao in the Chinese advertising market. Because in-feed advertising, which supports brand advertising and can be seen in both the WeChat and Toutiao newsfeeds, is becoming more important in China than the performance advertising that the search engine lives on. The advertising sales of Toutiao 2017 allegedly about the equivalent of two billion US dollars, they should grow by almost double in 2018 to about four billion US dollars. Although Baidu’s ad sales last year, at $ 13 billion, were many times higher than those of Toutiao, they grew much more slowly.

Shooting star Douyin: 150 million users in less than two years

Bytedance now has an armada of nine short video apps, some focused on the Chinese, some on the international market. The shooting star in China is Douyin (German: “Triller”, internationally known by Tik Tok), an app for 15 seconds long selfie videos in which teenagers love to sing, dance, perform life hacks and fool around with face filters. Creators with more than 50,000 followers are allowed to live stream their videos and answer questions from fans who pay for it. Influencers are generously supported by Douyin in collecting followers.

In September 2017, Douyin successfully launched its first infeed branding campaigns for the Airbnb, Harbin Beer and Chevrolet brands. The app counted 150 million daily users on June 12, 2018, and was the world’s most downloaded app in Apple’s App Store in the first quarter of 2018, with 45.8 million downloads – ahead of Youtube, Whatsapp, and Instagram. Their user numbers had quadrupled since January 2018. Douyin is in Germany as little available as the international version Tik Tok, but resembles Musical.ly – as already mentioned since the end of 2017 in the possession of Bytedance and China already integrated into Douyin.

Chinese authorities worry about media loss of control

Those who could stop the rapid rise of Bytedance as a completely new type of media company are the Chinese authorities, which are worried about losing control over media content in the new super apps. Often and sharply, Toutiao, parent company Bytedance and founder Zhang Yiming are criticized by the Chinese media authorities for “shallow, vulgar content” of the apps. It was not until April that Bytedance had to remove one of its short video apps from the market and Zhang publicly apologized for inappropriate content posted there. The Chinese government is trying to make its news more attractive with its own short videos on Douyin. Allegedly, the propaganda videos have been viewed 1.6 billion times so far – a testament to the learning ability of the Chinese government and the success of short videos as a new form of media.

This article first appeared on the Online Marketing Rockstars.

Leave a Reply

Your email address will not be published. Required fields are marked *