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WeChat teams up with luxury brands to expand in Europe

A recent Bloomberg report revealed that the messenger application, WeChat (Weixin), which has over 889 million users in China, is now planning to expand in Europe. It has set up an office in the UK, and has linked up with luxury brands such as Burberry and Chanel to run joint advertising promotions in those companies’ domestic markets. In addition, it is looking at developing its overseas travel services and its international payments business.

 

Alibaba and Facebook are potential barriers to WeChat’s expansion, as well as European regulations


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WeChat has already tied up with a number of luxury brands in the Chinese market in a number of promotional initiatives, successfully expanding its user base. For example, users can follow the official channel of their favorite luxury brands and watch exclusive fashion show content there which is not available for general consumers. This enables WeChat to expand its audience base, and at the same time helps luxury brands revive their currently sluggish sales.

However, WeChat’s ambition is not just limited to the domestic market; it is also planning an expansion on the international stage. In 2013 it launched an advertising campaign featuring football superstar, Lionel Messi of Barcelona FC, to drive the overseas expansion of the brand. This campaign was, however, not as successful as anticipated.

Since then, therefore, WeChat has concentrated more on its B2B strategy. This has already proved highly successful in the home market. The plan is to enable high-end brands to sell their products directly from WeChat’s platform into Europe, with an initial focus on the UK. WeChat is not just targeting European consumers in this, but overseas Chinese tourists as well. The number of Chinese tourists travelling overseas is expected to increase to 220 million by 2025.

At the same time, WeChat is also looking at expanding its payments business, although its two largest rivals, Alibaba and Facebook, are likely to be major competitive obstacles in this. Facebook is launching a payment function through its messenger application, WhatsApp, acquired in 2014. And in August last year, Ant Financial, Alipay’s parent company, announced a partnership with Ingenico Group SA, the French payments group, enabling Chinese tourists to pay for goods in Europe via the group’s e-wallet platform.

As well as these competitive pressures, WeChat also faces a host of regulatory hurdles in Europe. Financial regulation in Europe is much more stringent than in China. Clearing these will be challenging and time- consuming.

(By ZUU)

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