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Despite the favorable conditions for growth created by Tencent, We Chat has faced its fair share of challenges, including two behemoths in the Chinese Internet realm: 1) China’s powerful state-owned telecom operators, who were upset that their SMS fees were being eroded by We Chat’s free Internet messaging system; and 2) the wildly popular Sina Weibo, a Chinese social networking platform with over 500 million registered users. • Now world’s largest smartphone market, can China produce a top global brand?• China and Cybersecurity: The Other Side of the Story • China’s E-Commerce Market Grows in Size, Importance and Dynamism • The Significance of Amazon Appstore’s launch in China • China’s Reaction to NSA Surveillance Gives Microsoft Reason to Worry So far, so good.Monetization Tencent currently faces a challenge familiar to many companies in the Internet realm (we’re looking at you, Facebook): if you’re not charging for your service, how do you make money?We Chat is free to download, free to use, and free of ads.Moreover, its appeal cuts across nationalities and socioeconomic classes. Remember those two friends who asked for my We Chat ID when I landed in Beijing? They can search for new friends through various mechanisms, from the random “shake,” which connects you with other users shaking their phone to make new friends, to the integration of your phone contacts with the We Chat platform.

In early July, Martin Lau, president of Tencent, the company behind We Chat, revealed that the app has over 400 million registered users and nearly 200 million monthly active users.Earlier this month, Tencent unveiled the first of its We Chat games, which are free, but also include special features that users can pay to obtain.They are also reportedly developing an online payment service that will be released with upcoming versions of the app.Tencent is most famous for creating QQ, an Internet instant messaging platform with nearly 800 million registered users.We Chat’s initial growth was fueled largely by QQ users.

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