Apps based on local connections gaining in popularity

By Chen Yang Source:Global Times Published: 2012-8-27 18:40:03

When Zhang Ping, a 46-year-old taxi driver living in Beijing's Tongzhou district, goes to work, the first thing he does is check if anyone has reserved taxi services via an application called Momo on his smartphone.

Momo, or Hi Stranger, is a location-based mobile app that allows users to locate and chat with strangers around them.

At first Zhang was not so interested in the app, but when he heard of another Beijing-based taxi driver who was able to earn more than 10,000 yuan ($1,570) per month by using the Momo app to attract business, he decided to try it too.

"My company does not provide taxi reservation services," Zhang said. "But passengers nearby can send a message to me via the app, and then I can easily find their location and pick them up if I am available."

Zhang said he now gets several messages from passengers every day, who are mainly tech-savvy people in their 20s or 30s. "The app has not brought me as much business as I expected, but I do enjoy this way of communication," he noted.

Too intimate?

Momo, which can be used on Apple's iOS or Google's Android operating systems, is one of more than a dozen location-based social networking apps in China, including Miliao, iAround, Youjia and the biggest player - Tencent's WeChat.

What makes Momo both popular and controversial is its function that allows users to instantly pinpoint and contact nearby strangers anonymously. Some users treat the app as a useful tool for setting up blind dates or seeking one-night stands.

"If you use a picture of a beautiful young woman as your profile, you will soon find a lot of men nearby saying hello to you, and even flirting with you," said Jiang Ying, a 28-year-old Momo user in Shanghai.

"That wasn't our original intention when we designed the app," Wang Li, operation director at Beijing Momo Tech Co, told the Global Times, noting that the company has had to shut down a number of accounts of people using the app to harass other users. "Actually, many social networking apps encounter the same moral problem," said Wang.

But the function has made Momo a hotly discussed topic on the Internet and it continues to attract new users who are curious about it. Since the app was launched in August 2011, the number of its registered users has grown rapidly and is now over 10 million.

Wang said the company is still aiming to accumulate users and is not too concerned about profitability at this stage.

Recent market rumors said that Momo has completed a second round of financing worth $50 million. Wang did not confirm the figures, but said the financing had been completed.

Shadow of Tencent

Unlike Momo, Miliao, an app developed by Xiaomi Technology Co, mainly focuses on communication between acquaintances.

When Xiaomi launched the mobile-chat service in December 2010, CEO Lei Jun expected that Tencent Holdings, China's biggest Internet company by revenue, would take six months to launch a similar service.

But Tencent's move was much faster than Lei expected. It launched WeChat within just two months, and the app soon became more popular than Miliao. With Tencent's huge user base, WeChat had accumulated more than 100 million users by the end of March, while so far Miliao has just under 18 million users.

Xiaomi published a PC version of Miliao on August 10. The move was seen by some industry watchers as part of Xiaomi's strategy to strengthen its competitiveness against Tencent.

"We are not targeting Tencent. The launch of the PC version is aimed at providing more featured services to our users," Li Xiaoguang, a spokesman for Xiaomi, told the Global Times.

"Currently there is no pressure on Miliao in terms of generating profits, as Xiaomi mainly gains revenues from selling smartphones," he said. Around 3.52 million Xiaomi smartphones have been sold so far since the company started selling them in October 2011.

Both Li and Wang admitted that Miliao and Momo's user bases are still small compared to Tencent's WeChat, but industry experts are more pessimistic about Miliao's prospects.

"The features of Miliao and WeChat are too similar, and it is almost impossible for Miliao to challenge WeChat's dominant position," Li Yi, secretary-general of the China Mobile Internet Industry Alliance, told the Global Times.

"Though WeChat has similar features with Momo in terms of chatting with strangers, recent media reports on crimes associated with WeChat will make Tencent more cautious about its future strategy," he noted.

Local police in Changzhou, East China's Jiangsu Province, found prostitutes using WeChat to solicit business, CCTV reported on August 16. In June, a local court in Ningbo, East China's Zhejiang Province sentenced a 32-year-old man to eight years and six months in jail for raping seven women he had contacted via WeChat since December 2011.

WeChat's ambition

Tencent posted a 32 percent year-on-year increase in net profits to 3.1 billion yuan in the second quarter this year, mainly boosted by its online gaming sector.

Zhang Jun, a spokesman for Tencent, told the Global Times that the cash-rich company was not under immediate pressure to make a profit from its WeChat service, but some consumer brands such as Nike Inc have already noticed its advertising potential and have partnered with Tencent to launch their official accounts on the WeChat platform.

Analysts say WeChat's ambition is more than being No.1 in the mobile social networking sector.

In WeChat's latest version released in July, it added a new function that allows users to conduct real-time video chat.
"With this function, Tencent has the potential to challenge State-owned telecom operators' voice call business," said Li Yi. Currently domestic telephone services are dominated by three State-owned companies - China Mobile, China Unicom and China Telecom.

Li expressed concerns that WeChat's new voice over Internet protocol (VoIP) phone services might face the risk of further regulation from Chinese authorities if it grows fast and hurts the State-owned telecom operators' interests.

"Domestic regulations for VoIP services are mainly focused on the PC-to-phone sector, and currently there are no related regulations on such services between smartphones," he said.

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