Caixin
Apr 09, 2020 09:40 PM
BUSINESS & TECH

In Depth: China’s Remote Office Platforms See Boom During Outbreak

A primary school student takes classes online in Shanghai on Feb. 7. Photo: IC Photo
A primary school student takes classes online in Shanghai on Feb. 7. Photo: IC Photo
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During the SARS outbreak in 2002 to 2003, Chinese companies and government agencies recognized a need for video conferencing technology at a time when face-to-face meetings were dangerous.

The manufacturers of such hardware — such as ZTE Corp. and Huawei Communication Co. Ltd. — won big the following year as companies and agencies upgraded their office communication infrastructure.

It’s all happening again as schools close and employees work from home during the Covid-19 pandemic, leaving companies, schools and other organizations looking for ways to get a room’s worth of people communicating when they can’t be in the same room together.

“The virus outbreak has fast forwarded the development of the remote working (market) by five years,” said Qian Min, who is in charge of Tencent’s office products, including Tencent Meeting, the tech giant’s video conferencing application. In separate interviews with Caixin, sources involved with Tencent Meeting competitors — DingTalk, Wechat Work, and Feishu — agreed with that assessment.

Tencent Holdings Ltd. was a relative latecomer to the business. Its rival, Alibaba Group Holding Ltd., launched its workplace chat app DingTalk in January 2015, leveraging its e-commerce business to attract an initial batch of small enterprise users. It’s now the undisputed work-chat market leader in China. Tencent’s Wechat only released the first corporate version of its ubiquitous social messaging app Wechat, called Wechat Work, in April 2016.

It was already a crowded field even before the outbreak. Two other big Chinese tech companies, ByteDance Inc. and Huawei, joined the battle for corporate users by releasing similar software. ByteDance launched its Slack-like work collaboration app Feishu in 2018. And in December, Huawei launched WeLink.

But it wasn’t until the past few months that this kind of software really began to take off. Some apps have grown faster than others, but the market is growing so fast that on any given day, any one of them could top the most-downloaded lists. On March 6, Tencent Meeting became the most downloaded app on Apple Inc.’s App Store for the day, even though it had launched only three months earlier.

But all of these apps have done well of late. According data dealer Aurora, DingTalk’s number of daily active users (DAU) had surpassed 200 million by mid-March, up from less than 100 million in early February.

Tencent Meeting’s DAU grew from less than 2 million to over 10 million during the same period, and Wechat Work’s rose from nearly 10 million previously to 15 million at the beginning of March. Feishu and WeLink are still comparatively small players with DAUs of less than a million, though they are also growing quickly.

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DingTalk has seen demand spike since the global coronavirus pandemic began. Photo: IC Photo

The latest tech battlefront

Remote office and livestreaming apps had already become the latest battlefield in tech even before the coronavirus. But since the outbreak began, the battle has escalated. In early March, Caixin reported that WeChat had resorted to blocking links from Alibaba’s Dingtalk and Bytedance’s Feishu on its platform.

As competition has grown increasingly cutthroat during the outbreak, Alibaba, Tencent, ByteDance and Huawei have all begun to offer more remote work services for free in a bid to grab a bigger share of the market. Before the outbreak, they had been charging for these services, which were originally designed for corporate clients.

“The free strategy is very important for small businesses,” said a CEO of a company with around 500 employees. Last year, his company spent over 400,000 yuan ($56,633) on a video conferencing service similar to Tencent Meeting. DingTalk has been free since it launched, setting an example for others in the business to follow. The CEO predicted that eventually even high-quality video conferencing products for corporate users will also become free.

Still, the surge in demand for video conferencing has run up costs for the companies that operate these services. Li Zhifeng, head of business cooperation at WeChat Work, told Caixin that his company and its rivals “disregarded the cost to invest in manpower and equipment” in the early days of the outbreak because they figured a spike in demand was coming.

To cope with the overwhelming traffic during the outbreak, WeChat Work installed an additional 100,000 servers, while DingTalk added even more on Alibaba’s cloud platform.

Insiders from both Alibaba and Tencent believe that the need to spend so much money so quickly has squeezed out smaller players. “Few small companies can afford to add so many servers in such a short time … and no one can be sure whether these clients will stay after the epidemic passes,” one insider said.

Still, no one wants to miss out on the opportunity. “The window offered by the outbreak is very short. It will be much harder to play catch-up,” said a source at Huawei who has worked for the company for more than a decade.

He added that Huawei’s WeLink was not really prepared for the surge in demand during the outbreak.

DingTalk, which got in the business early, remains the company with the most users and the fastest growth. The app got its first 1 million users by leveraging Alibaba’s massive merchant database. Since then, it has managed to continue growing over the last two months thanks to demand from public schools and companies that have come to accept digital transformation, DingTalk Vice President Bai Huiyuan said.

“Previously, everyone knew digitalization was important, but its adoption among enterprises wasn’t as fast as we expected,” Bai told Caixin.

But after the outbreak, many of them who lacked the know-how or gave up halfway through the transformation were forced to reengage.

Bai believes remote work platforms won’t suffer too much of a drop in their user bases once the epidemic ends, but instead will rise across the board, because users will have cultivated new habits.

Contact reporter Isabelle Li (liyi@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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