China's Tencent wants to expand its presence in Singapore — and Chinese tourists are a big reason
"We see Singapore as a strategic market for Weixin," Etienne Ng, Southeast Asia's regional director for Tencent's Weixin Pay, told CNBC in an email.
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"We see Singapore as a strategic market for Weixin," Etienne Ng, Southeast Asia's regional director for Weixin Pay, told CNBC in an email. He added that the company aims to "make it easier for Chinese tourists to patronize local merchants" as China reopens.
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Tencent is expanding its presence in Singapore — and China's a big reason.
The Chinese tech giant has struck new partnerships with Singapore businesses such as ride-hailing app Grab through its digital messaging app, WeChat/Weixin.
"We see Singapore as a strategic market for Weixin," Etienne Ng, Southeast Asia's regional director for Weixin Pay, told CNBC in an email. He added that the company aims to "make it easier for Chinese tourists to patronize local merchants" as China reopens.
WeChat/Weixin provides instant messaging and social media services, and can function as a digital wallet. Weixin is a version of the app that targets mainland Chinese, and its separate sister app, WeChat, is its international version. The app has about 1.3 billion monthly users.
In December 2022, Grab launched a "mini-program," or feature, within the Weixin app which allows users to book its services across over 480 cities in Southeast Asia without having to download the Grab app separately.
Grab is currently the only ride-hailing app available on the platform in Singapore. In Grab's mini-program, Chinese travelers can also choose to pay via WeChat/Weixin Pay in Chinese yuan.
Grab is optimistic that Southeast Asia will benefit from the return of Chinese travelers to the region, said Shawn Heng, group head of business development at Grab, citing the company's data.
"Chinese travelers represented the largest group of non-Southeast Asian users using the Grab app in 2019," he added.
Weixin is also working with the Singapore Tourism Board on an updated version of a mini-program called MeetSG, targeting Chinese MICE (meetings, incentives, conventions and exhibitions) travelers to Singapore. Cities such as Las Vegas and Hangzhou have developed similar programs with Weixin, but Singapore remains the first and only country with such an arrangement.
In April last year, even the country's zoo started to use the app's livestreaming functions to engage with the Chinese audience during border closures, said Damon Wee, vice president of digital marketing at Singapore's Mandai Wildlife Group.
Why Singapore
Singapore had over 3.6 million arrivals from China in 2019, making China the top tourist market for the Southeast Asian nation before the pandemic.
And a full recovery to pre-pandemic levels is expected in 2024, Singapore Tourism Board's CEO Keith Tan said in a press conference in January.
Singapore did not tighten travel restrictions for Chinese travelers after China announced the easing of its border controls.
More broadly, the region is a promising market for Weixin: The number of active Southeast Asian merchants using Weixin's mini-programs grew by 10 times over the past two years, according to Weixin Pay's Ng.
Challenges ahead
Travel recovery won't be smooth sailing, however.
Willy Chang, partner at Bain & Company, said a number of challenges have to be dealt with before a full recovery happens: higher air fares, supply shortages (of flights, staff and so on) and global macroeconomic headwinds.
"As we have seen in our research this applies to outbound Southeast Asian tourists as well — so it's not just a Chinese tourism phenomenon."
A merchant using Weixin also sounded a cautious note.
Metro Singapore, a chain department store, launched a Weixin mini-program in November 2022 to allow for online shopping. But while the company is hopeful for the return of Chinese travelers, it remains "cautious as geopolitical tension and the high inflation may deter travelling and affect discretionary spending among consumers in general," said Erwin Wuysang-Oei, head of marketing, merchandising controller and e-commerce.
The regulatory environment in China is another concern.
"The increased scrutiny of Tencent's operations and investments in other countries could create potential delays or disruptions in the roll-out of new products and services. Suppose Tencent is faced with more strict regulations and scrutiny in China … it could impact its ability to generate revenue and profits, affecting its ability to invest in and expand its operations overseas," said Jan Ondrus, associate professor of information systems at ESSEC Business School Asia-Pacific.
Nevertheless, he added that "Tencent is still one of the largest and most influential companies in China, and it may have more resources to navigate changing regulatory environments."
