WeChat to manage wealth

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Tencent Holdings pushed into the nation's booming online financial services sector on Thursday as it announced plans to launch a wealth management service on its dominant mobile messaging app WeChat.

The service, called Licaitong, was jointly developed by Tencent and four fund companies, including China Asset Management Co and GF Fund Management Co.

The service, with a minimum investment of just 0.01 yuan, will enable WeChat users to buy and sell money market funds via mobile devices and get higher interest rates than typical banking deposits.

Tencent, China's largest Internet company by revenue, didn't reveal when the service will be officially launched and open to all WeChat users.

It did, however, say that its cooperation with the four fund companies isn't exclusive and it seeks to cooperate with more fund companies.

Sources said Tencent has been working on the service for months after its archrival, Alibaba Group Holding, introduced Yu'E Bao, an investment service, in June 2013 through its e-payment affiliate Alipay.

The tremendous popularity of Yu'E Bao, which reported more than 250 billion yuan under management and 49 million users as of Wednesday, has prompted many Internet companies and fund managers to follow in its path.

Baidu Inc, China's leading search engine, joined forces with China Asset Management Co in October to launch its first wealth management product, known as Baifa.

Suning Commerce Group Co earlier this month launched its first online investment service, Lingqian Bao, with GF Fund Management Co and China Universal Asset Management Co.

Analysts said Licaitong is the strongest competitor so far for Yu'E Bao, which is the largest money market fund in China.

Wang Weidong, an analyst at iResearch Group, a Beijing-based consulting firm, said that given the business model and the huge user base of WeChat, Tencent's offering would be a real challenge to Yu'E Bao.

"The most difficult part in selling wealth management products is to find a large pool of customers. WeChat, which already has more than 400 million registered users and boasts 272 million global monthly active users, is a great gateway to allow fund companies to gain access to potential customers," Wang said.

Ding Xuemei, a spokeswoman for Tian Hong Asset Management, which jointly launched Yu'E Bao with Alipay, said her company welcomes Tencent's move. "We are happy to see innovation in the sector, and competition is good for the market's development," Ding said.

Questions:

1. What is Tencent’s latest business plan?

2. What will the Licaitong service do?

3. Who will its competitor be?

Answers:

1. To launch a wealth management service on its mobile messaging app WeChat.

2. Enable WeChat users to buy and sell money market funds via mobile devices and get higher interest rates than typical banking deposits.

3. Alibaba Group Holding’s Yu'E Bao, an investment service, launched in June 2013 through Alipay.

About the broadcaster:

Nelly Min is an editor at China Daily with more than 10 years of experience as a newspaper editor and photographer. She has worked at major newspapers in the U.S., including the Los Angeles Times and the Detroit Free Press. She is also fluent in Korean.