Mobile chat application Yixin, which was launched by China Telecom Corp Ltd and NetEase Inc, is pushing China Mobile Ltd, the nation's biggest telecom operator, into an awkward corner, analysts said.

On Aug 19, China Telecom and Internet company NetEase Inc jointly launched Yixin, a smartphone app similar to Tencent Holdings Ltd's WeChat.

Yixin, which has created to challenge WeChat, has several features that set it apart from the competition. For instance, the app is capable of sending free text and voice messages to any mobile phone user, whether the receiver has installed Yixin or not.

To show the companies' determination to fight against WeChat, which has attracted more than 300 million users in two years, China Telecom's Chairman Wang Xiaochu and NetEase's Chief Executive Officer William Ding both appeared on stage at the launch ceremony. Other celebrities, including Sohu Inc's chairman Charles Zhang and Lan Ye, vice-president of Chinese e-commerce giant JD.com, were also present.

Before that, China United Network Communications Co Ltd (China Unicom) - China's second-largest mobile carrier - had joined hands with Tencent in July to launch the nation's first SIM card customized for WeChat.

After these moves, China Mobile is now expected to come up with its own strategy for the mobile instant-messaging sector, said Tian Siyu, an analyst with research firm Zero2IPO.

"People cannot help but wonder what kind of move will China Mobile take next? Will the world's biggest telecom carrier endure the situation and be left behind?" Tian asked.

There's no indication yet that China Mobile will react to the market changes or release any strategy for the sector soon.

The company declined to comment for this story.

China Mobile explored the nation's instant-messaging market as early as 2008. At the time, the company introduced the Fetion app to grab market share away from Tencent's dominating QQ service. Fetion was once the second-largest instant messaging app in the country, behind QQ.

In September 2011, more than six months after Tencent's launch of WeChat, China Mobile unveiled Feiliao, a mobile app that allows users to send and receive voice messages, and was intended to compete directly with WeChat.

However, Feiliao failed to take users away from WeChat and China Mobile said in July that it would suspend upgrades for the app.

However, the carrier did not abandon the mobile chat market. In June, China Mobile launched Jego - a Skype-like mobile app that targets users with international communication needs. But Jego did not last long, and China Mobile suspended the service three weeks after its launch.

"It's quite hard for China Mobile to do the same things that Internet companies do. China Mobile is a telecom carrier and it lacks that sort of Internet gene," Tina Tian, a telecom industry insider, pointed out.

Meanwhile, a series of corruption scandals in recent years has seriously hurt China Mobile's ability to take bold moves.

"The company appears to be more conservative than before," Tian said.

China Mobile said this month that Xu Long, its chairman in the southern province of Guangdong, was removed from his position and is under investigation for "severe disciplinary violations". Several high-level company officials have been ousted since 2010.

And there's no doubt that WeChat has placed negative pressure on China Mobile's market performance. About 70 percent of its revenue last year came from traditional voice and short message services. But the company's traditional business is declining, as more customers are using WeChat because of its almost free voice and message services.

China Mobile's financial reports reflect the carrier's difficulties. The company's net profit in the first half of the year rose a mere 1.5 percent year-on-year, while China Unicom's and China Telecom's net profit increased by 55 percent and 16 percent year-on-year, respectively.

Sandy Shen, an analyst with Gartner Inc, said that Yixin is not likely to affect China Mobile's financial performance in the short run. "It's unclear whether Yixin will be successful. Though the mobile chatting market is big enough to house two to three major players, I still doubt that Yixin has the chance to topple WeChat's position," Shen said.

Zhang Zheng, former head of NetEase's marketing department and now general manager of Zhejiang Yixin Technology, said that Yixin aims to have more than 100 million registered users within six months, with an active user base of more than 50 million users.

Yixin's customer base has already surpassed 5 million, according to Zhejiang Yixin, the joint venture between China Telecom and NetEase.

shenjingting@chinadaily.com.cn

(China Daily USA 08/29/2013 page15)