China Mobile to catch up in chat sector

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.