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Sealand Galaxy back trading and focused on WeChat opportunity outside of China

“We use Tencent’s product to develop the oversea market, with us both sharing the benefits”
WeChat has over 1bn registered users

A cottage industry has sprung up to monetise the data accumulated on Google and Facebook.

In China, too, the same issues arise albeit not with Facebook and Google, which are blocked, but with the local alternative, Tencent’s social media arm WeChat.

WATCH: Sealand Capital Galaxy aims to monetise Asian 'We Chat' data

WeChat has over billion registered users and from its roots as a Chinese social media platform has evolved into a full-blown payment system.

Nelson Law, chief executive, of Sealand Galaxy Capital Limited (LON:SCGL) says WeChat has effectively replaced cash in many places with many stores no longer accepting coins or notes.

Law has a good relationship with Tencent and that has enabled him to secure licences to provide services over the WeChat platform outside of China.

E-Purse, a payments system using WeChat, launched in November 2017 in Hong Kong and Law wants to establish similar operations here in the UK and Dubai.

Sealand will run the UK operation itself, while Dubai will be licensed. 

Chinese ex-pats and tourists

The thread is that all three countries have large ex-pat Chinese communities while also being major attractions on the country’s tourist map.

In Hong Kong, 170 merchants now take e-Purse and at these outlets tourists and ex-pats can use their WeChat accounts to pay for goods.

Average WeChat user usually bind 2-3 debit/ credit card under their WeChat Account, says Law, and they are used like Apple Pay or contactless cards.

Users in Hong Kong can pay at registered merchants as they would at home with money coming straight out of their WeChat account.

For the merchant, fees are lower than using Mastercard or Visa while payments come through quicker.

Sealand earns a share of the fee paid for the transaction, while it also encourages the use of WeChat outside of China.

It’s a bilateral benefit, says Law.

“We use Tencent’s product to develop the overseas market, with us both sharing the benefits.”

Digital advertising

But payments is just one of the strings Law wants to add to Sealand’s bow. 

Digital advertising is another part of the mix and potentially an even more lucrative avenue in the long run. 

“We have tremendous experience of the market in China,” says Law.

WeChat has captured a lot of information about spending habits and Sealand can use its partnership to help advertisers doing business in China to target the right audience.

People use WeChat 98 minutes per day on average, Law says, and that has created a lot of data.

Take a mid-price online jeweller, he says.

So long as it opens an official account on WeChat platform, Sealand will select the customers the adverts go to.

Other opportunities

That can mean a focus on the big, first-class cities such as Beijing and Shanghai, but Sealand can just as easily switch to the second-tier cities as a cheaper alternative.

That is targeted advertising 24/7, says Law. 

Law also wants to develop a relationship with Tencent in other areas, notably gaming.

Developing a further partnership with Tencent in other areas, such as TACG (Tencent Anime Comic Game) and online game, is another ambition, as these are the huge potential and profitable markets in China.

Law took over executive control in June 2017 having been non-exec chairman previously.

Tidying up process complete

A lot of time since then has been spent tidying up and restructuring the business following the disposal of social media app developer Securecom. 

Sealand bought Securecom for £3mln in cash and shares early in 2017 but found it would have taken too much additional capital to fund its development.

The business was sold for a nominal sum eight months ago, but that has cleared the decks to focus on the opportunity on offer at WeChat Advertising and WeChat related businesses, says Law.

Law is reluctant to put numbers on anything yet saying he wants to be cautious this time around, but as the year progresses he expects the newsflow to gather pace. 

Full-year results are due in April although it might take a full year’s operation of e-Purse to gauge the extent of the opportunity open to Sealand.

At 3.5p, the current market value is £17.6mln.

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