Tencent’s WeChat has become the default messaging app of everyday life in China, but there’s one territory that it has yet to conquer: the workplace.

There’s a list of reasons why WeChat might not be the best tool for work. Take file transfers, for example: it only allows files under 20MB to be sent among users.

Meanwhile, Tencent’s archrival Alibaba – an unlikely candidate for blockbuster social apps because of its focus on retail – has quietly grown Dingtalk into a dominant player in China’s US$1.12 billion market for workplace apps. Launched in late 2014, Dingtalk counted 7 million enterprise clients in June and surpassed 100 million registered users last December, according to an internal message that CEO Chen Hang sent to his staff.

Like WeChat, which has branched out to offer a host of services spanning ride-hailing to hospital queuing, Dingtalk isn’t just for text messaging.

“Enterprise software-as-a-service belongs to the PC era,” Dingtalk vice president Zhang Sicheng told Tech in Asia recently at TechCrunch Hangzhou. “Your entire company is run on the internet today.”

The idea is that in the future, people will do much of their work from inside the chat app. This could include basic tasks like file sharing, as well as other functions that weren’t traditionally handled by enterprise apps – such as booking business trips and procuring office stationery.

Dingtalk’s app store features third-party providers that offer everything from customer relationship management to matchmaking services.

Like Alibaba’s other services, be it ecommerce marketplaces Taobao and Tmall or logistics network Cainiao, Dingtalk adopts an “asset-light” approach that brings third-party suppliers onto its platform. The app still runs some of the core functions in-house – messaging being one – but it doesn’t want to do everything itself.

“Enterprise security, for example, has become in demand these days. But Dingtalk isn’t going to provide the service. Our partners are,” says Zhang.

Dingtalk’s app store features third-party providers that offer everything from customer relationship management to matchmaking services.

Failed attempt to challenge WeChat

It may be tempting to see Dingtalk and WeChat as rivals because messaging lies at the core of both, but the former wasn’t designed to take on the latter. Workplace activities are, for the most part, separate from personal ones. People booking a hotel room for vacation may not bother getting a receipt as they would if they were booking it for a work trip.

Dingtalk’s founding team originally came from an Alibaba product called Laiwang, which was designated as a WeChat challenger but didn’t take off.

“[Laiwang] was a top-down decision. Back then, Laiwang wasn’t really successful in focusing on user experience. Much of Alibaba’s strength lies in marketing and technological advancement, but we did sometimes fall short in product design,” observes Zhang.

Enterprise SaaS belongs to the PC era. Your entire company is run on the internet today.

Tencent, on the other hand, is widely known for its near obsession with user experience. WeChat’s relatively slow path to monetization is often pegged to the company’s reluctance to disturb that experience.

The Dingtalk team proved that Alibaba could also be adept in product management. When Laiwang fell through, the team regrouped to focus on enterprise software. The pivot was partly by design. While courting individual customers wasn’t Alibaba’s strongest suit, the ecommerce firm has had years of experience serving small and medium-sized businesses.

There was no top-down support for the founding team this time, but Dingtalk eventually rented out a unit at Hupan Garden – a no-frills apartment complex in Hangzhou where Jack Ma started Alibaba in 1999. According to Zhang, it was a move that gave “tremendous inspiration and motivation” to the nascent team.

Coincidentally or not, Hupan Garden has worked its magic again, this time on Dingtalk.

Quiet ascent

Dingtalk learned its lesson from Laiwang and set out to focus on product building. Every Friday, the team would visit its enterprise clients, sit next to them, and watch them use the software. To date, Dingtalk has observed about 10,000 of these companies.

 

“If we exceed customer expectation, they end up evangelizing our product,” says Zhang. “In China, companies run in networks. So if a company likes a product, it will likely say to its partner, ‘Why don’t you try this?’”

In its early days, Dingtalk thrived on this type of word-of-mouth promotion and barely spent anything on marketing, recalls Zhang.

This proximity to clients has also enabled Dingtalk to quickly spot new enterprise needs, which it will then integrate into its platform. To cover the spectrum of services at scale, Dingtalk has shelled out US$151 million for a fund to attract third-party developers. Like they would in an app store, users can discover the slew of third-party services on Dingtalk, though it doesn’t offer advertising to developers. Products are ranked based on customer reviews.

So far, majority of Dingtalk’s expenses centers around product development and human capital. Zhang is keeping mum on the app’s profitability, but he says monetization “isn’t a concern” at this stage. Instead, Dingtalk is focusing on optimizing its partners’ money-making ability as well as user experience of its products.

Much of Alibaba’s strength lies in marketing and technological advancement, but we did… fall short in product design.

“[Jack] Ma has said this early on – if your client manages to earn 100 yuan, he’s happy to share with you 1 yuan. If you have 10,000 clients, you then end up with 10,000 yuan in revenue,” notes Zhang.

One of Dingtalk’s closest competitors, unsurprisingly, is a brainchild of Tencent. In 2016, the messaging and gaming giant launched Enterprise WeChat, but the latecomer has a lot of catching up to do. In January, it announced 30 million active users and 1.5 million enterprise clients. And like Dingtalk, Enterprise WeChat has also opened up its platform to third-party developers.

Alibaba’s all-encompassing app also faces challenges from players who are “more vertically focused and are thus able to provide more professional services,” argues one executive of a startup providing WeChat-based solutions for digital business cards. They also point out that “integrating third-party data into Dingtalk can also be difficult.”

In China, companies run in networks. So if a company likes a product, it will likely say to its partner, ‘Why don’t you try this?’

The battle is far from over. China’s mobile enterprise market is still rapidly expanding and is estimated to more than double to US$1.82 billion by 2020, according to data research firm Analysys.

Aside from external threats, Dingtalk has also been attacked by the very same users it serves. Many employees call it the “holy grail for the boss” that carries almost “authoritarian” features. For example, employees must virtually “punch the card” to record their attendance, and the message delivery status can never be turned off. Enterprise WeChat, on the other hand, is deemed the opposite: an “app for employees.”

Zhang is undisturbed by the backlash. “This line of thought is putting employees in opposition to their managers. People come into an organization because they share common grounds. Everyone has to abide by the contract – they are both the creator and the guardian of it.”

Converted from Chinese yuan. Rate: US$1 = RMB 6.61

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