Kaiser Kuo brings us the fascinating and deeply weird story of the QQ, a virtual currency from a Chinese social software company that turned into a real-world currency that threatens to destabilize the national currency of China:
The QQ coin is in the news again. This morning a friend sent me a link to a story on Donews (in Chinese, originally apparently from a publication called “Online International”) that goes into quite a lengthy exploration of the origins of the QQ coin, conceived in part to help ween Tencent off the addiction to wireless revenues it shared with other leading Chinese Internet companies. The story looks at how Tencent partnered with banks to pioneer a debit card-based payment system (debit cards, unlike credit cards, enjoy very high penetration), and how the company exploited game card distribution channels – amassing some 3,655 points registered outlets in Beijing alone where QQ addicts can get their fix, including post offices, news kiosks, software stores, Internet cafes, malls, convenience stores, and so on. There’s quite a bit of fascinating detail on channel costs, the margins of card resellers, and of course the balance that goes into Tencent’s pockets.
But the story purports to reveal some of the darker secrets of how Tencent keeps its users buying QQ coins – especially if the company doesn’t look like it’ll hit its quarterly numbers. (The article’s title, in my rough rendering, is “All Services Are Commodities: Exposing the Extortionate Secrets of the QQ Coin”). As promised, this time around the meat of the story centers on allegations that Tencent is manipulating its virtual currency so as to impact not the RMB, but rather its stock price. (The company is listed on the HKSE, ticker symbol 0700). The story quotes a former product manager for Tencent’s virtual pet offering, QQ Pets, named Gao Shan.