We recently initiated a position in Momo, a leading social networking and livestreaming platform in China. More excitingly, it is also the owner of Tantan, the “Chinese Tinder”. Online dating is in its early stages of its development in China. According to the National Bureau of Statistics, there are some 300mn single Chinese people over the age of 15. Tantan has early mover advantage and is the only player with scale and yet it only has around 20m monthly active users.
Both the demographics and the culture make this a very exciting opportunity.
The average age of women and men getting married in China is 25 and 27 respectively. The one child policy has caused many selective abortions based on gender as Chinese families favour boys over girls. As a result, about 118 boys are born for every 100 girls, against a global average of 96 to 100. Consequently, there are currently 9m more boys than girls in China. But it isn’t just the boys who are facing competitive pressures: single women above the age of 25 are stigmatised as “leftover women” in China. So modern dating in China has it’s challenges, perhaps more so than in other countries.
In addition to the demography, Asian culture means that Chinese parents, much more so than their western counterparts, dedicate themselves with a vengeance to ensuring their daughters get married off to established men. The photo below shows a street lined with matchmaking posters put up by parents advertising their children. As well as all their other virtues, their jobs and annual income are described in glorious detail.
With this amount of societal and family pressure, it is perhaps unsurprising that a growing number of single people are looking for different channels to find the love of their lives.
Whilst true love might not be the only motivation of everyone who uses Tinder, comparisons between the US business and Tantan are indicative.
Tantan began generating revenue in January this year. From speaking to the management, they are guiding for revenue to increase significantly through 2H2018 as they roll out a raft of monetization features. We are estimating Tantan’s revenue to go from almost nothing this year to $500m in 2019. By comparison Match group’s Tinder started monetizing the app in 2017, doubling subscribers in 2017 and more than doubling revenue. Tinder had 3.1 million subscribers and $400m revenue, as of end of 2017. It is also ranked as the 2nd highest grossing app globally in 2017.
The long-term growth will be supported by structural shift from dating offline to online. The Chinese are incredibly tech savvy, and we expect the adoption of the dating apps to prove to be just as successful as seen in the developed economies.
Emerging market consumption is clearly undergoing a secular change. Equally obvious is the tendency for the emerging market consumer to follow trends that we have seen in the developed world. Mobile telephony, internet shopping, low cost airlines, organised retail and now (online) love itself!
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