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Sina Corp, the Chinese Web portal operator, may be facing a tough 2013 under intensifying competition from rival Tencent Holdings Ltd, China's biggest Internet company by revenue, according to industry analysts.
Sina Weibo, the company's micro-blogging service, had stood out as a sector success at a time when Web portals saw their advertising revenues slow amid the weak economic outlook. However, the popular service has been outshone over the past 12 months by WeChat, a hit service provided by Tencent.
Charles Chao, Sina's chairman and chief executive officer, admitted in November that Weibo was feeling growing pressure from WeChat, particularly on user access from mobile devices.
Tencent developed WeChat, a mobile application enabling users to send text messages, voice messages and photos free of charge, in January 2011, and the service is expected to attract 300 million users this month, according to Pony Ma, Tencent's chairman and chief executive officer.
Analysts now see the service as a real threat for Weibo, which has an estimated 424 million users.
Hong Bo, a Beijing-based IT analyst and founder of the consultancy company IT5G, said users now go to Weibo for information and personal interests, and to WeChat to communicate with friends, giving the latter significantly higher "user-loyalty".
Qiu Lin, an Internet stock analyst at Guosen Securities Co Ltd, said WeChat is likely to have greater potential in terms of generating revenue.
"As the biggest online games operator in China, Tencent may start to generate revenue from WeChat by introducing games to the platform as early as this year," he said.
Jim Lai, general manager of Tenpay, said in November that the company would add payment services to WeChat within two months, allowing users to scan codes at stores and make payments with WeChat.
Ma also said in November that Tencent planned to trial entertainment, advertising and other transactions on WeChat. The company, however, still had no plans to introduce revenue-generating measures for the service in the short term.
Weibo, on the other hand, accounted for 16 percent of Sina's total advertising revenue — $120.6 million — in the third quarter of 2012, up from 10 percent in the second quarter, according to Chao. Advertising is Weibo's major source of revenue.
Shi Jialong, a Hong Kong-based analyst with CLSA Asia-Pacific Markets, said he thought Weibo was still very competitive.
"Either of the two services can replace the other as they serve different functions," he said.
"If Sina sees a drop in its user growth rate, it may be because of a failure in execution or content, rather than pressure from WeChat. But so far, I haven't seen any signs of a drop in its quality."
Last month, Sina restructured its business units, making Weibo one of two major business divisions in an effort to consolidate functions scattered across different departments and enable it to respond better in the mobile Internet sector, it said.
Mobile Internet is WeChat's main battlefield, while half of Weibo's traffic is from mobile users.
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