An introduction to mobile commerce in China

https://www.mobilepaymentstoday.com/blogs/an-introduction-to-mobile-commerce-in-china/
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| by Steve Villegas
An introduction to mobile commerce in China

Everything in China is on a different scale. With more than 1.3 billion people, it’s the most populous country on earth, with 50 million more people than India. The migration from rural to urban areas and the growth of the middle class is significant. Demand for consumer goods is high. And digitalisation is happening at lightspeed.

It’s not news that China represents a huge opportunity for e-commerce merchants who want to expand into new markets. But collecting payments in the region is incredibly complex, and often this forms a barrier for doing business across borders. 

As a direct acquirer of the top three local payment methods in China – Alipay, WeChat Pay and now UnionPay – and many others around the world, PPRO is well-placed to understand the importance of local nuances for businesses with global ambitions. Here are our insights on trading successfully online in the world’s largest e-commerce market. 

The world’s largest e-commerce market

China is home to 1.3 billion people, 738 million of whom are online. More than half the population owns a smartphone, and 56% of e-commerce sales are completed on a mobile device. For reference, the US is only about 35%.

Indeed, it only takes a look at the figures from this year’s 11.11 Global Shopping Festival to know that mobile is the preferred way to shop in China. A dominant 90% of sales came from mobile devices on 11.11, blowing mobile sales figures for the US —  37% during Black Friday and 33% on Cyber Monday — out of the water.

What’s more, no country listed in the PPRO Almanac has a higher proportion of online sales. Thanks to growing consumer demand from a rising middle class, online retail is set to hit 1.8 trillion yuan ($264 billion) by 2022, making China the largest e-commerce market worldwide.

Key drivers of e/m-commerce in China are the wildly popular lifestyle super-apps. They may have started as a mobile messaging app (WeChat) or an e-commerce website (Alibaba), but WeChat and Alibaba’s linked Alipay are now the default ways to chat, shop, pay, order a taxi, date and game. Anyone looking to book flights or hotels online, shop for the best deals or organise their finances or even book a doctor’s appointment turns to one of these platforms. 

WeChat and Alipay have 1.1 billion and 785 million monthly active users, respectively. And those figures will probably be even higher by the time you read this article. These unbelievable numbers of users create network effects that drive commerce in China. So, those wishing to target Chinese consumers are advised to investigate selling on their online marketplaces (such as Alibaba, Taobao, Tmall), create WeChat Stores and – at the bare minimum – accept China’s preferred payment methods.

The 3 most popular payment methods in China

Payment habits are country-specific. They have developed over time and are formed by various cultural, political, economic and technological factors. E-commerce retailers shouldn’t look to re-invent customers or their payment preferences. Or seek to ‘drag and drop’ what works domestically to China.

The three Great Sage Kings, Emperors Yao, Shun, and Yu, were widely regarded as the great rulers of Classic China. Fast forward about 4,400 years, and the great three kings of Chinese local payment methods are Alipay, WeChat Pay – as previously discussed – and UnionPay, which is the world’s largest card scheme, even bigger than Visa. 

From department stores to small street food vendors, almost everyone in China accepts WeChat Pay and Alipay. These local payment methods can be used to pay in-app, in person, or from person-to-person. When it comes to plastic cards, bank customers are typically issued a UnionPay card by default. It’s so popular that UnionPay accounts for 97% of Chinese card payments online.

Businesses who only accept international card brands — maybe because this is how their existing customers typically pay — are effectively shutting themselves off to the overwhelming majority of Chinese shoppers.

With the push of a button 

It seems counterintuitive: the more global your e-commerce strategy, the more local your payment strategy needs to be. The right payments infrastructure is essential to driving customer-centric “shop-for-one” commerce. However, local payment customisation on the front-end creates complexity on the back-end. The need for local payment expertise and a centralised payments hub has never been greater.

PPRO helps to make local payments easier. In addition to having local teams with all the market knowledge you’ll need, our platform proudly enables WeChat and Alipay acceptance. We’ve also recently become a direct acquirer for UnionPay. Which means we can make expanding into China easier than ever. For more information on payments in China and how you can increase conversion rates in APAC, get in touch with one of our payments experts.

 

  


Topics: Trends / Statistics, Mobile/Digital Wallet, Region: APAC, Mobile Payments, Mobile Apps

Companies: PPRO



Steve Villegas

Steve Villegas is a sales, marketing and business development executive with over 20 years of experience building and managing sales, partner development and marketing teams. As head of the U.S. office for PPRO, Steve drives new partner relationships and has cultivated a strong network of Payment Service Providers who utilize the PPRO platform. Steve has expanded PPRO’s presence in the U.S. and leads strategic growth efforts in the region. 

wwwView Steve Villegas's profile on LinkedIn


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