In our earlier article, we have introduced six most innovative services that have developed around various concepts of Chinese sharing economy. Some of those companies, like DiDi, have grown enormous within record time, swallowing rivals and winning new markets. Others have  recently achieved infamous “unicorn” status (Tujia, Huochebang) while more startups are still small but full of potential.

5 distinctive features of Chinese sharing economy

#1: Smartphone proliferation

Perhaps the strongest driver behind wide adoption of shared services in new Chinese sharing economy is proliferation of smartphones, particularly in the cities.

Virtually every shared service “lives” on a smartphone is some shape or form. A smartphone enables users connecting with location based services while its camera serves as a scanning device which is essential for many such apps.

Moreover, many apps are either completely integrated with popular apps like WeChat or Alipay or are dependent on them for payment and authentication.

#2: Popularity of QR codes

While QR codes are much less common elsewhere, in China they are unambiguous and can be found practically everywhere. Moreover, virtually everyone knows what they are and what to do with them. In fact, WeChat, is single-handedly responsible for popularizing QR codes in China.

Alternative technologies like NFC have never achieved the same degree of recognition and popularity, mainly due to cost. Since printing QR code or generating it online is either extremely cheap or practically free, as long as security is not a concern, they always win over NFC or other technologies.

Many of the services of Chinese shared economy we discussed earlier rely on QR codes to connect users with a particular product such as in the case of unlocking shared bikes or shared umbrella locks.

#3: Convenient payment systems

Most of the shared services rely on a payment system for both payment and placing deposits. Two of the most common payment systems in China, Alipay and WeChat Pay, facilitate the process in the easiest and most secure way.

Since almost every Chinese city dweller is already a user of at least one or, more often, both of those systems, integrating them into the shared service apps is a natural fit. Essentially, those payment platforms have become the primary enablers of Chinese sharing economy.

Moreover, unlike Western equivalent PayPal (which is practically unheard of in China), both Alipay and WeChat Pay are transaction free services – they don’t charge users a single penny for payments as long as they are below a certain limit and are processed within China.

#4: Real name registration

The common misconception about sharing economy is that it is largely based on trust. If that was true – the concept would be a no starter in China. Luckily, with Chinese sharing economy trust is not an issue, or at least not to the same degree as it could be otherwise.

Why is that the case? The reason is that as long as people use one of the payment systems (Alipay or WeChat Pay) for transactions, they are automatically identified by their real name. In fact, WeChat and Alipay require real name registration that is connected to users’ Chinese ID or a passport for foreigners.

This arrangement minimized chances of service abuse (although it does happen, especially with bike sharing apps) or, at least, makes it easier to identify, track and punish bad behavior.

#5: Backing of internet giants

While being on good terms with the government officials is a pre-requisite for doing business in China in general, having the back of one of the BATs (Baidu-Alibaba-Tencent triumvirate) is a guarantee of success inChinese sharing economy.

Apparently, those internet giants are seeing great potential in many of shared services startups and have been generously financing them. In a rare display of cooperation within BAT, some of the services have been backed by more than one of them. Tencent and Baidu have been particularly enthusiastic in financing many such startups propelling some of them to unicorn status all within a couple of years.

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Just one year after its launch in China in 2013, Evernote was already claiming 4 million users. Last year, China has become its second largest market with reported 20 million users. Yinxiang Biji, it’s Chinese company, has recently announced its plans to go public in China.

In fact, Evernote has succeeded where many famous Western tech giants, such as Google or Facebook, have failed miserably. So, what was it that they were doing right? Let us break down main factors of Evernote’s remarkable success in China.

Navigating around Chinese censorship

Evernote has always stressed its main functionality as a private data storage for individuals, not a social platform and broadcasting service. Although, the original version does include some social functions such as note sharing, they have been either removed or played down in the Chinese product. This enabled Evernote to stay away from troubles with China’s powerful internet censors.

Speed and functionality

The company has realized that the key to good usability in China is the speed of synchronization and access – the core of its functionality. Keeping data centers in US would severely impact connection speed and turn away potential users, making it impossible to acquire critical mass of local early adopters. Hence the decision to setup local data center, which was also its first one outside of US.

Privacy assurance

Company’s CEO, Phil Libin, has published a letter assuring subscribers that Evernote takes securing the privacy of user data in China very seriously. The letter emphasized Evernote’s adherence to its three laws of handling user data by making it personal, protected, and portable.

Employing social media

Evernote quickly embraced Weibo and WeChat, two most popular Chinese social media platforms. The company has also been publishing its own blog filled with useful tips about efficient usage of its services while tailoring the message for the local audience. The blog was encouraging users to write about their personal travel experience with connection to Evernote apps – another good example of user engagement.

Localized customer service

When it comes to Chinese users, Evernote quickly understood the importance of speedy and high quality customer service . The company has been recognized for its efficient response to issues and complaints, both through social media, like WeChat channel, as well via chat on their website.

Successful choice of brand name

Evernote has made a smart choice in picking its Chinese brand name that proved to be an excellent fit on many levels. Evernote’s Chinese name is Yinxiang Biji (印象笔记) and can be translated as “memory notes”. Incidentally, the name also incorporates character 象, an elephant, that is used as Evernote’s logo. The name is both memorable and descriptive of the core functionality of the service.

Integration with local services

Part of Evernote’s China localization strategy was releasing API for integration with local apps. As a result, along with its support for traditional services like IFTTT and Pocket, its Chinese product integrates local services such as WeChat, Weibo, Duoguo (a restaurant guide website) UC browsers and others.

Localized Evernote Market

Most recently, Yinxiang Biji has launched its local version of Evernote Market store with products specifically selected and marketed for Chinese customers. Evernote’s fully functional web-based outlet was noted for its good user experience and original offers. It also itegrates Alipay as its online payment solution.

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Being a worldwide industry problem, China’s digital advertising market seems to be one of the worst affected ones. Chinese  internet is the second most popular advertising media after television and was estimated at $55.48 billion by the end of 2018 according to China Daily. Unfortunately, advertisers’ losses could account for up to third of that amount, mostly lost to non-human traffic and fraudulent CTR (click through rate).

The report by Miaozhen Systems, released about a year ago, claims that auto and telecommunications were hit the worst with up to a third of the traffic being non-human, i.e. generated by bots and crawlers, while food & drink and the fast moving consumer products industry saw the lowest rate at 8.52% and 11.88% respectively.

…many local computers still run on Windows XP that is no longer supported by Microsoft. Bots can infect such machines much easier and, in fact, a proportionally larger share of fraudulent traffic seems to be coming from lower tier cities where more people still use older Windows OS.

How do the losses occur exactly? A small piece of malicious software, a “bot”, is placed on a host computer from which it visits various sites in the background without user noticing anything abnormal with their machine. It’s even harder to spot for advertisers because it shares the real user’s unique “cookie” identifier.

Other pieces of software can stack hundreds of ads on top of each other on a website, or place the entire website into a small pixel on a page. This way, it would seem that a particular ad was displayed while, in fact, it was never seen by a visitor.

CPC (cost per click) ads are also affected as such bots can be smart enough to mix real clicks with the “fake” ones, making it harder to identify as a non-human activity.

There are number of reasons why China is one of the worst affected markets. First, many local computers still run on Windows XP that is no longer supported by Microsoft. Bots can infect such machines much easier and, in fact, a proportionally larger share of fraudulent traffic seems to be coming from lower tier cities where more people still use older Windows OS.

Second, not all the fake traffic is caused by bots, some is accounted for search engine crawlers. Since search engine market in China is much more fragmented than in the West, there are simply more crawlers visiting each site.

A third reason that is also specific to China is the fact that many people would willingly install special traffic software on their systems in order to attract more followers to their social media profiles, making their social activity appear more popular. However, such programs would do many other things without user’s knowledge or consent, effectively plugging such computer into a larger bot network.

Lastly, there is a lack of habit and willingness to go after the offenders and many in the industry still consider this problem to be the necessary evil that nothing much can be done about. Although, there is a technology in place to combat the problem, its adoption in China has been slow.

A new alarming trend is the increasing proliferation of online fraud in the growing mobile space. Android is by far the most popular mobile OS in China but the official Google Play store is not the usual place to go for apps. Most people would go to many smaller apps market which exercise very little control over quality.

While, at the moment, most non-human traffic in China is still PC based, it is reasonable to assume that with more people using Android devices to access internet, the worst of mobile advertising fraud is yet to come.

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There are considerable challenges in achieving success in the mobile apps market. Those have to do with launching and promoting an app in the right store, figuring out monetization model that works and is sustainable, overcoming China-specific technical challenges and, finally, making sure that your product is not easily copied by a competitor.

Here is the list of 10 most important factors to consider before venturing into China’s mobile apps market:

The right mobile OS

Thanks to the low cost of entry level smartphones in China, two out of three users are on Android system which makes it the one to target first. iOS still represents about one third of the total market but Android will certainly continue to dominate China in the near future. Windows phones didn’t get much traction in China yet, while Blackberry and Nokia’s Symbian systems being even less relevant.

Fragmentation of Android apps market

There are literally hundreds of Android mobile stores, each focusing on a specific niche, demographics or geographic region. Understanding complex Android ecosystem is crucial to launching your app in the right store. Simply applying to all or most of them is not an option because each store has its own QA and approval process as well as billing system. The best strategy is to focus on the top 5 stores and monitor the performance of each of them. The most popular Android independent stores in China include AppChina, Anzhi, Gfan, Hiapk, Liqucn,Wandoujia, eoemarket, and 91Market (note that Google Play is not even in the top 20).

In addition, many large companies, such as China Mobile (largest mobile provider), Baidu (top search engine), QQ (popular messenger), as well as Huawei, Lenovo, Xiaomi etc., have their own store.

Mobile network speed

The speed of China’s mobile networks still lags behind Western countries, Japan or Korea. If your app is graphics-heavy making it loading slow, it will most likely be abandoned. If you are considering localizing an existing app for Chinese market, you need to make sure that it works fast enough on much slower network speed.

Hopefully, the ongoing development and introduction of 5G infrastructure will help alleviate this problem.

Social media integration

Another challenge of localization is the integration of the local social media channels. Your app won’t work in China (unless used with VPN) if signup or login options use Facebook or Twitter as those are inaccessible from the Mainland. Same goes for sharing and retweeting. If social media is essential for your app, make sure to integrate the most popular local platforms such as Sina and/or Tencent Weibo, YouKu or WeChat.

Cloud storage issue

Popular cloud storage services, such as Dropbox or Box.net, are often too slow or inaccessible from China. Out of popular Western services, only Microsoft Skydrive seems to be relatively stable at the moment. If cloud storage is required for your app’s functionality, consider using one of the local solutions, although they may not be as fast and convenient. 

Payment system

Local mobile-based payment services have won the war against any other payment method. Two of the most popular services are Alipay and WeChat Pay. Remember that Chinese use of credit cards is very limited as they seem to entirely skip the credit card era straight to the digital money world. Another popular payment system with mobile in-app purchases works directly through mobile carrier, such as China Telecom, China Unicom and China Mobile. This, however, require more complex integration of your app into their payment system, something that can’t be done without an experienced local partner company.

Everyone takes a cut

Apps stores fees range wildly, something to be taken into account when choosing the most suitable one as well. QQ for instance, takes up to 70% of an app’s revenue, while China Unicom takes 30%. In addition, each store has its own guidelines and procedures as well as its own government tax and banking rates. Note, that government tax and various regulation fees can easily reach up to 30% on top of the app store cut!

Piracy concerns

If your app is successful there is no question that it will be copied. All of the world’s most popular apps have local copycats. Partnering with a local partner that is familiar with the apps store ecosystem can also help ensure that the copycat apps are pulled from the store to be replaced by the official ones. On the other hand, if you are simply coming up with a concept for an app and it is a good one, such “partner” can simply appropriate it. Therefore, due diligence is paramount in choosing your local partner.

Monetization model

Purchasing apps outright has been in decline worldwide. In China, people are even less willing to pay for an app, no matter how insignificant the price would be. This means that more creative monetization strategies should be considered. One of them would be selling ads. Recently, BBC ran a story about Chinese mother who developed flash card app for their kids which is now supplementing her income by $1,000 every month from the ads alone.

Another model is based on in-app purchases. It makes more sense to give away an app for free to get users more familiar with it. Once, hopefully, they start liking it, they would be more willing to pay for extras. This model works well for games and chat apps.

Finally, premium model is another one to consider: user downloads an app with limited functionality but has to pay for more enhanced features.

Apps for brands

Finally, there is another type of apps that aims at building brand awareness or serves as a marketing tool to supplement and support offline or web-based sales. If your app doesn’t require payment system or complex integration with other services, it can be launched much more easily. Also, such app would not be in any danger of  being copied as it has no value of itself without the brand behind it.

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In this post we are going to have a look at top 5 of them.

5 Most Useful Features of WeChat for Marketers

WeChat groups

One of the most often overlooked WeChat features for marketers is WeChat groups where members can participate in discussions. Inviting customers to join a group can be an effective way to keep them engaged with a brand. Each group is issued a unique QR code that users can scan in order to join, however, as soon as the group reaches its maximum allowed capacity (currently 100) scanning QR code would no longer work. An easy work around this limit is to send an invitation to users to join a group – a group owner can invite unlimited number of participants to a group.

Payments

After launching its own payment system, WeChat quickly became one of the major ecommerce platforms in China, along with Taobao, Tmall and JD. Every official service account has an option to setup its own ecommerce outlet and receive payment from customers. Capability to handle payments “on the go” is one of most powerful features of WeChat for marketers. Instead of directing potential customers to a website where they can complete the purchase, WeChat now enables a near instant conversion.

Lucky draws

WeChat service accounts can incorporate many types of lucky draws that can be another effective way to keep customer engaged as well as acquire new followers. Lucky draws can take multiple forms – from quizzes to virtual scratch cards. There are number of 3rd party add-ons that can enhance WeChat accounts by “gamification” of the user experience.

Loyalty cards

As businesses and brands are constantly looking for new ways to improve their customers’ loyalty, membership and loyalty cards are increasingly moving into WeChat. This is another excellent feature of WeChat for marketers as it offers both convenience to customers by not having them carry their cards and increases app usage. Latest version of WeChat even allows managing and storing loyalty cards and coupons in one place, much like AppleWallet does.

Targeting

One of the most powerful features of WeChat that is used for marketing is ability to target specific groups of followers with messages tailored just for them. Unfortunately, basic WeChat backend targeting function is quite limited and only allows to sort followers by their gender, and declared location which is also often different from the actual one. However, there are number of companies who offer a more customized approach that is based on behavioral patterns of followers. This way, followers can be grouped in new categories and targeted with specific marketing messages that they are more likely to respond to.

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As of now, China’s e-commerce sector is more than three times the size of the US market, which currently ranks distant second.

China has has been the largest ecommerce economy in the world since 2015. In 2019, it reached 1.94 trillion USD, representing an addition of 27% year over year and a quarter of China’s total retail sales volume.

Currently, the majority of Chinese are online shoppers which representing about 60% of China’s internet user base. When we compare this figure to US, where 88% of internet users shop online, it is evident why China still has plenty of room to grow in absolute terms. Needless to say, that the sooner your company taps into this vast market, the better off it will be.

Now, to the more practical aspect of China’s ecommerce. Generally speaking, there are two choices of selling online: opening a virtual store in one of the large online stores, or setting up your own internet store as an extension of your main website or as a stand alone site.

Plugging into China’s existing ecommerce ecosystem

The largest C2C ecommerce site in China is Taobao.com which as an equivalent to Ebay. Although, it is an entire universe in and of itself, selling on Taobao is more suitable to small retailers or individuals. It is a very competitive space and is notorious for fakes and pirated stuff. If your goal is building a trustworthy brand image you should stay away from Taobao.

Luckily, there is an alternative from the same Alibaba group that owns Taobao, called Tmall. The company goes to great extend to make sure that the product sold on Tmall are genuine. Sellers on that site have to abide by strict procedures which are even tougher for overseas companies. Read our earlier post for more details on how to establish a Tmall store and whether it’s a good fit for you.

While Tmall holds about 50% of B2C ecommerce market in China, Jingdong Mall (JD.com) is the second in size at about 22% market share as of 2013. The idea is similar to Tmall – Jingdong Mall is for branded products only and you will be expected to prove that you either own the brand or are authorized to sell it.
There are a few more such “online shopping malls” in China: Suning that focuses mostly on electronics and Amazon.cn – scaled down Chinese version of Amazon.com.

The pros of working with the existing ecommerce site can be summarized as follows:

• Traffic that goes through those sites is enormous and you are almost guaranteed to get some of it;
• Setup is not very complex, although it could be a bit tricky for a non-Chinese company. If everything is done right, your store can be up and running within 2-3 weeks;
• You can also benefit from marketing programs within the platform, although it would cost extra;

Of course, there are some cons too:

• It isn’t cheap. There are setup and running costs and a deposit, in case you are found in violation of the terms of the agreement (by selling counterfeited products for example). I discuss the cost of setting up Tmall store in more details here;
• Fierce competition from other sellers, pretty much like what you have in a traditional brick and mortar shopping mall but with more ads from every direction;
• Limited opportunity for differentiation by expressing your unique style or brand experience;

Setting up a stand alone online store

If you have a technical expertise to setup your own functional internet store than this could be an alternative route for your Chinese ecommerce strategy.

The obvious advantages of that approach are:

• You are in full control of your own store as there is no need to comply with anyone’s policies;
• Your store can provide a unique brand experience for a shopper that may not be available in Tmall or JD.com;
• There is no commissions on your sales to a 3rd party and no maintenance fees;

Disadvantages of building your own store could be as follows:

• You don’t benefit from the online mall’s traffic and acquiring it through marketing campaigns may become more expensive than paying to Tmall or JD.com for their marketing programs;
• Building your customers’ trust takes time. In the existing online mall like Tmall, trust level is high – shoppers know what to expect, fairly familiar with how it works and are quite sure that they’ll get what they pay for (and if they don’t there is proven recourse). Your customers have to be just as confident that they won’t be ripped off;
• The technical challenges can be substantial: you have to have the right payment system such as Alipay, Tenpay or Baidu wallet setup; take care of all the technical challenges related to traffic and transactions; having live support through chat; manage inventories; get a delivery system in place, just to mention a few.

As most of the examples show, and considering your marketing budget allows that, the best strategy is the combination of both approaches. Setting up Tmall or JD store for building brand recognition and attracting new customers in addition to having your own internet store for more immersive brand experience targeted at existing customers and brand followers.

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In this post, we attempt to summarize various pros and cons of having your site hosted in China.

The pros of hosting in China

Loading speed

Having a site hosted abroad, especially on the servers that are geographically remote, often affects loading speed. This, in turn, will most definitely hurt the ranking on Baidu, the main Chinese search engine. In addition, slow loading tends to turn off users resulting in increased bounce rate. By hosting a site in China, the loading speed will definitely improve.

Another reason for sites that are hosted overseas to load slower has most likely something to do with various filters related to censoring. An easiest way to see it is to load the same site with and without VPN, thus bypassing the Great Firewall. In most cases, the difference would be fairly apparent.

Geo-targeting

Although, most search engines like Google  assign less weight to a physical location of a site these days, one should keep in mind that Baidu is always a couple of years behind with their search algorithms. It is very likely that all other factors being equal, a site with the local domain (.cn or .com.cn) and with the local IP will be ranked higher than a foreign one.

The jury is still out on how much server location and .cn domain affect Baidu search results but, in my opinion, it still does quite a bit.

Minimizing risk of being blocked

It is often said that even if your site is hosted overseas but you are making sure to steer away from politically sensitive or illegal topics, you should be fine. However, there is always a risk of being unlucky enough to share a server with a site that gets banned by the government. There were instances in the past when some “innocent” sites got blocked just because they happened to be on a blacklisted server. It is, however, much less likely to end up on such server in China due to much stricter oversight over local ISPs.

The cons of hosting in China

Hassle of obtaining ICP license

Every site that is hosted on a Chinese server is legally obligated to obtain ICP license (Internet Content Provider or ICP备案 in Chinese). It is a little number that is usually displayed in the footer of every Chinese site. All websites with their own domain name that operate within Chinese borders are required to obtain that license, and China-based Internet service providers are required to block the site if a license is not acquired within a grace period. ICP licenses are issued at the provincial level and the application period may take up to 3 weeks.

Substandard local ISPs customer service

If you are used to customary high level of tech support by Western hosting services, you may be quite disappointed in China. HostGator type of support is quite few and far between, not to mention language problems. I’m sure that the situation will continue improving but, in the meantime, prepare  to lower your expectations.

Questionable value of .cn domains

Search ranking apart, having a .cn or .com.cn extension may not improve a click-through rate as some might expect. In fact, it is often noted that .com domains still command higher authority than the local ones. It may be especially true for the Chinese who may even distrust .cn site in favor of .com or .net one.

Ideally, you could own both .com and .cn domains and, incidentally, Chinese government now allows foreigners to register and own them, which was not the case until most recently.

In conclusion, my advice would be to focus on your site performance, most importantly, loading speed. Then, based on that, decide on the optimal hosting location. If you conclude that the loading speed difference is too large to ignore, than consider hosting in China. Alternatively, you may want to explore a possibility to host your site in Hong Kong or Singapore which are geographically closer to the Mainland and have plenty of excellent ISPs with English support.

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If you are selling a physical product, one of the best ways to find out what is already available is to research Taobao (Taobao.com), the primary C2C marketplace in China and its B2C equivalent, Tmall (tmall.com). Both platform belong to Alibaba and are similar to Amazon but much bigger.

Chinese Marketplace Sites Search

As mentioned before, none of Taobao or Tmall results will appear in Baidu searches, this is why it is important to research this channel separately.

While typing the search term (“sunglasses” in our example), more results will be shown as you type in, giving some insights on what other terms are frequently searched for (of course, you need to understand Chinese to make sense of it):

Additional search terms may give some more clues on what else you should be researching.

Taobao will also display a multilevel filters allowing for more targeted searches. In case of “sunglasses”, the results can be filtered by glasses shapes (oval, round, square, aviator, rectangular etc.), lens color, suitability for different type of face, gender and so on as well as price range.

The results, each with an attractive product photo, short description and the price, will be displayed right below the filters:

Typically, most results will be linking to either Tmall (like in the case of fashion items) or Taobao itself. Tmall is a type of an upscale version of Taobao with a strict policy against fakes. In the physical world, Tmall can compared to a branded department while Taobao is more of a bazaar style market.

How Taobao can help with the market research? First of all, it is the best to research product prices and price ranges for different subcategories of products.

Secondly, you will be able to better understand the overall popularity of the product category, competition and sales channels.
Finally, seeing so many competing offers grouped together may give you more insight on how yours could fit in the mix.
Side note: occasionally, you may even find your own products sold by someone else that you may not be aware of.

Stay tuned for the upcoming post on how to perform basic market research with Chinese social media.

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History

Union Pay is China’s state sponsored debit and credit card provider which has been enjoying complete market monopoly up until emergence of AliPay. It is still the most common payment method for offline transaction and its entry into online payment market is relatively recent.

In May 2017, UnionPay introduced its first QR code based payment method similar to the other two payment systems we have reviewed. It is, however, going to be an uphill battle against AliPay and WeChat Pay who already control about 90% of the market. Union Pay biggest advantage is its enormous user base – every Chinese with a bank account is already linked to Union Pay simply by virtue of being a customer of one of 165 participating banks. UnionPay has issued more than 5.4 billion cards and processed over 38 billion transactions within 2016 alone.

Usage

Although, Union Pay issues credit cards, it is better known as China’s primary debit card provider. It is always linked to user’s bank account and requires using the physical card to process transaction. Up until introduction of the previously mentioned QR payment systems and a mobile app, that was the only way to process a payment.

UnionPay is still the most commonly accepted payment method in China with nearly every business being the network’s member. Most government services also accept Union Pay.

Unfortunately, the reliance on magnetic strip and the security pin, makes Union Pay a less secure payment method. Chinese social media is full of horror stories of emptied accounts as a result of copied or stolen Union Pay cards. In contrast, AliPay and WeChat are much more secure, thanks to its encryption, dynamically generated QR codes and linkage to users’ smartphones.

Supported devices

Union Pay payment system supports all types of mobile devices and website integration. It can also be linked to Apple Pay which is currently the only way to link Chinese bank account to Apple’s payment system in China.

For offline purchases using UnionPay card, a special card scanning device is required at POS.

Transaction fees

Transaction fees of UnionPay follow the same logic as credit card – the fee is charges to sellers (online or offline merchants) and there is no fee for buyers. The fees charged to merchants are combined of bank’s portion (0.7%) and UnionPay commission (0.1%).

Acceptance overseas

Union Pay is, by far, the most commonly accepted Chinese payment method outside of China. Thanks to Union Pay linkage to the banks, most ATMs in Asia and, increasingly in North America and Europe, accept UnionPay withdrawals. Large number of business overseas, including most large department stores, also accept Union Pay.

Also, unlike AliPay and WeChat Pay, UnionPay can process nearly all world currencies.

Chinese tourism boom has been a blessing for UnionPay: in 2015, 2.5 million Chinese who traveled to US spent more than $40 billion during the duration of their stay. Vast majority of those transactions were processed by Union Pay.

<< Overview of Chinese payment systems

<< WeChat Pay

<< AliPay

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History

WeChat Pay is a relative newcomer among Chinese payment systems but it managed to gain traction almost immediately, surpassing AliPay in the number of registered users, although not in total transactions volume.

The vast majority of WeChat users, the number that is quickly approaching one billion, are also WeChat Pay customers as long as they have linked their account to their banking. WeChat Pay has gained additional momentum with the introduction of the “red envelope” feature – a cherished Chinese tradition of gifting money to friends and relatives on special occasions. During holidays, this feature of WeChat is by far the most popular one with transactions volume running into billions within hours.

Usage

In terms of various uses, WeChat Pay closely follows AliPay. It can be used to pay bills, buy goods online and offline, order tickets, grocery deliveries, hail a cab and do just about everything else. In addition, WeChat Pay powers rapidly growing WeChat ecommerce ecosystem, making buying and selling products with WeChat online stores a smooth and secure experience.

Moreover, WeChat continues to expand its services to various financial products – from investment funds to insurance, allowing users paying for that with WeChat Pay and from within the app.

In offline settings, WeChat Pay works pretty much in the same way as AliPay – using system generated dynamic QR code. In fact, both systems have become so popular, that it’s a common site to see WeChat Pay and AliPay QR codes next to each other at points of sale.

Supported devices

Since WeChat Pay is an integral part of WeChat app, it naturally works with every mobile device the app can be installed on. 90% of smartphones in China have the WeChat already installed, making WeChat Pay to be the most convenient payment system to use anyway.

It is a bit clunkier to use on a website – rather than following a link, users have to scan QR code with their phone in order to process the payment. However, since most people nowadays are surgically attached to their phones anyway, this doesn’t present a major inconvenience.

Transaction fees

Transaction fees structure with WeChat Pay is very similar to AliPay – it is free for most transactions. The fees of 0.1% start at withdrawals over 10,000 RMB as well as overseas transactions such as in case of cross border commerce.

An easy work around to avoid paying those fees is to buy WeChat various wealth management products and then move the money from there back to user’s bank account.

Acceptance overseas

Compared to AliPay, WeChat Pay is much less common outside of China, although recently, it’s been making inroads into new markets. It currently support 9 currencies (still short of 18 supported by AliPay). WeChat Pay has to comply with the same restriction faced by AliPay and imposed by China’s central bank on money outflow.

In recent years, WeChat has struck new deals with operators overseas, namely in South Africa, Philippines, Thailand as well as other countries to facilitate cross border transactions. They have also partnered with global payments technology company, Adyen, helping businesses worldwide to access new customers in foreign countries.

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The post Chinese Payment Systems Overview: WeChat Pay first appeared on Sampi.co.

The post Chinese Payment Systems Overview: WeChat Pay appeared first on Sampi.co.