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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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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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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The number of surveys indicate that Chinese are increasingly looking toward foreign brands at the expense of Chinese brands for everything from food and cosmetics to airlines and hotels. This means more opportunities for foreign companies considering increasing their foothold in Chinese market and winning more customers at the expense of the local competition.

According to the surveys, China’s food and entertainment industries are at the bottom of the “brand trust scale” while local technology firms are perceived as the most trustworthy brands. In retail, Western companies Nike and Zara enjoy the best reputation, however in grocery market, consumers show more price sensitivity. For instance, Taiwanese grocery chain RT Mart is doing well on the brand trust and overall value while British Tesco is leading among Western grocers in China.

Remarkably, large number of Chinese brands in retail are still perceived as not delivering enough value, even at throwaway prices. As a result, consumers are willing to pay premium for Western branded products as long as the price difference is reasonable.

Companies should learn to engage with their customer from the senior level. A company’s president or a CEO should be able to come out and address important issues head on.

Apart from the food safety scandals, social media has been playing increasing role in shaping brand perception of local products and companies. Chinese netizens are typically more likely to leave negative comments in social media following disappointing experience as opposed to writing raving reviews if the experience was positive. This situation often leads to brands falling out favor very quickly, especially if a company fails to address its social media crisis fast enough.

In one of the episodes of Thoughtful China program, Chinese consumers’ trust was the topic of discussion between several participants across number of industries. The interviewer was asking questions about the best ways of building brand trust, manage brand reputation and respond to crises. Below is the summary of the answers that made the most sense to me:

Companies should learn to engage with their customer from the senior level. A company’s president or a CEO should be able to come out and address important issues head on. Communication by senior level management would build trust and put such company on a different level of engagement with its customers.

China is still largely a relationship based society which explains the phenomenon of KOL (key opinion leaders) in the social media – individuals whose opinions are held in high regard by the large number, sometimes hundreds of thousand, of followers. Building relationship with KOL in the area of company’s operation is extremely important for brand reputation management.

Company should consider cultivating internal KOLs, the process that takes time and requires close engagement in social media. Once again, company’s CEO with enough charisma could be the best candidate for KOL. Chinese customers are very likely to appreciate such company’s efforts to build direct relationship with consumers from the highest level.

Chinese consumers tend to put more trust in large companies that are viewed as more reliable. In the West, on the other hand, people are more likely to distrust big corporations. Communicating the size, global reach and long history of a particular company will actually be beneficial in China in terms of brand perception.

Consumers in China are becoming increasingly demanding for greater social responsibility from companies they deal with. Issuing periodic social responsibility reports by such companies, as it is common in the West, will also help in building better reputation and, ultimately, solid and sustainable brand trust.

Overall, local brand trust situation in China shows signs of improvement, partly due to increased pressure from the government on corporations to become more transparent. Also, China’s market is still young and, since building trust takes time, foreign brands with established history and track record are likely to still stay ahead of local competitors for some time in the area of brand trust .

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First, let start with the definition of – a landing page (or LP) is where your potential customer “lands” first after clicking your link in the search results, social media or an email. Making sure that landing page design is clear, focused and the content is easy to understand is the key in converting visitors to customers.

Before we look at the specific guidelines that are relevant to building a Chinese landing page, let’s make sure that the general page structure follows best practices applicable to all types of landing pages.

Let’s start off with a quick rundown of those guidelines that are applicable to all types of landing pages:

• Having clear and concise headline up top
• Strategic placement of a large and distinctive CTA (call to action) button
• Using interesting and visually appealing images
• Making sure that the main text clearly explains the offer and is going from general to detailed description as the reader moves down the page

Now, let’s list the specific requirements for Chinese landing pages along with the common mistakes that companies often make in creating them:

Chinese landing page design: do’s and don’ts

#1 Use native translation

While using native translation should be the obvious rule, a surprising number of foreign companies still cut corners on this one. Re-purposing original landing pages for Chinese market by using machine translated text or simply relying on low-quality translations would make such landing pages completely useless and counterproductive.

Always use a professional translator to write proper copy for your Chinese landing pages and make sure that they are proofread by native Mandarin speakers.

#2 Remove links to blocked social media

While re-purposing landing pages for Chinese market, many companies forget to remove standard links to their social media accounts that are inaccessible in China anyway. Not only those Facebook, Twitter, Google+ and Instagram links will appear broken and wouldn’t even display an icon, they will significantly slow down Chinese landing page loading time.

Ideally, a page loading time should not exceed 5 seconds, although that is often hard to achieve with overseas hosting (more on it below)

#3 Optimize your Chinese landing page loading time

Loading time is almost always an issue for sites hosted outside of China. As long as your company doesn’t have a local business registration – hosting in China is not permitted. The next best option would be to get a hosting in Hong Kong. Some Hong Kong based hosting providers would often advertise “fast China route” options without physically having to host on the Mainland’s servers.

Alibaba Cloud is a popular hosting solution that is cheap and easy to sign up for. However, make sure that you select Hong Kong based servers when buying their hosting package.

#4 Embed videos from local platforms

It is often a good choice to have embedded videos on a landing page, however, if it is a YouTube one – it won’t work in China (YouTube is one of the blocked sites).

The solution is to setup an account on YouKu, Chinese YouTube equivalent, upload your video there and link to it from your Chinese landing page. There is one caveat here however – the video will be preceded by an advertisement and those are notoriously long and can even run for up to 90 seconds. The only way to play videos without pre-roll ads is to sign up for a paid YouKu account. Although not cheap (currently RMB 5,000 per year), it would make sense to purchase if you are planning to host more videos on the platform in the future.

The last tip about the videos – if they are in English, make sure to either provide a Chinese voiceover or, at the very minimum, Chinese subtitles.

#5 Integrate share buttons and links to Chinese social media

If you already have Chinese social media presence on Weibo, YouKu, WeChat or other platforms, make sure to include links to those sites on your Chinese landing page or, in the case of WeChat, display official account’s QR code. This will not only demonstrate to your visitors that you have an established local presence but will also help in getting more followers to your Chinese social media channels.

In case you didn’t yet setup those social media account in China, at least include sharing buttons to Weibo and WeChat.

#6 Localize the contact form

If your Chinese landing page is designed for collecting users’ data, make sure that the contact form is properly translated to Chinese and don’t leave any English field names to avoid confusion.

Also, keep in mind that while your English form may have separate fields for first and last names, Chinese equivalent would typically use just one name field for both the surname (one character) and the given name (one or two characters).

#7 Optimize for mobile

Mobile optimization of a landing page is extremely important for Chinese market as most traffic will come from mobile devices. It’s essential to use responsive design for your Chinese landing page ensuring that it displays correctly on most type of mobile screens.

Once the landing page is displayed on a small mobile screen, it is critical to make sure that most relevant information such as the headline and CTA (call to action) shows up “above the fold” rather than relying on users to scroll down the page.

#8 Test, test, test

Finally, your Chinese landing page is ready to go live and now you can just sit back and relax. If only that was true… The fact is that you can never be 100% sure that your page works correctly unless you, or someone else on your behalf, would test it from within China.

Although, there are some online tools available to test loading speed and accessibility of sites in China, they cannot be relied on completely as they wouldn’t show common display problems, broken links or other errors. Therefore, it is best to have someone to test your Chinese landing page in China using inspector browser option (F12 hotkey in most browsers) to note and record any errors and loading time.

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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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This post is the first one in the upcoming three part series covering basic market research in China.

Baidu Search

Due to a number reasons, the familiar digital marketing tools, which are mainly run by Google in the Western markets, are not available in China. Google search engine market share in China has fallen below 1% this year and all the Google services, such as Google docs, Google maps, Google analytics etc., have also become blocked from access. This fact alone is making life quite difficult not only for marketers but for regular citizens and businesses.

Luckily, there is an alternative and it is Baidu (baidu.com), the largest Chinese search engine with about 60% market share.

In fact, just a few years ago, Baidu was much more dominant reaching about 80% of the total search market. Since then, other popular services became more competitive and managed to grab larger market share away from Baidu. Those platforms are 360 Search (haosou.com) and Sogou (sogou.com) holding somewhere around 30% and 15% respectively as of the end 2014.

Here I will be mainly focusing on Baidu but, in principle, other search engines are fairly similar and can also be used for the purpose of basic market research.

Just like with Google, your basic research can start with a simple search term of a product translated to Chinese. Now, a word of warning, I strongly advise against using Google Translate or other machine translation program for that. You must find a native speaker to verify the term that you are interested in.

Let me give you an example. Suppose you are interested to search for the term “sunglasses”. Here is what Google Translate would return:

Unfortunately, even though the translation may technically be correct, no one in China actually uses the term太阳镜.

The proper term for sunglasses is太阳眼镜 and this is what you should be using for Baidu search. Once again, Google Translate cannot be relied upon even for a translation of simple keywords, let alone complex “long tail” ones.

Anatomy of a typical Baidu search results

Here is an example of a Baidu search results for the term “sunglasses” (太阳眼镜). Paid results are typically grouped at the top and on the right panels like in the example below:

Compared to a typical Google search results page, with Baidu, it is somewhat harder to tell the difference between paid and organic results. In fact, the only thing that indicates paid ads would be a small word “推广” at the bottom right.

For popular keywords, there would be very few organic results (if any at all) on the first results page.

Next, you would typically see results from Baidu-owned sites like Baike (equivalent to Wikipedia) or Baidu Zhidao (Chinese “Yahoo answers”).

News related results would be ranked next followed by the results from ecommerce sites. Interestingly, links to the largest ecommerce platforms of Alibaba, Taobao and Tmall, would not be shown at all. This is the result of the fierce competition between Baidu and Alibaba.

Finally, closer to the end of the page in this example, you can finally see a few organic results followed by another block of ads:

What can you learn from Baidu search? First, you can immediately see the level of competition in your intended market. If there are many paid ads, be prepared to compete with those advertisers for the same keywords.

Next, you will be able to learn who the main competitors would be and what they are offering. It’s a good idea to go and see their sites, explore the offers, sales strategies and distribution channels.

Finally, basic search would give you a better sense on whether it would be wise to invest in Baidu pay-per-click (PPC) or SEO to get ranked organically. I’m going to discuss those choices in more details in the future posts.

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

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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.

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<< 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.

<< Overview of Chinese payment systems

<< AliPay

>> Union Pay

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