In 2018, China is an almost entirely cashless consumer economy, where popular mobile payment apps such as WeChat Pay and Alipay have enabled consumers to go straight from cash, to smartphone payments, leapfrogging the use of credit cards and cheques.
One of the world’s leading players in mobile or e-payment, China saw $15.4 trillion worth of mobile payments handled by third-party platforms in 2017 – more than 40 times the amount processed in the US.
Chinese consumers can buy a pancake at a roadside breakfast stall, order food online, pay credit card bills, or manage stock accounts, all with just their smartphone. In fact, mobile payments are so prevalent that use of cash fell from 63% of transactions in 2011 to just 33% by 2016.
When Alibaba founder Jack Ma carved out his payments business from the ecommerce giant in 2010, he pulled off a coup with multibillion dollar implications. But it was a move by WeChat a few years later that really set the category alight.
The sending and receiving of red packets containing cash (also called lai see in Cantonese, and hongbao in Mandarin) at Lunar New Year is an important tradition across China. But historically red packets were always tangible items, real cash in a paper envelope. Then, in 2014, WeChat introduced digital red packets. The ability to send festive cash to family and friends using just the WeChat Pay mobile payment platform. It was a revolution, and 4 years later in 2018, the idea of digital red packets had caught on to such an extent, that 80% of Chinese consumers sent a red packet via WeChat. This year only 69% sent a physical red packet.
WeChat’s success with digital red packets introduced and popularised the mobile payments category with Chinese consumers, and built a platform for the adoption of wider mobile payments functionality across money transfer, taxi ordering, online shopping, bill settlement, wealth management, for both WeChat – and it’s competitors.
In fact, Alipay, owned by Alibaba, now handles nearly 54% of total mobile payment transactions, with WeChat Pay, owned by Tencent, processing around 39%. Across the category, the number of transactions made through non-banking mobile apps increased from 3.8 billion to more than 97 billion over the period 2013 to 2016, and research firm eMarketer recently estimated that more than 61% of global mobile payment users in 2018 are located in China.
Alipay and WeChat Pay have also made their presence felt abroad. Both companies extended their payments services to hundreds of thousands of merchants in regions like Southeast Asia and Europe, targeting outbound Chinese travellers and encouraging them to settle their overseas shopping bills with the apps. Adoption is still low, but merchants are keen to facilitate easier transactions for high volume and wealthy Chinese tourists.
Within China however, the game is up. The dominance of mobile payment means not only that companies like Alibaba and Tencent manage consumer financial transactions, but as a by product they also control huge lakes of valuable personal data. Already this data is being used to close the loop on the consumer purchase cycle, and up-sell other financial products such as loans, or retail experiences. Alipay has also built Sesame Credit, a personal credit rating platform and Chinese government social rating system, linked to it’s mobile payments footprint. While English language media tends to describe Sesame Credit as an authoritarian system straight out of Black Mirror, Chinese social media users seem to focus more on the advantages than the burdens.
Ay, there’s the rub! As the West agonises over Cambridge Analytica and GDPR, WeChat and Alipay have already built the future of mobile payments. Convenience trumps all, if you let it.
Below we’ve collected key takeaway resources covering WeChat, Alipay and the mobile payments ecosystem in China.
Mobile Payment Usage in China 2017
Tencent: The Growth of the Digital Payment Ecosystem in China
Social Networks & Digital Payment in China
Alipay and WeChat Pay: Reaching Rural Users in China
Digital transformation in China – Take aways from the Alibaba Global Dreamer Program
The UK recently kicked off its largest ever international trade and investment marketing campaign. Aimed at international businesses and governments the campaign plans to showcase the UK’s trade and investment opportunities to a global marketplace, including the EU and beyond.
The comprehensive, multi-channel campaign will display a series of new images showcasing the UK’s world-leading products and services, including advertising in international airport hubs such as Hong Kong, New York, Los Angeles, Dubai, Frankfurt, Amsterdam and Singapore; press publications; along with substantial digital promotion.
As part of this international push, the Department for International Trade is stepping up its efforts to help international companies looking to trade or invest in the UK to find the right opportunities for them.
A recently launched interactive digital service – www.great.gov.uk – will provide practical advice to UK businesses ready to take the next step into new global markets, or international buyers and sellers who want to know more about the UK market or how to buy British.
The digital service will also include information on seven sectors, from technology to food and drink, so that international businesses can easily navigate the UK market and make an informed decision about the best investment opportunities.
Jo Hawley, Director of International Trade and Investment at the British Consulate in Hong Kong added: “Hong Kong and UK trading links have gone from strength to strength over the last 20 years. In the British Consulate General in Hong Kong, we are working with record numbers of Hong Kong and mainland Chinese investors expanding their businesses into the UK as well as UK companies keen to do business in Hong Kong. We hope that our new campaign and digital hub will encourage even greater trading links.”
Over the coming months the UK government will be reaching out to more global partners to facilitate global trading relationships. For more information, please visit www.great.gov.uk.
We see a big year ahead for programmatic in China with projected 36.9% YOY growth. $12.72bn estimated ad spend will account for 57% of total digital advertising market.
China Mobile Ad Revenues and Programmatic Ad Spend 2014-2017 [Infographic]
Chinese internet users are more likely to be under the age of 30, have a higher education than previous generations and earn an average income.
These netizens are increasingly accessing the Internet though mobile devices. Not only is it more convenient for them, but the majority of Internet users find the experience comparable to or even better than desktop.
2015 was another exciting year for digital and programmatic in Asia, South East Asia especially.
There is a definite sense that individual markets are outgrowing Singapore as a regional hub – evidenced by rapidly increasing spends at individual market level, and a resurgence in agencies, both local and global, doing outstanding digital work in local markets.
In celebration of the year past, here are the top 5 Digital in Asia articles for 2015.
In our most popular piece of content, we talked to Joanna Kalenska, Managing Director at Razorfish Hong Kong, about Asian consumers, brands’ challenges and opportunities.
Ogilvy released the latest in their guides to Social Media in China highlighting the (mostly) differences but sometimes surprising similarities to global platforms.
A report from market research company Epinion and OMD looking at Generation Z in Vietnam. Numbering 14 million, and with an average monthly disposable income of 112 USD – significant in this emerging market – these consumers are incredibly valuable for brands.
2015 promised to be an exciting year for Digital Marketing and Media in Asia. These were the ten trends that, in DIA’s view, would change online advertising over the last year. How many did we get right?! Don’t worry, we’ll be right back very soon with another 10 trends for 2016.
Chinese consumers say concerns about personal privacy, the environment and their security will stop them from purchasing new products, according to a new study from Edelman.
Raised in a high growth, fast changing society, a vast majority (94%) of Chinese consumers now view innovation itself as an essential component of society’s progress. And more than 4 in 5 (85%) believe it’s the responsibility of business to drive this innovation.
However, there is discomfort at the role of business in innovation. The majority of respondents believe innovation comes at a personal and societal cost with privacy (58%) and environmental impact (52%) the major concerns.
“It seems innovation in and of itself is not enough to be liked, trusted or bought,” said Carol Potter, executive vice chairman, Edelman Asia Pacific, Middle East & Africa. “We find consumers simultaneously positive about the benefits of innovation at the same time as anxious, uncomfortable and skeptical about the companies that bring it.”
The full report is worth reading to find out more about Chinese consumers conflicted attitudes to business.
Innovation and the Earned Brand in China [Edelman]
According to a recent Razorfish digital marketing report, Asian Marketers must be more innovative and forward-thinking than their western counterparts, to meet the technology-driven expectations of consumers in our region. Asian consumers are not only reporting higher ownership and usage of technology, they also hold higher expectations of brands and technology overall.
We talk to Joanna Kalenska, Managing Director at Razorfish Hong Kong, about Asian consumers, brands’ challenges and opportunities.
DIA: Hi Joanna, how are you?
JK: Doing fantastic, thanks.
DIA: So we’ll leap right in there. Marketers are underestimating the digital divide between Millennials and Gen Xers. How do you think this applies in Asia? Can we even say that Gen X exists in Asia?
JK: What’s fascinating about this region is the fact that when it comes to technology the differences between the generations are minimal. And this came as a clear finding during our global research report Digital Dopamine. It seems that enthusiasm towards technology is age independent in markets like the US or UK, where the differences are more prominent. But not in China for example, where despite a relatively low internet penetration people are more savvy and demanding when it comes to their technology expectations. This lack of legacy has allowed Asian markets to leapfrog directly to quite advance digital behaviors.
Also, culturally, in China, peer-to-peer purchases are part of everyday life, and so social commerce has become a widely accepted, very normal practice. And it is this that has also led to less of a gap between Gen X & Y in China, in so far as digital usage is concerned. Generation X in the West, has had to learn to trust new platforms from the start, compared to Generation Y, who grew up with this practice.
DIA: Brands need to focus more on being useful than on being interesting. Can you talk about how this applies to Asian markets? In markets where a lot of basic infrastructure is missing, do you think brands have more of a role to play?
JK: Absolutely, and precisely for that reason. To win, brands as a service must deliver meaningful utility / value everyday to stand out from the crowd. Digital Dopamine showed us Asian consumers adopt and embrace technology quickly. Often, quicker than brands are able to implement the correct infrastructure to enable experiences at the expected level. Consumers won’t wait for brands to catch up. This means that at the point where longer-term strategies are already defined, brands need to think in a fresh and innovative way. Tech-savvy consumers are not as much interested in a brand’s reputation as before, their loyalty is determined more by the total satisfaction of the brand’s omni-channel experience. Especially in Asia where there is a lot of noise and a lot of choice.
DIA: Omni-channel customers still encounter a number of friction points as they dip between online and offline platforms in search of cross-channel convenience. Do you see any interesting trends or consumer behaviours emerging specific to Asia to solve this issue?
JK: This remains a big challenge for most brands, and therefore consumers. Considering how long this concept has been on the table it’s quite surprising how slow brands are at adapting. The biggest obstacle for real omni-channel is a single view of the customer, which has been restricted because of legacy systems. Smaller, more agile brands have more chance to succeed but they often lack resources and funds to make a real and noticeable difference. To enable a smooth transition and be able to deliver on an omni-channel promise, businesses need the right data and technology infrastructure. This does not, however, stop brands from moving towards platform integration in smart and simple ways. Each business can deliver a short, medium and long-term solution to surprise and delight their customers, examples include extending catalogues online, order online & collect instore initiatives, pick in store & deliver to home or office, and more.
DIA: While we sometimes focus on the rational benefits of technology, digital interactions affect us on a biological and emotional level. Do you see marketers moving brand budget to digital yet at scale? We often think Asia is especially tech obsessed. Is this a more relevant trend here than anywhere else globally?
JK: Nowhere in the world are people as obsessed with their phones as here in Asia. Mobile first – brands have got to be mobile and social, because social proof makes the decision for the buyer.
Secondly, buying online here is very emotional and seen as gifting yourself, providing a digital rush of sorts.
DIA: What’s the future for agencies in a fast, nimble, social media world?
JK: A never-ending funnel of smart and simple ideas. We rely on clever people – that’s our IP. Being curious, quick, yet diligent and considerate has been keeping Razorfish at the top of the consideration list for our clients.
DIA: Do you think Asia has a talent problem in digital marketing and media?
JK: I think the talent problem in digital marketing is not only an Asia issue. Experienced marketers have not caught up with the ever-changing technology, and younger generation often believe that being a native user makes them know what’s required. There are very few professionals who can think and talk at the brand and business level, being at the same time connected to the target audience and the way they engage and embrace technology.
We also live in the time where everything is instant and there seem to be less time for understanding market, product or target audience context. I don’t think WHY is considered before the HOW is agreed. But this takes confidence and experience. In a world where people change jobs every 18 months, there is very little know-how building and seeing the results of your decisions or recommendations – both on the agency and the brand side.
DIA: Is advertising all about the algorithm now? Do you see data and automation emerging as serious trends in your markets?
JK: Yes and No. It can never just be about the algorithm. Real time marketing does require a deeper understanding of the audience and uses programmatic targeting and retargeting to reach them in context, when and where our message is useful. But it also requires smart human truth creative in order to be really effective.
The big problem we have in Asia is a real lack of data-led insights, because firstly, companies have never needed to collect data, they had it very easy until now, and secondly, if they have data, they are very reluctant to share it, because it might give away a competitive advantage. This will change in time once a few players have realized how great data-led insights and briefs can drive transformational execution.
DIA: We see a lot of hype around mobile, but is it really a channel to be taken seriously yet?
JK: Is this a trick question?!
DIA: Not a trick question! We are interested in both the buzz and the reality on the ground. How much attention are your clients putting towards mobile?
JK: Mobile as a content provider, mobile as a device, most of us can’t imagine life without or another channel to push advertising onto. We are asking about rational benefits but aren’t we past that, mobile is affecting us on a biological and emotional level. You can read about these effects in our report, Digital Dopamine. Digital Dopamine points out 87% of Chinese consumers report often feeling dependent on technology, that’s a pretty extreme demonstration of its importance.
Mobile-Mad is Asia, even more than the Middle East. Asian consumers are way ahead of brands in terms of how and what they use their mobiles for. Brands think that a mobile enabled site is enough, well it’s not nearly enough. Content has to be rethought to fit the smartphone screen in its entirety, and still too many clients are thinking about big screen content, which ends up looking ridiculous on the small screen. What’s worse, it doesn’t deliver the value consumers are looking for.
DIA: Oreo famously made a splash during the Super Bowl with a clever tweet during the blackout. Does something like that move the needle, or is it just something we talk about for a tiny cycle and then forget?
JK: I don’t think it’s always about moving a needle. Sometimes it’s about quick, fresh and clever thinking. Oreo did exactly that, clever thought using a popular platform. There was nothing groundbreaking about it, but it was spot on, real time marketing. So few brands are ready for it.
DIA: If you could choose between working in the sleek tech-driven world of modern advertising, or the days of Don Draper and Mad Men, what would you do?
JK: Without a doubt in the sleek tech driven word. I think the task is much more interesting and challenging on many levels. We are being challenged every day, by new technologies, by changes to legislations, new platforms, hardware software, we have to be engaged and interested or we will fall behind very quickly. 15 years ago it was easy to be an expert in a particular field. It took ages before anything changed so you could gain deep experience. We now need to be experts in a new area every day, that’s not easy and it takes a lot of intellectual openness and fresh thinking. Having said that, the creativity and courage of Mad Men mixed with the curiosity and connection of digital would be perfect.
DIA: Thank you for a hugely interesting discussion. Looking forward to chatting again soon.
The latest MasterCard Mobile Shopping Survey covering Asia Pacific finds consumers embracing the convenience of mobile shopping. Almost half of consumers – around 45% in total – made a purchase using their smartphone in the three months preceding the survey.
Exactly 50% of respondents across Asia Pacific cited convenience as the most compelling reason for shopping on their smartphone. Other motivating factors include the ability to shop on the go and the growing availability of apps that make it easy to shop online.
Fig 1: % consumers who have made a purchase using a smartphone
2014
2013
2012
Asia Pacific
46%
39%
35%
Korea
54%
48%
40%
China
70%
59%
54%
Thailand
59%
51%
51%
Hong Kong
38%
40%
41%
Taiwan
62%
45%
28%
Singapore
37%
31%
40%
Vietnam
45%
35%
34%
Indonesia
55%
47%
55%
India
63%
47%
30%
Malaysia
46%
32%
25%
Philippines
34%
33%
21%
Japan
26%
23%
26%
New Zealand
21%
15%
18%
Australia
20%
25%
19%
In addition to using their mobile phones to make purchases, shoppers in the region are also using it to compare prices between physical and online stores. Close to half (45%) of respondents have conducted price comparisons, with a similar proportion (44%) also stating that they have conducted research online prior to making a purchase in-store.
Overall, consumers from China (70%), India (63%) and Taiwan (62%) are the most likely to shop using their smartphones with the most popular mobile shopping purchases amongst Asia Pacific shoppers include clothing and accessories (27%), followed by apps (21%) and daily deal coupons (19%).
Asia Pacific consumers are also adopting new mobile technologies, with 28% of respondents saying that they use mobile banking apps. Group buying apps (40%) and digital wallets (28%) are the most popular amongst Chinese consumers.
Increased smartphone ownership is clearly having a massive impact on the way people across Asia Pacific shop and spend. Brands and online shopping portals need to continue to develop easy and simple ways to browse and pay, as convenience remains paramount to consumers whether they are shopping on their phones or in-store.
China’s social media landscape has proven a fast moving target. Ogilvy have just released the latest in their guides to the market highlighting the (mostly) differences but sometimes surprising similarities to global platforms.
The big story is the continued rise of WeChat, with the Tencent owned platform taking on the role of multiple Western platforms in China. Video sharing makes a first appearance, inspired by Vine. The major players are Sina owned Meipai and Tencent’s 微视 plus WeChat’s “Sight” functionality.
One of the few western platforms not blocked in China remains LinkedIn. In a market where networking is done face-to-face there are questions as to cultural fit, but with a China office this is clearly a long term bet. There are definite opportunities for brands.
China Social Media Landscape [2015]
Previous versions of the infographic can be found here.
