Alibaba recently released a report entitled “Mom and Dad’s Mobile Internet life” which shows that the national middle-aged preferred 3C and home appliances when shopping online.

50-year-old and elder Alipay users have come to save an average of 7,000 yuan (US$1,054) in their Yu’E Bao account as mobile payments have become commonplace, far outstripping the national average of 4,000 yuan (US$603). As of September 30, 2017, compared with the same period last year, the amounts saved by 50-and-up users in their Yu’E Bao has increased by nearly 40%.

Over the past 9 months,  per capita consumption among the 50-and-up demographic has risen to nearly 5,000 yuan (US$753), with an average of 44 purchases per user. Geographically, the first- and second-tier cities such as Shanghai, Beijing, Guangzhou, Hangzhou, Wuhan, Chongqing, Chengdu, Shenzhen, Nanjing, and Tianjin have the largest concentration of such consumers.

It also became apparent that parents are not just buying cheap goods on Taobao. Rather, their Taobao shopping focuses on 3C, home appliances, and other products which aren’t low in price.

The most popular categories of goods to be purchased online by this demographic are mobile phones, mobile top-up cards, dresses, T-shirts, low shoes, pants, bathroom supplies, air conditioners, and other mid- to high-range consumer goods. In addition to the sheer variety, data shows that parents are still very focused on the brand, spending habits have come to mirror those of China’s youth.

The top ten favorite brands are Midea, Haier, Apple, Huawei, Xiaomi, Aux, Philips, Honor, Playboy, and Canon. Adidas and Nike were also ranked highly.

Yu’E Bao grows by over 40% QoQ in the first quarter of 2017 and totals 1.14 trillion yuan (US$170 bn).

Yu’E Bao is a wealth management product using the Alipay account balance built by Alipay. Money transferred to Yu’E Bao buys money market fund of Tianhong Asset Management. The money in Yu’E Bao can also be used to shop online with flexible withdraw.

As of the end of 2016, Yu’E Bao net assets totaled 808.3 billion yuan (US$117.4 bn). The growth in Q1 2017 is over 40% from Q4 2016, keeping Tianhong in the top spot in China’s public fund management.

With more than 260 million subscribers as of June 30, 2016, Yu’E Bao’s current 7-day annualized yield reaches 3.938%, ranking the first in the industry in China.

Also read: China third-party online payment overview 2011-2019

Alipay will start to charge service fee for cash withdrawal (balance transfer from Alipay account to bank deposit accounts) from 12 October 2016 as it announced earlier today.

Individual users have a quota of RMB 20,000 per year, within which any withdrawal is free; Alipay charges 0.1% service on each transaction with a minimum fee of RMB 10 cents per transaction if the total amount exceeds this quota. Users can also use rebate points to pay for the service fee.

Fund transfer to bank accounts from Yu’E Bao, an investment fund from Alipay’s holding company Ant Financial Services Group (formerly known as Alipay, is an affiliate company of the Chinese Alibaba Group), continues to be free.

Tencent’s WeChat started charging service fee since this March for cash withdrawals from WeChat Payment accounts.

China’s third-party internet payment transactions reached RMB 4,058.43 billion (USD 609.93 billion) in Q1 2016 with a year-on-year growth rate of 67% according to iResearch.

Read more: China Online Payment Overview Q1 2016

Nowadays, the penetration of internet investment products has exceeded 45% in china. The internet investment products, such as P2P, Yu’E Bao, WeChat Licaitong and so on, are very popular among internet users according to research of Nielsen.

Since Alibaba’s launch of Yu’E Bao in June 2013, there are more and more internet investment products coming out in China. By the third quarter of 2014, Yu’E Bao’s users were over 149 million. Yu’E Bao’s exceeded RMB578.9 billion (US$94.09 billion), contributing over 98% of Tian Hong Fund’s total capital as of 31 Dec 2014.

Compared Yu’E Bao with bank financial products, consumers have higher expectation about bank financial product. The convenience internet investment products, low purchase standards as well as good liquidity are 3 major reasons for consumers purchase internet investment products in China in 2014.

Compared Yu’E Bao with bank financial products, consumers have higher expectation about bank financial product. The convenience internet investment products, low purchase standards as well as good liquidity are 3 major reasons for consumers purchase internet investment products in China in 2014.

Besides, 40% Yu’E Bao’s users checked their earnings every day while over 80% of users check every week in 2014. Some users showed their satisfactory when they make a profit from internet investment products which demonstrates the happy experience brought by internet investment products.

Also read: Weibo and Alipay’s Hongbao Campaign Gone Viral

Tian Hong Fund released the news on 5 January 2015 that as of 31 Dec 2014, Yu’E Bao’s exceeded RMB578.9 billion (US$94.09 billion), contributing over 98% of Tian Hong Fund’s total capital.

In Q4 2014, Ye’E Bao increased by RMB44 Billion (US$7.15 Billion) from Q3 2014 while Tian Hong Fund management company’s total transaction value increased by RMB41.8 Billion (US$6.79 Billion) in the same period.

Yu’E Bao is one product of Ant Financial Service Group, which was launched in June 2013. Yu’E Bao assisted Tian Hong’s Zeng Li Bao Fund to provide cash management service for users. By the end of 2013, Yu’E Bao’s GMV was RMB185.3 Billion (US$30.11 Billion). In Q1 2014, the number increased to RMB541.3 Billion, which was almost 3 times more than the one in the end of 2013.

Yu’E Bao grew to 149M users in Q3 2014 and it is still growing in China. In tier-1 and tier-2 cities, the growth rate was 14% while it had a user growth rate of 21% in tier-3 and tier-4 cities.

In July 2014, Taobao & Yu’E Bao offered money-making “Tour Packages” with Lvyou Bao, or “travel treasure”, a travel product with investment benefit.

Also read: Over 42.3 Bln Transactions on Alipay in 10 Years

Tianhong Fund disclosed the report of Yu’E Bao’s first three quarters’ performance in 2014 on 24 October. As of 30 September 2014, total transaction value of Yu’E Bao exceeded RMB534.9 billion ($87.46 billion) with a decrease of 6.8% quarter on quarter in Q3 2014.

Yu’E Bao users made profit of RMB5.7 billion ($0.93 billion) in one quarter and the total profit generated since its birth on June 2013 was over RMB20 billion ($3.2 billion). On average, each user made profit of RMB133 ($21.74).

According to the latest data, total transaction volume of Yu’E Bao was 428 million with a total worth RMB206.8 billion ($33.81 billion) in Q3 2014, an increase of 53.16% quarter on quarter.

There was a net redemption of RMB39.27 billion ($6.42 billion) by the end of Q3 2014, which was the first quarterly decline of Yu’E Bao. The main reason was that some high net worth individuals with money management skills reduced their investment in Yu’E Bao.

The number of Yu’E Bao’s users increased to 149 million in Q3 2014 in China. The number of users increased by 25 million in a single quarter with an growth rate of 20%. Yu’E Bao is still growing rapidly in China. In tier-1 and tier-2 cities, the growth rate was 14% while it had a user growth rate of 21% in tier-3 and tier-4 cities.

Also read: Demystify Alibaba’s Money Fund Yu’E Bao

Alipay Yu’e Bao and Taobao Trip launched Lvyou Bao, or “travel treasure”, a travel product with investment benefit.

How it works: Consumers pay for travel service on Taobao with Yu’e Bao after which the paid money is not in fact spent but “frozen” until consumers confirm the travel service. During the “frozen” period, consumers can make money from Yu’E Bao.

Lvyou Bao offers 30 day unconditional refund; consumers can cancel the booking and still enjoy the benefit made from Yu’E Bao with previously paid money. This is an illustration of Yu’E Bao’s efforts facing its declining yields.

Taobao and Alipay are working hand in hand for more shares of China travel market from leaders like Ctrip and Elong. Alipay has recently reached a cooperation agreement with Global Blue in which Chinese tourists can use Alipay for tax refund while shopping in Europe.

Yu’E Bao is an investment fund owned by Alipay; set up in May 2013, its size was RMB200 million (USD 32.44 million). It hit 185.3 billion yuan (USD 30.06 billion) by the end of 2013, accounted for 6% of fund market and became the largest single fund in China.

INFOGRAPHIC: Brief History of Alipay Yu’E Bao’s Rapid Development in China

Alipay’s Yu’E Bao, linked with monetary fund, is a value added service of Alipay serving as an alternative investment way for China internet users. It’s been launched for a little over one year; let’s take a look at its journey of rapid development.

Infographic created by Danqi

Hundsun, a well known supplier of financial software and network services, announced on Weibo that Zhejiang Rongxin owned by Alibaba’s founder Jack Ma acquired Hengsheng Group with 3.299 billion yuan (USD 534.38 million) on April 3, 2014. Zhejiang Rongxin holds 20.62% of stake in Hundsun, becomes the largest shareholder.

Hengsheng Group’s business includes banking, financial investment, construction material, real estate, communication and COSCO logistics. Hundsun mainly provides software solution and services for banks, security, insurance, property management, communication, e-commerce and fund management enterprises. Zhejiang Rongxin owned by Jack Ma also offers financial software and network services, including administrative support and risk management.

Although Hundsun stressed that the acquiring firm is Zhejiang Rongxin. Even if Jack Ma is the president of Alibaba’s board, but Alibaba has no equity in Zhejiang Rongxin, therefore the acquisition has no business with Alibaba.

Alibaba’s IPO in U.S. does not include its finance business. Jack Ma plans to divide Alibaba’s businesses into three parts, the first part includes Tmall, Juhuasuan, Taobao, etao, Alibaba B2B, SME and global wholesale business which will go public this time. The second part includes Alipay and Alifinance (the SME financing arm of Alibaba Group), and the third part includes Alibaba cloud computing.

Jack Ma now controls Hundsun through Zhejiang Rongxin, apparently, he aims at developing Alifinance. Alibaba has tried successfully at online finance businesses such as SME finance, Alipay, Yu’E Bao. The acquisition extends to traditional financial IT industry, making up for online finance.

Alibaba’s money fund Yu’E Bao belongs to Tianhong Asset Management, which was found on May 29 in 2013. How did Yu’E Bao perform in the past 2013?

The Growth of Yu’E Bao

By the end of 2013, there were 89 fund management companies in mainland China in charge of 1,552 funds. The total funds size reached 3 trillion yuan (USD 486.67 billion). When Yu’E Bao was set up in May, its size was 200 million yuan (USD 32.44 million). It hit 185.3 billion yuan (USD 30.06 billion) by the end of 2013, accounted for 6% of fund market and became the largest single fund in China.

By the middle of February in 2014, Yu’E Bao fund size reached 400 billion yuan (USD 64.89 billion). It was estimated to reach 500 billion yuan (USD 81.11 billion) in March 2014.

Who Invested in Yu’E Bao?

By the end of 2013, there were 43.03 million people purchased Yu’E Bao money fund, while the number of A-share stockholders in China was merely 53.85 million. Considering the fact that many investors hold two A-share accounts (one in Shanghai, one in Shenzhen), the number of Yu’E Bao users surpassed the number of stockholders. Besides, the number of fund accounts (by the end of 2012) was 76.36 million.

By February 26 in 2014, the number of Yu’E Bao users hit 81 million.

How Did Yu’E Bao Make Profit?

In 2013, Yu’E Bao made 2.014 billion yuan (USD 326.72 million), 93% came from deposit interest and only 4% came from bond interest.

In 2013, the expenditure of Yu’E Bao was 224 million yuan (USD 36.34 million), accounted for 11% of total income. The net income accounted for 89%, which was 1.79 billion yuan (USD 290.38 million).

Alibaba paid Tianhong Asset Management 190 million yuan (USD 30.82 million) which accounted for 85% of expenditure.  Manager’s renumeration accounted for 46%, and trailer fee accounted for 39%. Besides, trustee bank China CITIC Bank was paid 280 million yuan (USD 45.42 million).

Where Did Yu’E Bao Invest?

The investment risk of Yu’E Bao was extremely low, data showed that 92% of Yu’E Bao fund was deposit, and 7% bond investment.

About 0.05% of Yu’E Bao fund was demand deposit. Within 1 month time deposit, 1-3 months time deposit and 3 months above time deposit each accounted for 29%, 48% and 23%.

Tianhong Asset Management announced on November 14 2013 that Yu’E Bao fund users surpassed 30 million, fund size reached 100 billion yuan (USD 16.32 billion). It was the first Chinese money fund over 100 billion yuan, ranking 51 in the world.

By November 13 2013, Yu’E Bao total revenue reached 788 million yuan (USD 128.62 million). On November 14 2013, Yu’E Bao single day revenue reached 13 million yuan (USD 2.12 million).

3 million users checked their Yu’E Bao accounts every day, and the money transferred to Yu’E Bao via mobile was almost equal to PC.

On November 11 2013, or known as Double 11, Yu’E Bao money fund redemption amount was 6.1 billion yuan (USD 995.65 million), prevented the large scale redemption risk.

Double 11 was not only a shopping carnival for consumer goods, this year, Taobao began sellling money fund.

Data from Taobao finance management showed that by the end of 3 pm on November 11 2013, money fund products total transaction reached 682 million yuan (USD 112 million). Guohua Life sold out 401 million yuan (USD 65.39 million) worth money fund, ranked the top. Efunds ranked the second with 151 million yuan (USD 24.62 million). Sino Life raised 100 million yuan (USD 16.31 million). Normally it would take 10 days to raise 100 million yuan money fund, Taobao finance management did it within one day.

However, the top three best-selling money fund had huge successes, other money fund products sales were not optimistic. Except for the top three money funds, others raised 130 million yuan (USD 21.2 million) together.

On November 11 2013, Taobao money funds began selling at 8 am, and Guohua sold out 100 million yuan (USD 16.31 million) in 10 minutes. Efunds sold out 100 million yuan at 10:28 am. Sino Life achieved 100 million yuan sales in 7 hours 46 minutes.

At present, Taobao money funds couldn’t use Yu’E Bao to pay. Users could only use debit card or Taobao finance management accounts to buy money funds.

Baidu launched its finance center on October 28, 2013, within 5 hours, Baidu sold out 1 billion yuan (USD 163 million) worth of money fund. Baidu aimed at offering a finance product with a 8% annual percentage yield (APY) in cooperation with China AMC (China Asset Management Co.). Over 120,000 users bought Baidu money fund, outperformING Alibaba’s Yu’E Bao on the first day.

Baidu finance center was officially on line at 10:28 am on October 28. The heat of Baidu finance center caused downtime merely after 10 minutes of launch, users from some regions couldn’t register or purchase money fund. The system recovered after 1 pm, and Baidu reminded its users that the first finance product was about to be sold out at 14:27. By the time of 14:50, Baidu money fund had sold 1 billion yuan (USD 163 million), more than Yu’E Bao single day revenue of 350 million yuan (USD 57 million) on June 13, 2013.

The launch of Baidu finance center was a hit not only because of the internet marketing of 8% APY, but also the idea of online finance product really suited internet users finance management needs. Online finance product in essence is money fund, but it lowers the entrance limits and offer more flexible buying and selling money funds with low risk.

By the end of September 2013, Yu’E Bao Tianhong Asset Management fund reached 55.6 billion yuan (USD 9.08 billion), the largest fund in China market. The total fund size of Tianhong Asset Management had increased 4 times.

Yu’E Bao fund reached 4.24 billion yuan (USD 693 million) in Q2 2013, growing by 1211.33% in Q3. Since the launch of Yu’E Bao on June 3, 2013 by Alipay, it had been growing rapidly. Yu’E Bao is a value added online finance product under Alipay, part of Alibaba Group, enabling users to use it as both investment and saving account like Alipay.

By the end of June, the number of users reached 2.5 million, and the fund hits 6.6 billion yuan (USD 1.08 billion). It increased 570 million yuan (USD 9.31 million) daily in average in Q3, it was estimated to break 100 billion yuan (USD 16.33 billion) by the end of 2013.