Top Performers

ByteDance, Xiaomi, and SHEIN lead the list, showcasing the strength of Chinese brands in the entertainment, electronics, and fashion sectors.

Lenovo, Huawei, and AliExpress also remain strong contenders, emphasizing the diversity and innovation in China’s tech and e-commerce industries.

Sector Growth

Smart devices, automobiles, and e-commerce experienced the fastest brand power growth, with China’s industrial ecosystem and technological innovations providing a competitive edge.

Consumer electronics, entertainment apps, and online fashion account for a substantial portion of the brand power growth.

Brand Expansion

Chinese brands have successfully penetrated international markets, with notable growth in regions like Europe, North America, and Southeast Asia.

Brands like BYD and NIO in the automotive sector, and OPPO and Vivo in consumer electronics, have expanded their global footprints, contributing to the increasing brand power.

Market Trends

The report highlights a shift in consumer preferences towards brands that offer meaningful differentiation and high engagement. Brands that have successfully created unique and compelling brand experiences have seen significant growth.

There has been a notable increase in the brand power of mid-sized brands, indicating a shift from the dominance of top-tier brands to a more competitive landscape.

Notable Brand Highlights

• ByteDance: As a global leader in digital content and social media, ByteDance’s platforms like TikTok have become household names worldwide, driving significant brand recognition and engagement.
• Xiaomi: Known for its high-quality yet affordable electronics, Xiaomi continues to expand its product lines and market reach, solidifying its position as a leading global brand.
• SHEIN: The online fashion retailer has disrupted traditional retail with its fast-fashion model, capturing a significant global market share and expanding rapidly across multiple regions.
• BYD: In the automotive sector, BYD’s focus on electric vehicles has positioned it as a key player in the global shift towards sustainable transportation solutions.
• OPPO and Vivo: These smartphone giants have continued to innovate and expand their international presence, offering advanced technology and appealing to a broad consumer base.

Strategic Insights

The report suggests that the key to the success of Chinese global brands lies in their ability to offer meaningful differentiation and engage deeply with consumers. Brands that can innovate and adapt to changing consumer preferences will continue to thrive in the competitive global market.

• Consumer Engagement: Successful brands have invested in understanding and meeting the functional and emotional needs of their consumers, creating strong brand loyalty and advocacy.
• Technological Innovation: Continuous investment in technology and innovation has enabled Chinese brands to stay ahead of the curve, offering cutting-edge products that resonate with global consumers.
• Global Strategy: A tailored approach to international markets, considering local preferences and cultural nuances, has been crucial for the expansion and acceptance of Chinese brands abroad.

Top 50 Brands from Kantar BrandZ 2024 China Global Brands

1. ByteDance
2. Xiaomi
3. SHEIN
4. Lenovo
5. Huawei
6. AliExpress
7. Haier
8. TEMU
9. OPPO
10. Hisense
11. TCL
12. Tencent
13. vivo
14. Chery
15. BYD
16. Anker
17. DJI
18. MiHoYo
19. OnePlus
20. Kuaishou
21. realme
22. GWM
23. TP-LINK
24. HONOR
25. Lynk & Co
26. MAXUS
27. Insta360
28. WORX
29. Lilith
30. Century Games
31. JAC
32. Roborock
33. CHANGAN
34. Geely
35. Midea
36. DiDi
37. POCO
38. ECOVACS
39. Trip.com
40. Magic Tavern
41. Habby
42. Tsingtao Beer
43. EcoFlow
44. Infinix
45. IGG
46. Kunlun
47. eufy
48. 37Games
49. NetEase Games
50. LightInTheBox

BCG: The most innovative Chinese companies

Ant Group, the official payment partner for the Hangzhou Asian Games, announced that Alipay had completed the support for overseas users to use mobile payment services in China.

Athletes and tourists from around the world can now enjoy various convenient services across the country using Alipay, including shopping, hailing a taxi, taking the subway, and visiting tourist attractions.

To use these services, users must download the Alipay app, click “Register Account”, and select the “International Version”. After completing the registration, users can click on “Add Now” to enter the card binding page and follow the prompts to complete the card binding operation.

Alipay now supports international card organizations such as Visa, Mastercard, and Discover Global Network (including Diners Club). Furthermore, the usage of Alipay after binding an international card is no different from using a domestic bank card, supporting both QR code payment and payment code payment.

Similarly, Tencent announced a deepened cooperation with international card organizations such as Visa, Discover Global Network (including Diners Club), JCB, and Mastercard.

This collaboration aims to systematically open up WeChat Pay’s merchant network in various cities in China. Inbound individuals can activate WeChat Pay by using their passport, Hong Kong and Macau Residents Travel Permit (Home Return Permit), Taiwan Residents Travel Permit (Taiwan Compatriot Permit), Hong Kong and Macau Residents Residence Permit, Taiwan Residents Residence Permit, and Foreign Permanent Resident ID.

After binding an international bank card, they can conveniently consume at millions of small and medium-sized merchants.

These developments mark a significant step towards making mobile payments more accessible to foreigners in China, providing them the same convenience that local residents enjoy. It is expected to significantly enhance the experience of foreign visitors in China, especially in the context of the upcoming Hangzhou Asian Games.

There have been 96 companies on the Forbes Blockchain 50 list since it was created in 2019. And, only 12 have been included in all three years.

• Ant Group
• Cargill
• Coinbase
• DTCC
• IBM
• ING
• JPM
• Microsoft
• Samsung
• Signature Bank
• VMWare
• Walmart

Amazon, Citi, Google, Facebook, and Mastercard were among the 14 two-time members who dropped off the list this year.

2021, for the first time ever, saw half coming from outside of the U.S. 13 are from Europe and a record 12 are from Africa, Asia, the Middle East and Latin America.

Of particular note, Forbes included its first member from Africa (South Africa-based pulp producer Sappi), India (Tech Mahindra) and the Middle East (oil giant Saudi Aramco).

China has seven companies this year, including:

• the payments giant Ant Group (platforms: AntChain, Hyperledger Fabric, Quorum)
• search giant Baidu (platforms: Baidu Xuperchain, Hyperledger Fabric)
• Binance (platforms: Bitcoin, Binance Chain and dozens of others)
• China Construction Bank: platforms (BC Trade 2.0, Hyperledger Fabric, Hyperchain)
• ICBC (platforms: ICBC Chain, Ethereum, Hyperledger Fabric, Tendermint)
• Ping An (platform: FiMAX)
• Tencent (platform: FISCO BCOS),

China’s Bitcoin mining machines manufacturer Ebang filed for U.S. IPO

Jingdong (JD.com) total 11-day sales during Double 11 2020 grew by 32% YoY and reached 271.5 billion yuan (US$41.02 bn) in GMV. Tmall’s 11-day Singles’ Day sales reached 498.2 billion yuan (US$75.27 billion) with an increase of 26% YoY.

Tmall Historial Double 11 Sales

CIW Premium subscribers can download this year’s update on Double 11 here.

Double 11 Sales 2020

Lenovo reported total sales of 1.3 billion yuan in the first hour of the first day (1 Nov). Xiaomi received total sales of over 1 billion yuan in less than 20 minutes of the first day.

Tmall Double 11 Sales

In just two minutes, Tmall’s smart home sales exceeded 100 million yuan on the first day. And more than 1 million smart home devices were sold in one hour.

As of 1:00 a.m. on Nov 1, the total sales of Tmall Smart Speaker ranked first in the smarter speaker category. Among them, the total sales of smart screen products increased 14 times year on year.

By 1:51 am on Nov 1, 100 brands, including Apple, L’Oreal, Haier, Estee Lauder, Nike, Huawei, Midea, Lancome, Xiaomi, Adidas had a total sales of more than 100 million yuan (US$14.95 million). The most popular categories are 3C and cosmetics.

Update (11 Nov): According to the data of Taobao Live, the proportion of GMV via live streaming exceeded 60%, and the number of live streaming merchants increased by 220%. Taobao Live promoted more than 4 million employment opportunities.

Alibaba Tmall Double 11 total GMV in 2020 reached 372.3 billion yuan (US$56.46 bn) as of 00:30 am on 11 November.

Update (12 Nov): Tmall’s 11-day Singles’ Day sales reached 498.2 billion yuan (US$75.27 billion).

• 250,000 brands in total participated in Double 11 this year, of which 31,000 are overseas brands. Within these overseas brands, 2,600 participated in 11.11 for the first time.
• 357 emerging brands became top sellers in their respective subcategories. More than 1,800 emerging brands surpassed their GMV from Double 11 last year and, of these, 94 emerging brands enjoyed sales growth of over 1,000%.
• Under Alibaba’s Spring Thunder initiative, 1.2 million merchants and 300,000 factories focused on overseas trade from more than 2,000 industry clusters across China participated in Double 11.
• AI customer chatbot handled over 2.1 billion queries during the 11-day period.
• The United States was the top country selling to China by GMV.
  • Other top-selling countries to China, in alphabetical order, include: Australia, Canada, France, Germany, Italy, Japan, Korea, New Zealand and UK.

JD.com Double 11 Sales

Jingdong (JD) released the first day Double 11 report, and the turnover of the whole day increased by more than 90% year on year.

According to JD big data, FMCG products such as milk and dairy products, shampoo, rice, biscuit cake and paper drawing have become the top five categories in terms of sales, while 3C household appliances such as mobile phones, washing machines, flat-panel TVs, refrigerators, laptops and other household appliances rank first by total sales.

JD Plus, which recently reached 20 million members, saw a lot of activity on Nov 1st. The number of new users on Nov. 1st increased 113% YoY.

JD’s C2M home appliances, which have quickly become popular for their high cost-to-performance ratio also performed well. Twenty products from this line selected as priority quickly exceeded sales of RMB 200 million yuan on the first day.

Personal care home appliances grew 180% on the first day of sales, among which makers of hair dryers, electric razors and more such as Dyson, Philips, Flyco, Panasonic, Braun and Oral B were highest ranked in terms of sales.

Mobile phone sales in half an hour saw 314% growth. JD’s special mobile phone for the elderly saw eight times growth in the first 15 minutes, while users who participated in JD’s trade in program in the first 30 minutes increased 465%.

JD Luxury saw whole day sales on Nov. 1 up 138% YoY. In the first 30 minutes, 127 brands including Ferragamo, Ralph Lauren and Tod’s saw sales up 10 times YOY. International jewelry brands were up six times.

Update (11 Nov): JD Double 11 total GMV in 2020 since 1 November exceeded 200 billion yuan (US$30.33 bn) as of 00:09 am on 11 November. Here are a few quick highlights:

• In 6 seconds sales generated from live-streaming exceeded RMB 100 million yuan
• In the first 11 minutes, JD private label sales exceeded sales of the whole day on Nov. 11^th last year
• Haier, Midea, Gree and other brands sold over RMB 100 million yuan in products in one minute
• Huawei Mate 40 sales in 7 seconds exceeded RMB 100 million yuan
• Over 100,000 computers were sold in 10 minutes
• The turnover of JD Super, JD’s online supermarket increased 10 times YOY in the first five mins of sales
• JD Fresh increased 5 times YOY in the same timeframe
• JD’s international business saw transaction volume increase more than 120% YOY in the first 10 minutes
• JD’s imported goods supermarket saw turnover increase 2.5 times month-on-month
• 93% of first party orders placed during the Singles Day Grand Promotion have been delivered to customers in 24 hours

JD’s Consumer-to-Manufacturer (C2M) home appliances, which quickly became popular in the market because of their high-cost performance and ability to meet consumers’ demands, were highly sought after during the Singles Day period.

Twenty products hand selected by JD as development priorities quickly exceeded RMB 200 million yuan when the official sales period kicked off on Nov. 1^st.

C2M relies heavily on JD’s supply chain abilities. JD helped with sales forecasts for 33,000 brands and 5 million products and automatically deployed them to the locations nearest to users in advance.

Update (12 Nov): Jingdong (JD.com) total sales during Double 11 2020 grew by 32% YoY and reached 271.5 billion yuan (US$41.02 bn) in GMV.

Starbucks saw one-day GMV growth of over 90% YoY on 11 Nov to 200 million yuan.

Other Platforms

Suning reported 5 billion yuan sales across all channels as of 00:19 am on 11 Nov.

Gome GMV increased by 166%. In terms of online platforms, the sales of general merchandise increased by 237% month on month, and that of maternal and infant commodities increased by 314%.

Xiaomi reported total sales of 14.3 billion yuan across all platforms in the 11-day sales.

Come back soon; we’ll update with the latest information on Double 11. You can subscribe to e-newsletter or paid subscription. 

Dossier: Double 11

How JD penetrates lower-tier cities with social e-commerce initiative

Double 11 Introduction

Alibaba Tmall Double 11

Alibaba Taobao kicked off its Double Eleven Global Shopping Festival (“Double 11”), the largest annual shopping festival in China, on 21 October 2020 with new innovations and features to meet rapidly changing consumer trends.

These include the participation of Alipay’s digital lifestyle platform; broader consumer reach and bigger promotions, “double” the number of shopping windows that will spotlight more brands, products and special offers, and the popular live streaming technology creating more fun and engagement for Chinese consumers with the largest international presence to date.

For many brands, Double 11 is the single biggest growth driver every year and this year will be no exception. Check out Double 11 2019 performance.

Read our guide on Double 11 here.

Deepening Engagement to Create “Double” Opportunities

This year the Taobao/Tmall Double 11 Festival expands the concept from “single” to “double,” enabling merchants to double up on promoting their products to consumers across China not just once, but twice, according to Alibaba’s official announcement.

A new sales window will be added from November 1 to 3 on Taobao/Tmall platforms, ahead of the main event on November 11, with the aim of providing merchants, specifically new brands and small businesses, the opportunity to showcase their products and tell their brand stories amid the pandemic.

Double 11 has become one of the most important new product launch events of the year for many brands. This year, more than 2 million new products will be introduced, which is double the amount compared to last year.

Double 11 will be offering more opportunities for merchants both online and offline to engage with consumers as well as provide a better consumer experience overall.

This year’s Taobao Double 11 experience will also be enhanced by Alipay’s digital lifestyle platform, which brings together nearly 2 million local service providers offering special promotions in more than 100 cities.

Offline small- and micro-merchants across China, such as street stalls and neighborhood grocery stores, will be able to participate in the excitement of Double 11 by connecting with consumers through Alipay’s digital lifestyle platform.

Big Growth Driver for Participating Brands

Alibaba launched Spring Thunder Initiative early this year as a continuous effort on merchants empowerment and Double 11 is yet another milestone to help merchants regain growth.

This year’s Taobao Double 11 Festival will feature 14 million value-for-money products from more than 250,000 brands available on Tmall.

Also, to cater for the needs of customers in lower-tier cities, Taobao Deals’ “RMB1 Sales” campaign will enable consumers to purchase goods at huge discounts with free shipping.

To meet Chinese consumers’ increasing demand for international products, Tmall Global will bring more than 2,600 new overseas brands to Chinese consumers for the first time. Alibaba’s cross-border e-commerce platform Kaola will also join Double 11 for the first time, featuring products from 89 countries and regions.

Live streaming and Logistics Core to the Event

Live streaming is expected to take the center stage of this year’s Taobao/Tmall Double 11.

In addition to sessions hosted by top live streamers, about 400 company executives and 300 celebrities will also hold individual live streaming sessions. Taobao Live will offer sessions ranging from cosmetics, electronics, to cars and houses.

New features like online property viewings and virtual vehicle test drives will provide a more realistic and engaging experience to help consumers with their buying decisions. Alibaba’s DAMO Academy will use artificial intelligence technology to create its first virtual live streaming host while Fliggy will host travel-related live streams.

This year’s event will have the largest international presence since it was founded in 2009.

AliExpress now sells to more than 200 countries and regions worldwide. Lazada was the first to bring the shopping festival concept to Southeast Asia across six markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

Shopping festivals such as Double 11 have also become one of the key industry growth drivers as local small-and-medium businesses participate in this biggest event alongside LazMall, the region’s largest online mall with more than 18,000 local and international brands.

This year Lazada will continue its “shoppertainment” features ranging from live streaming to new consumer games and innovations such as voice search to find items.

Alibaba’s robust technology and logistics infrastructure is the backbone of the Double 11 Shopping Festival. Cainiao will charter approximately 700 flights during Double 11. More than 50% of this year’s cross-border parcels are expected to be delivered twice as fast as its usual speed.

JD Double 11

JD also kicked off its Double 11 2020 campaign on 21 October 2020. JD is expected to be the first choice of consumers buying 3C products (mostly computer, consumer electronics, and communication products) in this year’s Singles Day promotion, according to Nielsen.

Double 11 Pre-sales

Nearly 140 million items were sold during the pre-sales period from October 21st to 28th, an increase of over 42.3% from the same period last year, of which JD.com sales increased by 85.5%, according to O&O Consulting.

Products worth more than RMB 1,000 yuan accounted for 48.3% of JD’s pre-sales. Pre-sales of medicine and health care on JD increased by 378% YoY while home furnishings increased by 79.3%. One of the reasons cited for the increase is people’s yearning for a sense of security and stability after a very tumultuous start to 2020.

During the pre-sales, home appliances, computer and office supplies, maternal and child, medical and health care and other categories saw growth of over 100% YoY, indicating that after the epidemic consumer demand to “settle down” has become more important.

According to JD’s own data, from October 21st-29th advanced orders for health equipment, Chinese and western medicine, and traditional nourishment on JD’s platform increased more than 10 times compared with the same period last year.

Orders for fitness and exercise equipment increased more than three times, while health-conscious small home appliances increased four times YoY.

In terms of key sub-categories such as computers, electrical appliances and home furnishing, JD’s pre-sale volume of mid and high-end goods exceeded peers, especially in the home decoration category.

O&O data finds that consumers have a tendency to turn to JD for purchases in the durable consumer categories such as large household appliances, computers, and household appliances, with the platform making up 62.7%, 82.6% and 82.7% of pre-orders respectively by category.

Lufax, a financial platform headquartered in Shanghai, ranked second with a value of 270 billion yuan, and East Money ranked third with a value of 221.5 billion yuan, according to Hurun China Top 10 Most Valuable Fintech Companies 2020 released last week.

Lufax is backed by major internet companies, such as Ant Group, WeBank and Tencent Licaitong.

JD.com’s affiliated JD Digital and WeBank ranked fourth with a value of 200 billion yuan.

• Ant Group
• Lufax
• East Money
• JD Digits
• WeBank (Tencent has an estimated 30 percent ownership share)
• Hundsun
• Hithink RoyalFlush
• Suning Finance
• ZhongAn (online-only insurance company)

Some highlights about the Top 10:

• The top ten fintech enterprises mainly cover financial management, microloans, payment, Internet financial information services, and other fields.
• Among the top ten companies, 2 are mainly B2B business and 8 are B2C business
• 7 of the top ten companies are in the Yangtze River Delta region, including three in Hangzhou and Shanghai and one in Nanjing; two in Shenzhen and one in Beijing
• Among the top 10 companies, 5 are public listed, 3 are in the process of IPO, and 2 are private

Financial services is the industry that has been transformed by unicorns. The traditional financial service industry is greatly influenced by these technology enterprises. For example, the market value of ICBC is 1.8 trillion yuan, and the market value of Ping An of China is 1.5 trillion yuan, which has been surpassed by Ant Group.

There are 63 fintech unicorn enterprises globally, including 21 in the United States, with a total value of $84 billion, and 18 in China, with a total value of US$239 billion.

Chinese unicorn overview 2020

Its revenues come mainly from the growth of digital financial technology platform revenue.

Its gross profit was 69.549 billion yuan (US$10.41 billion), a year-on-year increase of 74.28%; and, the overall gross profit margin increased to 58.84% from 48.13% in the same period last year.

Ant Group plans concurrent initial public offering IPO on the Shanghai Stock Exchange’s STAR board (“SSE STAR” market) and The Stock Exchange of Hong Kong Limited (the “SEHK”).

Credit Suisse expects Ant’s revenue to grow at 34% CAGR from 2019-2022e with digital fintech services as the key driver. It projects non-IFRS net profit to grow at 54% 2019-2022E CAGR.

S&P Global: Bank disruptors doubling down on mobile payments in China

The listings will help the company accelerate its goal of digitizing the service industry in China and driving domestic demand, as well as position the company to develop global markets with partners and expand investment in technology and innovation.

The innovative measures implemented by SSE STAR market and the SEHK have opened the doors for global investors to access leading edge technology companies from the most dynamic economies in the world and for those companies to have greater access to the capital markets. We are thrilled to have the opportunity to play a part in this development

said Eric Jing, Executive Chairman of Ant Group.

Ant Group aims to create the infrastructure and platform to support the digital transformation of the service industry.

Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders and regulators. Through our commitment to serving the under-served, we make it possible for the whole of society to share our growth

Mr. Jing said.

China’s mainland stock markets rose slightly in the morning session on 21 July 2020 following the news while shares related to Ant Group soared.

Alibaba-backed Ant Group is to raise US$10 billion in the Hong Kong IPO and the company could be valued at US$200 billion.

Ant Financial, the previously used company name of Ant Group, was created in 2014 to encompass Alipay and Alibaba’s bigger push into fintech. In 2018, Alibaba bought a 33% stake in Ant Financial. Jack Ma, the founder of Alibaba, still holds the controlling stake in Ant Group.

The Ant Group first announced its share structure in 2013, clearly announcing that the employee stock ownership would reach 40%. On July 13, 2020, Alibaba released its fiscal year 2020 report, which shows that Ma Yun holds about 8.8% of the shares in Ant Group and has 50% voting rights.

At present, Alibaba holds 33% of the shares of Ant Group, Jun Han and Jun Ao hold 50% of the shares of ant group. Jun Han belongs to Ma Yun and employees of Alibaba and Ant Group, and Jun Ao is part of Alibaba partnership. As the employees are still the largest shareholders of Ant Group, this also triggered speculation about how many multimillionaires and billionaires will be born after the IPO.

Check out Ant Group Performance here.

Chinese FinTech companies took four places of the Top 10 FinTechs Ranking in 2018. Ant Financial topped the list, followed by JD Finance. Baidu-affiliated Du Xiaoman Financial and Lufax ranked fourth and tenth, respectively, according to the report from H2 Ventures and KPMG.

Ant Financial including Alipay, Ant Fortune, Yu’E Bao, Zhima Credit, MYbank, and Ant Financial Cloud had 870 million users worldwide as of March 2018.

JD Financial provides a set of services including JingBaobei, Baitiao, Jintiao and Xiaobai. It has served more than half a million corporate clients and 150 million individual consumers.

Baidu-affiliated Du Xiaoman Financial provides short-term loans and investment services. It had a loan balance of 28 billion yuan (USD$4.42 billion) as of 2017. Ping An Group-affiliated Lufax had a loan balance of US$24.55 billion as of May 2018.

Of the top 100 fintechs companies, 18 are from the US, 12 from the UK, 11 from China, 7 from Australia, and 6 from Singapore.

34 out of the top 100 fintech companies are payments companies, followed by lending (22), wealth management (14), and insurance (12). The top 100 have raised over US$52 billion in venture capital, more than double compared to the previous year.

59.9% of China mobile payment users bought financial products, Ye’E Bao the most popular.

The majority of the top 5 finance service apps in China are male users (over 70%) but Ping An Jinguanjia (55.1%).

Users of Alibaba-affiliated JD Finance and Ant Fortune have the highest online consumption capacity and the highest penetrations in China’s tier-1 cities.

The rapid growth of social networks and e-commerce platforms has transformed the way people communicate and transact around the world. Integrating digital payments into these growing networks and platforms has presented vast opportunities to drive economic opportunity, financial inclusion, transparency, security, and growth.

In practically all countries individuals, businesses, and policymakers are recognizing these opportunities and acting on them, but perhaps nowhere more so than in China.

This report examines two of China’s most far-reaching applications – WeChat and Alipay – and explores their role in the development of one of the world’s largest and most sophisticated digital payments ecosystems.

China’s online payment market share

As China’s economy is unique, this report has also identified key factors in the successful integration of digital payments into social networks and payment platforms. In this way, the report aims to provide lessons that can be assessed, and where relevant, applied in other markets beyond China.

As social networks and e-commerce continue to grow and offer new opportunities as well as risks, the report adds to a body of knowledge about how digital payments can improve lives and strengthen economies in all parts of the world.

Combined Alipay and WeChat payments (by value) have risen from less than RMB 1 trillion (US$81 billion) in 2012 to an estimated RMB 20 trillion (US$2.9 trillion) in 2016 – a 20-fold increase in four years.

In 2015, non-cash payments accounted for nearly 60% of retail transactions in China. Of all non-cash payments, Alipay and WeChat Pay captured 28% of all retail transaction fees; effectively what would have
been nearly US$20 billion in payments fees on transactions had they been processed on traditional card payment networks. Digital payments as a whole have grown rapidly from about 3.5% of all retail transactions in China in 2010 to about 17% in 2015.

Digital payments as a whole have grown rapidly from about 3.5% of all retail transactions in China in 2010 to about 17% in 2015.

Key Findings

Significantly, the growth of digital payments using existing platforms and networks in China has brought with it a much wider range of digital financial services that are both expanding financial inclusion and economic opportunity for individuals and creating valuable new business models for companies.

1. New financial services have proven highly popular, delivering benefits to large numbers of people.

Alibaba worked with Tianhong Asset Management and launched the Yu’E Bao (meaning “leftover treasure”) product, a low-risk money market account similar to a bank savings account. Customers can take the money “left behind” on their digital wallets and invest it on the Yu’E Bao product.

While these services usually involve small individual amounts, they nonetheless provide benefits that can be helpful particularly for people living on low incomes. The scale of these individual savings products, when viewed in aggregate, is significant helping to explain how these products represent new business models that are attracting attention in countries around the world.

Yu’E Bao has grown from having 0.2 billion RMB (US$29 million) in assets under management (AUM) in 2013 to more than 810 billion RMB (US$117 billion), serving more than 152 million customers three years later and making it one of the largest money market funds in the world.

2. Digital finance has dramatically increased economic activity and e-commerce among merchants and consumers

As of September 2016, one provider, Ant Financial, had lent a total of RMB 740 billion (US$107.3 billion) to over 4.11 million small and micro enterprises and entrepreneurs. New business models enabling lending to people on low incomes are driving significant new usage of digital payments in a country where 79% of adults have had a bank account at some point, but only 10% of these have ever borrowed in the formal financial system.

For example, Huabei or “Just Spend,” is a service launched in 2014 which allows shoppers to take out small month-to-month loans. On Single’s Day 2016 (a major consumer-focused holiday similar to Valentine’s Day), consumers spent a total of RMB 26.8 billion (US$3.9 billion) using the Huabei service on two major e-commerce platforms.

3. Effective incentives and demonstrable utility are key factors in stimulating initial use and cultivating customer loyalty

For example, in 2014, Tencent launched its WeChat Red Envelope campaign – a digital version of an old Chinese custom of giving small amounts of money to friends and family in red envelopes during Chinese New Year.

In order to receive the red envelopes, the recipient was required to have a WeChat account that was connected to a bank account. Within the first week, more than 8 million people used the service, and the number of new bank accounts connected to WeChat surged by the millions.

During Chinese New Year 2017, WeChat users sent each other 46 billion digital red envelopes, an increase of 43% from 2016.

4. New credit scoring services are becoming available which are increasing access to credit, particularly for people on low incomes and small businesses.

One such service – Sesame Credit – is able to assess credit worthiness for over 350 million real-name registered users and 37 million small businesses that buy and sell on Alibaba Group marketplaces. When users sign up for Sesame Credit they agree to allow Ant Financial to use their transaction data to determine their credit score.

These credit-scoring services are increasingly being used outside of China in both the public and private sector. For example, a trial program was set up in June 2015 with the Luxembourg Government to allow credit scores to be used in place of bank records in securing a visa for the Schengen travel area in Europe.

5. The major digital payments providers are rapidly expanding beyond China and investing in new financial technology companies.

Users can now use Alipay and WeChat Pay in Thailand, one of the most popular destinations for Chinese tourists, to pay for goods and services in many stores.

Alibaba has made a significant investment in India’s PayTM and Tencent into India’s PayU, two of the largest digital payment providers in India. Tencent has also recently launched a joint-venture initiative in Africa, allowing for payment in South African Rand.

These and other experiences in China show there are clearly vast opportunities that other countries can harness by using existing e-commerce platforms and social networks as a foundation for expanding the digital payments ecosystem.

A 2016 report from the McKinsey Global Institute estimated that digital finance could add US$3.7 trillion to GDP across all emerging economies in aggregate by 2025, a 6% boost above the projected baseline, and create 95 million new jobs.

For China, it could mean an additional US$1.05 trillion (RMB 7.25 trillion), a 4.2% GDP boost above the projected baseline GDP for 2025. In China, that shift to digital – which is now well underway – would not have been possible without existing platforms and infrastructure.

Recommendations

For payment providers, e-commerce firms, and social networks

Attracting users by building on existing e-commerce platforms and social networks, using strategic incentives to deepen usage. For example, Tencent was able to build a widespread digital payment product within an existing service, which helped it gain rapid acceptance.

Major payment platforms in China have developed a variety of additional incentives for users, such as vendor promotions and discounts, and creative gamification concepts around popular cultural events.

Making platform tools openly available to innovators for seamless integration. For example, making software development tools, such as application program interfaces (APIs), available can enable third-party vendors and Small and Medium Enterprises (SMEs) to make their own innovative additions to the ecosystem in response to user needs and preferences, thereby organically growing the ecosystem.

Enabling universal access for users and businesses by developing ecosystems that function across various platforms. China’s two most popular payment apps are “hardware-agnostic,” in that both work across the Android and Apple iOS platforms, which combined, account for 99.3% of smartphone operating systems in urban areas.

This has helped to drive uptake and build out a large inclusive digital payments ecosystem. For payment providers, embracing interoperable platforms adds clear value for users and can help to grow a wider network of merchants and acceptance points.

For governments

Developing a supportive regulatory environment that strikes a careful balance between encouraging innovation and managing risk. In its efforts to strike a balance between these two objectives, China has announced policies to foster domestic development and competition, and support innovation.

The G20 High-Level principles also recognize the need to support innovation while managing risk and encouraging the development of digital financial products and services.

In China, the government has taken a “wait and see” approach to regulation which allows for innovation by industry participants within informal limits, under careful supervision by the relevant regulators. As products mature and their implications for users and the ecosystem emerge, the regulators develop the appropriate guidelines and rules to address these implications, protect consumers, and support a more cohesive payments ecosystem.

This approach of protecting and fostering domestic players may not be appropriate for every country, and each country should consider their own circumstances, but China does offer an illustrative example of how this strategy can work.

Setting public investment priorities that encourage digitization. This is particularly the case with the vital preconditions of digitization, such as effective infrastructure for the internet and mobile telecommunications.

In 2016, China had 530 million 4G users. This exceeds the number of 4G users in the United States and Europe combined. China expects to spend RMB 1.2 trillion (US$1.88 billion) over the next three years to further improve the quality of its broadband connectivity and mobile access. This will support the use of mobile smartphones – an important element in digital payments and digital finance usage.

For both businesses and governments

Encouraging public-private partnerships (PPPs) to develop an ID verification system or similar method to identify payers and payees accurately. Having a widely adopted and secure means of identifying customers is vital to enable secure and transparent payments and improve consumer protection.

It is also important in order to advance Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating the Financing of Terrorism (CFT) efforts, and meet international standards in these areas. Governments and payment providers can work together to enhance adoption and use of identification.

Incorporating lessons of successful business models in payments over messaging platforms to drive adoption of digital payments in their own markets. As more examples emerge of companies successfully expanding their payments businesses internationally, there is a growing knowledge base that can reduce the trial-and-error component of building out inclusive digital payment ecosystems, particularly by anticipating key risks that have emerged in other countries and observing commercial and regulatory approaches that have proven effective.

China’s tech giants (particularly Tencent and Ant Financial) are rapidly expanding internationally, PayPal continues to grow its global footprint, and companies like Facebook are pushing into international payments, heralding a period of rapid international expansion of payment platforms. As these companies expand, national or regional players can both observe and incorporate their experiences, or partner with them to drive their own transitions to digital payments.

A key overarching issue in payments (both traditional and digital) is trust and convenience. There must be trust in the community or network (i.e., between the payor and payee), trust in the security of the payment mechanism, trust in the regulatory environment for consumer protection and recourse, and a belief that the method is beneficial. An examination of the China experience demonstrates that robust digital payments ecosystems can address all of these concerns and are, therefore, a useful way to accelerate the acceptance and use of digital payments. Despite the benefits, there are challenges.

An examination of the China experience demonstrates that robust digital payments ecosystems can address all of these concerns and are, therefore, a useful way to accelerate the acceptance and use of digital payments. Despite the benefits, there are challenges.

Regulators are still figuring out the right balance between innovation and regulation. China’s financial institutions are still working out their fintech strategies. Alipay and Tencent are expanding faster than many other similarly sized global tech companies. And we are still very much in the early days of fintech both inside and outside China. How this all plays out remains to be seen, but the initial impact of digital finance on China is difficult to over-exaggerate.

There are significant benefits of convenience and utility to be achieved by integrating payments functionality in existing e-commerce platforms and social networks. But even greater benefits of financial inclusion can be reached when robust digital payment ecosystems are developed around those networks and platforms. As China’s experiences

How this all plays out remains to be seen, but the initial impact of digital finance on China is difficult to over-exaggerate. There are significant benefits of convenience and utility to be achieved by integrating payments functionality in existing e-commerce platforms and social networks. But even greater benefits of financial inclusion can be reached when robust digital payment ecosystems are developed around those networks and platforms. As China’s experiences

But even greater benefits of financial inclusion can be reached when robust digital payment ecosystems are developed around those networks and platforms. As China’s experiences illustrate, being able to access vital financial services in an easy and convenient way increases the likelihood of their use. Digital payments ecosystems, therefore, can be a powerful catalyst to accelerate digitization and increase financial inclusion.

This report was originally published on BetterThanCash.org.

China post-80s spent an average of 120,000 yuan(US$17,330) online in 2016; and, mobile payment accounted for 92% among China post-90s consumers.

Alipay mobile client released a function today to allow users to generate and check the annual spend statement in 2016; and, it generates a poster-like image to share in social media. Many users shared on WeChat and Weibo.

Alipay has 450 million verified users in 2016 according to Alipay; mobile payment accounted for 71% of total payment, comparing to 65% in 2015. Guangdong province ranks first in 2016by total annual payment, accounting for 16% and followed by Zhejiang and Jiangsu.

Related: Alipay is launching a special Hongbao campaign utilizing Augmented Reality to make it more interesting and engaging. Read more here »

Shanghai ranks first by total annual average online payment per person (148,000 yuan or US$21,400), followed by Zhejiang, Beijing, Fujian, and Jiangsu (each over 100,000 yuan).

Chinese millennials are the main forces of online payment market. Chinese post-80s, those born between 1980 and 1989, made an average online payment of 120,000 yuan (US$17,330) per person in 2016. 92% of post-90s’ online payment came from mobile.

Ant Check Later (or huabei, working like a virtual credit card), another consumer credit product from Alipay’s company Ant Financial, has about 100 million users; 86% are millennials. 3.2 billion online transactions used Ant Check Later in 2016, an increase of 344% over 2015.

As of 31 Dec 2016, over 60% of Alipay finance management users come from tier-3, tier-4, tier-5 and rural areas. Over 330 million users bought internet insurance service on Alipay in 2016.

Also check out China Online Payment Overview 2016 »