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.

The Chinese government continued to increase its efforts to combat environmental violations in 2016 with a total number of 137.8 thousand cases investigated and fines totaled 6.633 billion yuan on 124.7 thousand cases, a record high according to the Ministry of Environmental Protection.

The total fines amount increased by 56% while the number of cases punished had an increase of 28%. Guangdong, Beijing, Jiangsu, and Zhejiang each had over 10,000 penalty cases; and, over 20 areas each received total fines of over 100 million yuan.

The implementation of the close-down and seizure saw 9,976 cases, an increase of 138%; the implementation of limited or stopping production had a total of 5,673 cases, an increase of 83%; 4,041 cases were transferred to administrative detention, an increase of 94%; 2,023 criminal cases were transferred for suspected of being involved in environmental pollutions, up 20%.

China GDP grew faster than expected in Q1 2017

This research explores the digital adoptions among Chinese enterprises including internet usage, proportions of enterprises using trending technologies (mobile broadband, cloud computing, CRM, ERP), top channels for digital marketing and mobile marketing, and their expectations to solve problems.

Almost all companies in China adopted computers(99%) and Internet (95.6%) in their operations; and, more companies are utilizing mobile broadband (32.3%).

Over 90% enterprises in China use emails; however, only a bit more than half (63.7%) use corporate mailing systems.

Enterprises’ internet usage for information includes finding out product or service information (77%), publishing information (73.3%), and obtaining information from government agencies (63.6%).

Online banking is widely used (86.4%) among enterprises in China.

92.4% Chinese enterprises have safety precautions for the internet. But, less than half use paid antivirus / firewall software.

60% enterprises in China adopted certain information systems; 50.4% use office automation. However, less than one-third are using ERP or CRM.

Utilizing internet for sales is increasingly popular during the past few years; now, near half enterprises in China have adopted internet for sales and purchases.

The proportion of China enterprises, who have deployed digital marketing activities, increased to 38.7% from 33.8% a year ago.

Instant messenger, e-commerce platforms, and search engines are the top 3 channels for digital marketing activities in China.

WeChat, mobile websites, and search are the most popular mobile marketing channels among China enterprises in 2016.

Over half enterprises are aware of the trending technologies, including cloud computing, big data, and internet of things. However, only about one in five enterprises adopted these technologies.

Also read: China social application user insights 2016

The American election provided the world a sudden shake-up. And, as the dust settles, the fortitude of recently established global alliances and newly laid foundations for economic opportunities are emerging.

Take China, for example.

The country is not known for having an open, easily accessible market. State-owned companies are traditionally protectionist, and foreign businesses in China are routinely up against restrictive government policies that prevent market access.

However, in this new global reality, China has been making bold moves to modify domestic policies. The country has been ushering in a new era of market accessibility while strengthening ties with developing countries around the world. Simultaneously, global issues like climate change are in need of leaders whose priorities are focused on solutions. Taken together, opportunities abound for China, so long as the country continues to embrace, and invest in, change.

Straddling the line

China is in a unique position, straddling the line between developed and developing countries. Membership in BRICS, for example, demonstrates mutually advantageous ties with Brazil, Russia, India and South Africa. Namely, that the countries have entered an arena with common goals like technological innovation, financial integration, tariff reductions and an easier exchange of people and ideas.

BRICS, now entering its second decade, shows how new alliances are unbound by old or outdated approaches to information and investment, and that innovation is the proverbial dangling carrot. The New Development Bank, established by BRICS, approved loans worth US$1.5 bn last year. The money mainly went to finance clean energy and infrastructure developments in BRICS member countries.

China knows that it is an important partnership in which to invest. The BRICS’ share of the world economy grew from 8.2% in 2002 to 22.2% in 2015. The countries’ allegiances show that moving forward together will create mutually beneficial economic opportunities. This leaves little room for outdated bickering and stable economic policy.

What’s old is new again

China isn’t stopping there. The country continues to open up new trade routes and partnerships around the world. Another example taking place is reestablishing the 2,000 year old Silk Road route connecting Beijing and London.

Trains replace horses and the 18-day journey makes many stops along the way. The route traverses through Kazakhstan, Russia, Belarus, Poland, Germany, Belgium, France before terminating in the UK.

The passage deepens China’s commercial connections to these countries while providing opportunities for an increasingly important part of the world. Diversifying from quick, expensive air and affordable, slow ocean cargo options mean more opportunity for non-time-sensitive exports, while countries like Kazakhstan can take advantage of the access.

And let’s not forget about Africa. China has established the China-Africa Development (CAD) Fund in order to invest in infrastructure projects across the continent. As of 2016, the CAD, managed by China Development Bank, has invested US$4bn in 88 projects across 37 African countries.

The aim of the CAD is diversification. Ventures have ranged across a variety of industries like infrastructure, manufacturing, energy and mineral resources. Economic growth has long been slow in the region, but the more roads paved, the more connected African countries are to each other and the global market, the sooner it will accelerate. And China is well positioned to share in future prosperity.

The new way forward

China seems committed to loosening its protectionist agenda. Isolation is no longer the best way forward, and China is recognizing this with new relationships that build upon the potential of ready-to-emerge markets. The country is also ushering a more relaxed approach for consumers at home, with ecommerce sectors enjoying fewer cross-border restrictions, making it easier to meet China’s demand for hard to source items, such as live lobster.

When Chinese President Xi Jinping attended the World Economic Forum earlier this year, his focus was on global partnerships, especially in the face of climate change. That China is emerging a leader on that issue, while the US’ authority is receding, demonstrates just how quickly shifts can happen. Especially when countries are focused on the future and not the past.

What’s clear in these uncertain times is that countries cannot survive, or at least thrive, on their own. And with the distractions and uncertainty that dominate the American landscape, countries like China are uninterested in getting involved. Instead, they are demonstrably moving on, quite possibly relieved for the breathing room. The burden of American hegemony is loosening as the country is caught up in its own unraveling while other countries are moving quickly to reposition.

China will no doubt keep a very close eye on the U.S. But with developing countries taking giant leaps forward in education and innovation, investment opportunities abound. China is simultaneously reconfiguring its own traditionally protectionist market while emerging as a leader and friend to countries ready to make gains in the global economy.

Continue to read: Top China Provinces/Municipalities by GDP in 2016

China Ministry of Industry and Information Technology (“MIIT”) starts tightening its control on internet access market from today till 31 March 2018. Setting-up or leasing VPN is not allowed unless approved by MIIT.

MIIT will investigate IDC, ISP, and CDN services in China and punish companies with unapproved connections.

In addition to regular internet users, currently many MNCs and foreign trade enterprises depend on VPN services to access certain websites. Even the United States Consulate in Shanghai sought VPN suppliers on Weibo in August 2016:

The ban on unauthorized VPN services is likely to close down many small providers though it is hard to be effective on all, especially for paid commercial VPNs as it’s also easy to get around the blocked access. You may find this thread on Quora useful.

This is the part 1 of a series of posts that gives you insights on Chinese netizens behaviors from Sina Weibo. Part 2, Part 3, Part 4.

Sina Weibo launched its 2013 Weibo User Development Report on December 6, based on massive Weibo user accounts information and consumption behavior to offer enterprises effective data support in social media marketing.

According to CNNIC, the number of Chinese netizens reached 591 million, and mobile netizens accounted for 464 million. Sina Weibo was one of the most important social networks for Chinese netizens, and its users had been growing fast in recent years.

Generally speaking, female Weibo users equaled to male Weibo users. Male accounted for 50.1%, a little bit more than female users.

Post 90s had become the major Weibo user groups, accounted for 53%. In the past year, post 90s users grew significantly. Post 80s accounted for 37%. Weibo tended to attract young user groups.

17.4% of Weibo users were from community service industry, and many were from school, real estate and IT industries.

Most of Weibo users had high education backgrounds, 70.8% owned bachelor and above degrees.

By comparing user demographics from 2012 to 2013, Capricorn, Aquarius and Cancer users’ percentages all increased a little. Libra was still the largest Weibo user group in 2013.

Post 90s users grew from 37% in 2012 to 53%, replacing 80s to be the dominant Weibo user groups.

Most people would use Weibo client, with 76% of the total users. 29% people used web version Weibo.

And lots of people became active after 8am, Weibo online users hit several apexes between 12 to 13, 16 to 17 and 22 to 23 in a day.

Mobile payment developed quite fast as mobile netizens increased, by analyzing Weibo users, we found out that 88% of them had used mobile payment in daily life. Alipay was the most popular mobile payment method, and many would also use online banks apps. NFC mobile payment also occupied a part of mobile payment market.

80.68% used mobile payment while shopping online, besides, 20.53% used it to repay credit card.

Mobile payment Weibo users, android users were apparently higher than other groups, with 64.78%. Government, school and NGO user groups had the highest percentage in mobile payment usage, with 18.47%. And users between 18 to 28 years old were the active mobile payment user group.

Recently, Beijing police cracked down six Chinese online PR companies, which colluded with agents and web workers to delete online content illegally for cash. More than ten suspects were involved and arrested for the crime of illegal business operation, bribing non-government workers and non-government workers accepting bribes. 19 suspects had been approved to arrest, involving over 10 million yuan (USD 1.63 million).

This case was another typical work of Chinese police cracking down organized online rumor fabrication, as well as the biggest online PR company arrested after Supreme People’s Procuratorate and Supreme People’s Court announced new judicial interpretation about online cases.

After investigation of IWOM CEO and corporate representative, IWOM offered public opinion monitor and positive brand image maintenaince services for more than 50 big companies since 2007, one of the most important business was to remove content for cash. IWOM annual revenue reached 70 million yuan (USD 11.44 million).

IWOM PR director said that once monitoring department of the company found negative information about its client, they would report it to the client and decide whether to remove it or not, then settle the price. If the client want to remove the information, IWOM would ask a web worker or agents to remove the content. The price was settled according to websites and difficulty of removing, ranging from hundreds to two or three thousand yuan. IWOM PR department spent 470,000 yuan (USD 76,788) in 9 months to pay agents and bribe websites editors.

Agents all had connections with websites editors who were authorized to remove content from websites. Dozens of websites editors were involved in IWOM crime network. One editor admitted that he was just making extra money by helping “friends”, he could earn 200 yuan (USD 33) for deleting one post. He made about 30,000 yuan (USD 4,901) for working with IWOM agent.

These online PR companies usually contacted agents and web workers/editors via QQ.

IWOM PR director confessed that she removed a video exposure of private villa belonged to a person in charge of a Qingdao company. It cost 1,500 yuan (USD 245) for deleting the video on a website, in total it added up to about 30,000 yuan (USD 4,901).

Another staff at IWOM confessed, in August 2013, a real estate company’s project in Qingdao was exposed online for misleading advertisement. IWOM contacted about 10 websites then, spending 12,000 yuan (USD 1,961) in total.

.CN Chinese Domain Registration

If you want to register a China Country code top level domain (ccTLD), .CN for Chinese market, it requires the following documents:

• A completed .CN domain application form
• A copy of your  Business License (registered in China; can be Hong Kong registered commercial entity)
• A copy of your Signatory’s National ID. Signatory must be a Chinese citizen and has a valid PRC personal ID

ICP license number (Internet Content Provider) is a permit issued by the Chinese Ministry of Industry and Information Technology (MIIT) to permit China-based websites to operate in China. The ICP license numbers for Chinese websites can often be found on the bottom of the front webpage.

If Registrant is not registered in China’s MIIT ICP Recording system, domain name will be on “serverhold” status till MIIT ICP number is provided.

ICP registration can be done at www.miibeian.gov.cn or via domain registrar.

Exemption from China’s ICP Recording Number

The requirement of submitting ICP number can be exempted under the following circumstances:

1. For non website usage purpose. Applicant needs to submit “the letter of commitment of the usage of domain name for non website purpose”.
2. For website server not located in Mainland China. Applicant needs to submit “the letter of commitment of the usage of domain name for website whose server is not based in mainland China”.

So, if you want to host your website in China, you should have a registered business with Chinese government. Note that if your domain is not .CN, such as .com or .net, having a Chinese national representative in China can also get you the ICP number.

Hosting Your Website in China

No matter where you registered your domain, you must register with MIIT to get ICP number. So, ICP recording number is the key if you want to host your website in China.

Hosting Your Website Outside China

If you host your website outside China (even in Hong Kong), you may run into one of the two problems:

• Your website is completely not accessible. There is so far no guarantee your site being hosted outside China is accessible in China; this could happen even if your website has no political or pornographic content.
• Your website can be accessed by Internet users in China but very slow.

Check Whether Your Website Can Be Accessed in China

Ask friends from different cities in China to help check whether your website is accessible and how comfortable they are with the loading speed of the website. Or, you could use free tools from websitepulse.com or greatfirewallofchina.org to check:

A few other free tools include: Just-Ping.com and viewdns.info,

One thing to be clear though, passing the test does not guarantee all users in China can access your website. Some CIW reported they have to use proxy or VPN to access this blog. Users in different cities may or may not be able to access your site.

How to Prevent Your Website from Being Blocked

If you website is hosted outside China, there is no way you can be 100% sure no matter what content you publish. However, these are the best you can do to prevent that:

• Use a VPS or dedicated server with a unique IP address. On shared hosting, if someone else with the same IP address is blocked, your website is collateral damage
• Avoid publishing political content
• Avoid posting sensitive news. One way to judge whether a piece of news can be published is to go to search Chinese news website and if they published it, it’s safe.
• No pornographic content or gambling related

You can also watch this video below: