Daily Digital Pulse of China
Mobile Payment up 300% in China
Mobile payments in China have tripled since Q2 2012 – that’s the verdict of China’s central bank. More than 371 million transactions took place over the past year, generating over ¥2 trillion in revenue. What could be the reasons for this? For one thing, mobile payment is convenient – a user can make a payment anytime, anyplace with an Internet connection. Traditional online payment methods are not convenient – they require the user to be in close proximity to a PC/laptop at home or at work. In addition, so-called “old-school” mobile payment, that is to say using top up credits to pay online, is now seen as a relic of the previous decade. For both these reasons, mobile payments in China are expected to grow at an unprecedented rate until 2014.
Taobao in Rural China
Taobao isn’t just an urban phenomenon – it’s changing China’s rural communities too. Most of the online sales revenue generated by Taobao merchants in rural China has to do with agriculture. Nevertheless, China’s farmers turned venture capitalists pack a punch – they have generated ¥1.5bn to date. Although only 1.5 million Taobao merchants live in rural areas, the site offers them the opportunity to improve their standard of living. A farmer who is a registered Taobao merchant has access to far more potential customers nationwide than one of his or her offline counterparts. In the medium term, Taobao’s increasing popularity in the agriculture industry is expected to have a “trickle down” effect. What does this mean? As China’s farmers look for new ways to compete with their global competitors over time, e-commerce will become one of many solutions – minimal startup costs, with instant access to new markets.
Source: Beijing Times
Tencent's Q2 Blues
Tencent isn’t living up to its shareholders’ expectations – its Q2 profit fell short of the ¥4bn forecast mark, reaching only ¥3.7bn. But wait – doesn’t that mean Tencent is still in the black? What’s all the fuss about? The answer – overexpansion. Investors see Tencent’s plans to expand WeChat’s presence across Asia as a drain on the company’s scarce resources. They do not dispute WeChat’s recent successes in Mainland China – the rising number of daily users, the take-up of its online payment service, but to name a few. However, what has shareholders worried is the cost of Tencent’s international marketing campaign for WeChat, the cost of which appears to be spiralling out of control. In the past two years, it has risen from 3, to 6, to 9% of the company’s total costs. It seems that Tencent will now have to find a middle way – continuing to promote its brand overseas, whilst keeping investors on board.