Kuala Lumpur, May 19 – China\u2019s consumers are by no means the wealthiest in the world. But they are years ahead of their counterparts in many developed economies in terms of how they shop and pay for what they buy \u2013 and they are revolutionising the way consumer finance is conducted in the world\u2019s second-biggest economy.\u00a0<\/p>\n
Like so many of the changes sweeping China, the uptake of internet and digital technologies has happened with head-spinning speed.\u00a0<\/p>\n
As recently as 2000, a mere 1.7 percent of mainland Chinese were online. By December last year, that number had risen to 53.2 percent, or more than 730 million internet users. \u00a0Visit any Chinese city these days, and you will find pretty much everyone toting a smartphone or tablet \u2013 or both. China\u2019s e-commerce sales have soared from practically zero in 2003 to nearly USD 600 billion in 2015, and now top those in the United States. Alibaba\u2019s annual \u201cSingles Day\u201d shopping event generated a massive USD 17.8 billion-worth of sales on its online marketplaces last November, up 32 percent from a year earlier.<\/p>\n
Put another way, mainland China\u2019s consumers \u2013 like those in Malaysia and many other Asian nations — have gone from (nearly) no-tech to high-tech within just a few years, largely bypassing clunky fixed-line telephony to leap into a world where and online shopping smartphone ownership have become the norm.\u00a0<\/p>\n
This transformation is explained by a powerful combination of factors.<\/p>\n
First, mainland China\u2019s retail and telecommunications networks \u2013 again, like those in other developing economies \u2013 were for decades underdeveloped and inconvenient. So China\u2019s consumers eagerly embraced the speed and choice that the internet and mobile phones brought to buying clothes, hotel stays or movie tickets, and swapping shopping tips with their friends.\u00a0<\/p>\n
By now, a generation of Chinese has grown up with a different concept of \u201cconvenience\u201d: Residents of, say, Shenzhen or Guangzhou are perfectly likely to buy items via the smartphone in their pocket, rather than walk one block to the store that stocks them.<\/p>\n
This is the world that anyone doing business in China needs to adapt to: an e-commerce environment that is one of the most developed in the world, and that is growing rapidly. Research company eMarketer estimates that China e-commerce sales will top USD 2.4 trillion by 2020. Already, 55.5 percent of that is done via mobile devices; by 2020, that will have risen to 68 percent, according to eMarketer.<\/p>\n
Meanwhile, the mainland authorities want to continue to develop the Chinese economy, and have supported the build-out of internet-related technologies.<\/p>\n
All this has massive implications for the financial and e-commerce sectors in China, which have raced to adapt to Chinese consumers\u2019 ravenous appetite for digital innovation. Just as buying behaviour has changed from traditional over-the-counter to online\/mobile, so too financial interaction is rapidly becoming paperless, wired and digital.<\/p>\n
Alibaba, for instance, has capitalized on the popularity of its own online marketplaces by creating its own payment system, Alipay. In 2015, Alipay had 451 million active users conducting on average 153 million transactions per day. By comparison, PayPal\u2019s 180 million active users conducted just 16 million transactions a day.<\/p>\n
And Tencent in 2014 set up an electronic wallet \u2013 which allows people-to-people payments via mobile phones \u2013 for users of its massively popular social messaging apps.<\/p>\n
The uptake of such technologies has been immense.<\/p>\n
Within just 72 hours of ApplePay\u2019s launch in mainland China in February, three million payment cards had been registered to the service. That\u2019s three times the total registered in the US. More than 410 million Chinese now regularly use e-payment methods — nearly 90 percent of them via mobile devices \u2013 according to official data. \u00a0<\/p>\n
Traditional banks also are responding to China\u2019s e-commerce\/e-payment ecosystem, and are rushing to introduce new digital tools for their customers.\u00a0<\/p>\n
Virtual teller machines, for example, allow customers to interact with bank staff by video, scan documents and provide e-signatures, meaning that things like opening an account becomes simpler and quicker.\u00a0<\/p>\n
Mobile apps are increasingly common and making it easier for customers to check their accounts or make transactions, wherever they happen to be.<\/p>\n
Thumbprint ID and voice-recognition technologies are already available and will before long be commonplace, adding an extra layer of security and convenience for online and mobile customers.<\/p>\n
\u201cBricks and mortar\u201d bank branches and people-to-people interaction is still highly valued, although their role is rapidly changing to focus on meeting customers\u2019 wealth management and more complex needs. Paperless, branch-less \u201cclicks and apps\u201d banking allows banks to service most of their customers\u2019 transactional needs more efficiently and quickly, around the clock — whether they are in Shenzhen, Shanghai, rural Sichuan, or in Malaysia.<\/p>\n
Few people could have imagined the changes sweeping China\u2019s retail and banking scene just five years ago. The next five years are sure to bring still more change. Banks and retailers will need to be nimble, and anticipate the future needs and preferences of China\u2019s 1.38 billion shoppers. Those who get it right will find the size of the prize is immense.\u00a0<\/p>\n
Malaysia is also heading in the right digital direction<\/p>\n
Like China, Malaysia is using digital technologies to drive economic growth.\u00a0<\/p>\n
\u201cLast year, the #MYCYBERSALE 2016, Malaysia\u2019s biggest online sale event organised by the Malaysia Digital Economy Corporation (MDEC), saw participation increase to 607 sites, 54 percent more than in 2015,\u201d said Mukhtar Hussain, Chief Executive Officer of HSBC Bank Malaysia Berhad.<\/p>\n
This initiative, which is in its third year, aims to encourage small and medium-sized enterprises to embrace e-commerce and boost innovation while stimulating the domestic e-commerce market. It achieved RM211 million in gross merchandise volume in 2016, a 79 percent increase from last year.\u00a0<\/p>\n
The success of the initiative shows that Malaysians are embracing the e-commerce culture. \u201cWe can definitely see a shift in the way Malaysians are shopping. It is good to see the e-commerce industry and digital economy growing so steadily,\u201d Mukhtar commented.\u00a0<\/p>\n
To highlight Malaysia\u2019s drive in digital technology, Malaysia earlier this year launched the world\u2019s first Digital Free Trade Zone, an e-hub established by Alibaba Group and MDEC. This initiative aims to allow small and medium-sized enterprises to capitalise on the exponential growth of the internet economy and cross-border e-commerce activities.\u00a0<\/p>\n
Mukhtar added that Malaysia will tap on the expertise of Jack Ma, Alibaba\u2019s founder and executive chairman, who is also digital economy adviser to the Malaysian government, and at the same time learn from the technological advances that Chinese companies such as Alibaba, Tencent Holdings, Baidu Inc. and Huawei Technologies have made.<\/p>\n
According to MDEC, the new Digital Free Trade Zone will boost the e-commerce roadmap that Malaysia introduced in 2016. This aims to double the nation\u2019s e-commerce growth and increase the GDP contribution to RM211 billion (about USD 47.68 billion) by 2020. It also has the potential to double the growth rate of Malaysian small and medium-sized companies\u2019 goods exports, and to create 60,000 direct and indirect jobs by 2025.\u00a0<\/p>\n
\u201cIn 2016, 20.4 million people were accessing the internet in Malaysia. That figure is projected to grow to 24.6 million in 2021.Increased internet access, coupled with increasingly widespread digital technology, is critical to amplifying productivity, innovation and living standards across the wider economy. Malaysia has realised this early, and is well on its way to creating an innovative and vibrant digital ecosystem,\u201d concluded Mukhtar.\u00a0<\/p>\n
\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
Kuala Lumpur, May 19 – China\u2019s consumers are by no means the wealthiest in the world. But they are years ahead of their counterparts in many developed economies in terms of how they shop and pay for what they buy \u2013 and they are revolutionising the way consumer finance is conducted in the world\u2019s second-biggest […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[],"class_list":["post-520","post","type-post","status-publish","format-standard","hentry","category-features"],"_links":{"self":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/520","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/comments?post=520"}],"version-history":[{"count":1,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/520\/revisions"}],"predecessor-version":[{"id":5967,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/520\/revisions\/5967"}],"wp:attachment":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/media?parent=520"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/categories?post=520"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/tags?post=520"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}