China’s financial sector used to be famous for its poor service and imperviousness to innovation. Even today, when customers go to make a transaction at one of the country’s big state-run banks, they often take a bag of snacks with them—they know they’re in for a long wait. But things are changing fast in the Middle Kingdom. A new generation of digital finance firms is taking the country—and the global markets—by storm in everything from digital payments and micro-lending to insurance and wealth management. How will China’s lumbering state-run banks react? Will tightening regulation nip this revolution in the bud?
Chinese tech giant Tencent surpassed Facebook in market value this November, and is the first Asian company worth more than $500 million. Unlike Facebook, which earns 97% of its revenue from advertising, online advertising only represents 16.9% of Tencent’s revenue, according to the company’s Q3 2017 report–lagging behind domestic competitors like Alibaba in terms of ads gain. Determined now to gain a larger slice of the digital advertising market, Tencent focuses on improving targeting and algorithms to intensify ads on its ubiquitous platform WeChat while not undermining the user experience, as well as leveraging opportunities in the company’s other products and services, including mobile games.
Historians say that paper currency was invented by the Chinese during the Tang Dynasty. Today, their descendants are taking the lead again: Young Chinese are abandoning cash. Shop anywhere in China–from a grand shopping mall to a small street vendor–and you can use your smartphone to pay. Of course, the wide acceptance of smartphones and 4G internet is one thing, the rise of fintech firms like Ant Financial is another. Yet to seriously phase out cash, authorities and professionals are pursuing something more than just QR codes: digital currencies based on blockchain technology. Despite the cracking down on unfavorable operations like ICOs, China is studying blockchain in a rather serious way.
WeChat is not just a messaging app. With nearly a billion active users, it is used to make voice calls, play games, read news, hail cars and more. With WeChat Pay, people use the app to send money and pay bills by scanning a QR code, and friends and families use WeChat to send lucky money during festivals. For many, WeChat is already indispensable. How did the company grow? What were the key decisions and strategies? In the fierce competition between WeChat pay and Alibaba’s Alipay, who will win? There are many questions about WeChat, but the app’s success is certain—for now.
Online social networks are changing Chinese professional culture—simply sending out resumes to get a job is inadequate. Compared to Americans, young Chinese spend more time networking and leverage social sites to find jobs. Recruiters are active participants in this trend. As a Shanghai-based employer says: “I don’t even call people anymore.” Instead of waiting for resumes that may contain dull business mug-shots, employers look at applicants’ social profiles, chatting to ones they find interesting and learn about their business and leisure time and maybe, if lucky, get a rough idea of their personality.
The upsurge in mobile transaction services used through smartphones is at the heart of a sudden expansion of the online financial services industry in China. This is a diverse and dynamic marketplace with investment, small-lending companies, peer to peer (P2P) lending, and most recently the emergence of the first batch of online-only banks: MYbank, 30% owned by Ant Financial (founded by Alibaba), and WeBank, which is 30% owned by Tencent. These new services provide a much-needed expansion of financial access for Chinese consumers and small and medium-sized enterprises (SMEs), that have long been underserved by the state-dominated banking system. What lies ahead for China’s online banks?
Tencent has used WeChat to create a mobile ecosystem for China, which has more smartphone than PC users. By steadily integrating value-added services into a social media app, Tencent has made it increasingly useful to both consumers and businesses. That means WeChat has more opportunities than other messaging apps to make money. In contrast to Facebook, which earns most of its revenue from advertising, WeChat monetizes by integrating online payment functions that encourage shopping through the app and selling games. In the second quarter, Tencent recorded RMB 4.5 billion in revenue from games purchased through WeChat and its older instant messaging app QQ, up 11% year-on-year.
Mobile wallets are taking off in China but it is too early to say what they mean for the use of cash and bank cards.
Big data promises to revolutionize the work of business and government, and China’s largest internet companies are leading the way
In China, LinkedIn is offering its tried and tested formula of professional networking with some unique twists.