China Payments

China Payments is a unique payment solution provided by Payment21® to help you conquer ‘the Great Wall’ and to connect you to 1.4 billion Chinese customers.

Chinese Market and Chinese customers’ behavior patterns

With the largest online population, China has already nourished a $190 billion (2012) e-tailing market with a 120% of compound annual growth since 2003. On Taobao a single day’s transaction volume is $4 billion surpassing daily e-commerce sales in the United States. According to Bain & company’s projection, China will surpass the U.S, becoming the largest e-commerce market this year. Considering that broad band penetration is only 30% and smartphone penetration is at an even lower percentage of 10% in China, Mckinsey & Company is expecting online sales to reach $650 billion by 2020, matching the combined size of today’s US, Japanese, UK, German and French markets.

Furthermore, China’s e-tailing market is not dominated by large B2Cs yet; instead, nearly 90% of the industry is market-place based. Based on A.T Kearny’s projection, from 2010 to 2014, China’s B2C market is expected to growth at a Compound Annual Growth Rate (CAGR) of 52%, taking part of more than 40% of China’s entire e-tailing market and C2C & B2C market is expected to grow at a CAGR of 33% respectively.

Breaking down the characteristics of online shoppers in China, Mckinsey & Company finds that even though in lower tier cities people generally also have lower income, the amounts they spend online is about the same with that of consumers living in higher tier cities, and more than 44% of online shoppers make their purchases on overseas websites.
On the other hand, China’s shoppers are not big fans of credit card at all; the cash payment method is still the most popular payment option in “Internet transactions” due to the inherent cash based culture.

Suitable consumer goods for e-commerce in China

In general, almost everything can be bought online in China, even the pre-decorated Christmas trees. The dominant categories are clothing, electronics and cosmetics. Recently, as the purchasing power of Chinese customers have been increased significantly as well as the raising concerns regarding food securities, Chinese customers are purchasing more luxury items and baby formulas from overseas websites. In contrast to the West, books, music and DVDs are less important because they are widely available for free as counterfeits or to be downloaded. iTunes, for example, does not sell music in China, only apps such as games, e-magazines etc. Similarly, travel has yet to reach the same vast significance as it has in other markets.

According to Mckinsey & Company’s recent research, apparel, recreation and education, and household products are the three largest product categories in Chinese e-tailing. They collectively account for 70 percent of online consumption. Transportation/communication and health-care/personal products are the next two largest categories, accounting for a bit more than 10 present each.

Above all, Chinese customers know what is produced in their own countries and exported worldwide and are reluctant to buy product which is obviously ‘made in China’. A product which is foreign produced has foreign design work, or carries a foreign brand name is appealing to Chinese shoppers because they can leverage their social statues with it. Moreover, Chinese customers are heavily relying on social media, word-of-mouth and friends’ recommendation, comparing to shoppers from other countries, for their purchasing decisions. Therefore, it is of utmost importance that you offer a solid product and build a credible brand.

International merchants and ‘the Great Wall’

Thousands of international merchants face challenges to reach Chinese customers. For mortar-and-brick store owners, miscellaneous registration procedures and strict capital requirements create almost impassable barriers to enter into China’s market.

For e-commerce businesses, processing payments from Chinese online shoppers is not an easy task either. Since credit cards are still not pervasive among Chinese shoppers, most of online shoppers are relying on third party payment platforms and online banking transfer. However, these third party payment platforms are designed for domestic merchants by nature, and banks offering online banking transfer services generally require merchants to negotiate with them face to face, which could be extremely cumbersome and costly for merchants.

On top of these barriers, there are even more hurdles for merchants to overcome in order to enter into China’s market, such as the significant culture differences, language barriers, tracking shipments and dealing with refunds etc.

Payment21®’s China Payments is designed for merchants to solve issues, such as processing Renminbi (RMB) payments, and we will help you build up a bespoke Chinese-shopper-friendly payment front desk.

Ease of Use with Low cost

Payment21® understands that merchants want clear and effective simple management tools to control costs with no hidden fees and easy yet quick access to revenue from anywhere and at any time. With our unique solution, once a merchant opened an account with Payment21®, we are able to connect you with 790 million Chinese online shoppers immediately. Additionally, our solution also has following advantages:

• Receive payments instantly and managing your account in real time.
• No requirement to open an entity in China.
• Enable merchants to process Renminbi (RMB) payments, settlements in USD, Euro and Swiss Francs.
• No currency conversion issues, shoppers and your business interact seamlessly.
• No third parties involved in the transaction, significantly lowered fees.
• Anti-fraud system protects you from fraudulent transactions.

Payment21® welcomes all types of merchants, no matter you are an independent designer or a giant corporate.

Request for more information about China Payments here.

Sources: Mckinsey &Company Global Iinstitution (China e-tailing report), FIDUCIA (China Focus Edition 2), EU SME Center (Selling online in China)

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