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Mobile commerce booming in China

Online shopping via mobile phones has become the main way Chinese people spend their money, with a large number of those living in rural areas jumping on the mobile commerce bandwagon, according to a report by Alipay.

The Alipay Annual Spending Report is a report the e-payment firm releases each year that documents the spending trends of the Chinese consumer. According to this year’s report, mobile commerce in China is on a major upswing. In the first 10 months of the year, payments through mobile phones accounted for 54% of all transactions conducted over Alipay, while for the full year last year, mobile payments made up only 22% of total payment volume.

A graph showing the growth rate of Chinese mobile payments

Mobile commerce booming in China

This rapid growth is also seen in the country’s remote Western regions—Tibet, Shaanxi and Ningxia—which had the highest share of mobile payments in China, at 62%, 60% and 58% respectively. Mobile commerce grew in these areas due to the lack of broadband telecommunications infrastructure and the high costs of desktop computers.

In contrast, the wealthy Chinese cities of Beijing, Shanghai, Guangdong, only saw 29%, 24% and 27% of transactions conducted through mobile phones.

The falling costs of smartphones means that mobile is now the No. 1 way Chinese people access the Internet, according to a report released in July by the China Internet Network Information Center (CNNIC). According to the report, about 83% of users surveyed said they accessed the Web on their mobile phones, compared with 81% who said they accessed the Internet on a personal computer. At the end of 2013, 42% of those surveyed said they had used their phones to shop online.

In terms of raw spending power, China’s trading and consumer hubs ruled, with Guangdong province, Zhejiang province, Jiangsu province, Shanghai and Beijing combined accounting for 55% of total China-based Alipay payments. In terms of highest average spending per capita amongst Chinese cities, Hangzhou came up tops with RMB 44,197 ($7,179) spent per head. Individuals living in Yiwu county spent the most in all of China, totaling an average of RMB 65,160 ($10,585) per capita.

Rural cities in Tibet and Xinjiang were among the places where online spending is growing fastest, said the Alipay report. Over the past decade, average annual online spending in the Tibetan cities of Lhoka and Shigatse grew 600 times and 145 times respectively.

Alipay, an Alibaba Group related company, allows Chinese consumers  to pay for their online shopping purchases, utility bills, credit card bills and top up their mobile phones. In the 10 years since its launch in December 2004, some 42.3 billion payments have been settled via Alipay.  A subsidiary of Ant Financial Services Group, Alipay also lets users invest their spare cash through the Yu’e Bao financial services platform, which includes a popular money market fund. According to Tianhong Asset Management, the fund that co-manages Yu’e Bao, at the end of September, Yu’e Bao users had earned more than RMB 20 billion ($3.2 billion) in interest income since its inception in June 2013.

Alipay has over 300 million real-name registered users in China and handles more than 80 million transactions daily. Alipay’s mobile application, Alipay Wallet, has 190 million active users.

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