Europe and China Partner to Provide Mobile Payment Solutions by Alipay
Not quite a month we woke up with the news that two technological giants had joined forces in creating an alliance with huge chance of success. The alliance between Ingenico Group and Alipay is focused on payments innovation as part of a wider international push, but is also a recent demonstration of the growing momentum of Chinese companies in Europe.
Over recent years, Chinese ambitions in Europe are clearly visible: just in 2016, Alipay has forged alliances with Uber app and Wirecard to offer mobile payments services around the World.
The alliance is based in European mobile payments
Ingenico Group is a french company specialized in designing a wide range of payment solutions, whatever the sales channel or payment method is chosen, according to three main needs that merchants and consumer ask: a secure, easy and seamless experience.
In recent years, China has created a vast and well integrated digital ecosystem in which highlights Alipay– a Chinese equivalent to PayPallaunch by Alibaba– which is already China’s leading third-party online payment solution with no transaction fees. The company already has more than 400,000,000 active Users.
Although there are many reasons behind this alliance, the clear purpose was to tap into the huge Chinese tourist flow in Europe. As we wrote in our previous article “How to Acquire Chinese Tourists through Digital Marketing“, the Chinese tourism consumption is already estimated to be the highest in the World. Moreover, Chinese tourism market will keep growing even faster: in year 2019, estimations says that consumption will reach US 264 billion dollars.
The motivation to exploit the partnership is shared: on the one hand, Europe has become the major vacation destination by a sector of the population with high standard of living; on the other hand, Alipay seeks to exploit the existence of more than 120 million Chinese tourists arriving in Europe every year and an approximately cost of $ 875 on average, while offering a payment experience nearest to their day to day.
Chinese tourists in Europe will be able to pay via Alipay App at any store that uses the Ingenico solution
The announcement not only underscores the growing relationship in business between two increasingly interconnected areas, but also the enormous benefits that such collaboration can mean to both. With such a perspective, it is not surprising the happy ending. As Philippe Lazare, Chief Executive Officer of Ingenico Group said,
“We are very excited to partner with Alipay and contribute our unique omni-channel expertise, products and services to help them optimize the user experience and boost sales all over the world. Their choice for Ingenico is a tribute to our high success rate and ability to meet even the most demanding customers’ requirements.”
Chinese tourists are accustomed to using electronic payment methods, an innovation that fails to catch on among European citizens. Presumably, this cultural difference has become a barrier that discourages expenditure among Chinese tourists. As Jacques Behr, Ingenico’s executive vice-president for Europe and Africa said,
“Payment becomes a friction for business so we are removing this friction by allowing the retailers to capture sales to the Chinese tourist population.”
The measure therefore seeks to stimulate Chinese people expenditure in their major holiday destination, but also tries to take advantage of the huge market Alipay already has in China: more than 450 million users liable to become target audience, and a market share in mobile payments in China higher than 80%. As they themselves spelled out,
“We are building international business step by step. There is much still to do with our customer base, and is still expanding.”
Such collaboration not only benefits the Chinese people, but also means a qualitative leap in technological enjoyment for Europeans. The alliance seeks to provide to European online retailers and to customers the possibility to pay and accept payments through Alipay´s eWallet through some marketplaces. An excellent way to boost e-commerce and sales in China and Europe.
Although the operation has already begun, both companies estimate that Alipay won’t be fully operational in Europe yet.
Just to start
While Alipay makes its movements, the rest of the world watches. Only companies that have a deep understanding of Chinese market can cope with the changes that are to come.
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China And The Ripple Effect On The Global Stage
What are the risks that could arise from the economic slowdown in China? How does China affect to other countries? Since starting its market reforms almost thirty years ago, China´s currently economy cannot be ignored.
Even if China has not left behind its centrally-planned economy yet, it has introduced some big measures to turn into a market-based country. Such efforts have resulted in a huge GDP growth and has lead the country to reach all the Millennium Development Goals by 2015.
Currently China has become the second largest economy in the world, but deals the first in the ranking by the quantity of goods and services produced. Moreover, according to the expectations published by the International Monetary Fund (IMF) for the present year, China will be responsible of the 18% of the entire World economic activity.
If to all this we add the expectations of its huge and richer population, its rapid change on production models and its consequent role on the World stage, we can conclude that the importance of China in the world has become a matter of vital importance in today’s global interregional balance.
But its big hits cannot make us forget that China still remains a developing country, and as we have mentioned before on our article “Ten Challenges on Chinese Future“, not only market reforms are incomplete, but also it has huge challenges ahead which must start to face.
After the financial crisis of 2008, neither the business community nor Governments have fully restored their confidence on the global economy. The doubts about the economic bonanza and the future role of Western countries have underestimated the increasing influence capacity of China in the international arena, while doubts have generated certain fear of a possible blowout of the country.
Trade effects are a game changer
The channels through which China affects the global economy can be summarized on:
- Decrease in trade and exchange rates
The Chinese leadership on trade makes hard not to affect global demand. China’s import volumes keep growing, but less than expected. This becomes a huge problem to those countries dependent on Chinese exports: raw materials are highly susceptible of the slowdown.
This effect creates a bidirectional paradox: China affects the world as much as the world affects China.
Although there has been much speculation about a possible future depreciation of the RMB in order to relaunch Chinese exports, in the team we believe that a currency war is currently off the table.
- Oil lower prices and commodities
The latest drops in oil prices are caused by the lack of confidence on Chinese economy. Its weakness has led to enormous imbalances on exporting countries of crude oil and raw materials: Russia, Brazil, OPEC countries and the U.S. still suffer for it. China’s falling demand has greatly contributed to the new situation and with it, deflation has knocked on the door.
However, according to the latest analysis made by the IMF, the negative effects are supplemented by growth in the purchasing power of the population. The Organization still thinks that lower prices on commodities have a positive effect on general economy.
- Monetary and inflation policies
The recent affordability of RMB should not make us forget that Chinese weakness can lead to a global new paradigm surrounded by deflation and debt. Once again, lower prices stimulate consumption, and this leads to boost demand, bigger sales and prosperity. Lower prices have become the stimulus of global economy.
- Cultural hegemony
Even if the Western countries have underestimated China’s rise, the consequences can already be seen. Although Cultural power follows to Economy and Politics, China already shows its increasing political and cultural power on international arena: mandarin language and Chinese diplomacy have become a key to Government policy.
Its empowerment is more visible in East Asia, but runs fast around the rest of the world. We have started living in a China-centrism, in which global power gravitates around Chinese policy.
Nowadays, confidence in the global economy is vital for prosperity but unpredictable. The ripple effect that is lived in the global area, is greater than ever.
Understand this huge spider web which is China, seize opportunities to launch your business and boost your sales, are our goals.
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