With no limits on yuan cross-border payments and thriving e-commerce and travel industries, China continues to open up for business.
Here, we take a look at China’s e-commerce and travel revolution and the critical role of payments in the continuing growth of these markets.
China’s Soaring Travel Market
New airports, better infrastructure and reduced visa restrictions have made travel easier for Chinese citizens. As a result, China has surpassed the US in becoming the world’s largest source of outbound travelers and is expected to reach over 200 million travelers by 2020.
Inbound travel to China for business and leisure has also increased, resulting in China’s hotel industry growing to $44 billion. To capture the rising demands of travelers, hotel chains such as Starwood, Marriott and boutique operators are increasing their footprint across China.
OTAs are also thriving in the Chinese market, with leaders such as CTrip, Tuniu and Alibaba’s newly minted Fliggy leading the pack.
China’s Dynamic E-Commerce Economy
China has become the world’s largest e-commerce market with Chinese consumers contributing nearly half of global online retail sales. With B2B e-commerce transaction volume growing from ¥3.3 to ¥16.8 billion from 2009 to 2015, China’s sales volume exceeds that of the U.S and is expected to grow 20% annually by 2020.
A number of factors are driving this spectacular growth. One is the increase of China’s middle class, which has reached 500 million and will rise to 1.75 billion by 2020. Increasing incomes, higher education and more sophisticated buyers, combined with the spread of government-subsidized, high-speed Internet access and Internet-connected cellphones have widened the pool of online shoppers.
Another factor behind China’s e-commerce dominance is its standardized, single-account transaction process for e-retailers. Unlike in the U.S, where major retailers operate independent e-commerce marketplaces, more than 75 percent of Chinese e-commerce is transacted through Alibaba’s business-to-consumer site, Tmall.com. Plus a majority of online transactions also take place on Alibaba’s consumer-to-consumer site, Taobao. These online marketplaces are one-stop portals where global retailers and individuals can sell products directly to the Chinese market.
China’s Payment Challenge and the Transpay Solution
While China’s travel and e-commerce markets are becoming increasingly sophisticated, one hurdle still left to conquer is payments.
Alipay and China UnionPay have helped to simplify acceptance of payments from Chinese shoppers and travelers, but payments into China – i.e. supplier payments – remains a largely unsolved challenge. Left with few payout options (until recently), travel and e-commerce brands have had to rely on payout methods like Western Union and SWIFT wires, which levy heavy transfer, conversion and interbank fees as well as undefined delivery times.
That’s why Transpay introduced Chinese renminbi payments. Transpay enables businesses to settle cross-border payments to Chinese businesses and consumers, in local currency, directly to their local bank account. By providing a seamless payments experience through local currency, Transpay is opening new opportunities for eCommerce and travel businesses looking to grow their market share in China.