China is in the midst of a mobile commerce boom, according to a new report from Alipay, the Alibaba-affiliated payments service that handles more than 80 million transactions per day.
The company‘s latest report found that 54 percent of the number of transactions on its PayPal-like service during the first ten months of 2014 were from mobile devices. That’s a huge increase on last year, during which mobile accounted for just 22 percent of all payments.
This year saw mobile internet access overtake desktop access for the first time in China, but interestingly Alipay — which has over 300 million registered users and more 190 million downloads of its wallet app — found differing behavior when comparing urban and rural parts of the country.
Mobile payments were relatively low in affluent cities like Beijing, Shanghai, and Guangzhou (accounting for 29 percent, 24 percent and 27 percent of transactions respectively), but in more remote areas like Tibet, Shaanxi and Ningxia, mobile accounted for 62 percent, 60 percent and 58 percent of transactions respectively.
While consumer spend in these mobile-focused provinces clocked incredible growth — it was up 600 times and 145 times in Tibetan cities Lhoka and Shigatse — more than 55 percent of Alipay’s total transactions came from five of China’s most developed provinces: Guangdong, Zhejiang, Jiangsu, Shanghai and Beijing.
Indeed, the highlight figures account for the sheer numbers of transactions. When it comes to the overall volume of sales processed via mobile, the figure is almost certainly below 50 percent. Mobile accounted for 43 percent of the record $9.3 billion sold on Singles’ Day 2014, which may be higher than usual given the amount of promotion and hype behind the event.
Smartphone shipments are slowing in China as adoption of devices nears saturation point in urban areas, and that is coaxing China’s largest tech firms into addressing the technology gap in rural areas. Tencent, for example, last week showcased its first ‘mobile internet village’ in China aimed at bringing new citizens online.
In one example of the program, the company is providing smartphones and free WiFi for 460 households in the Tongguan village in Guizhou province in Southwest China.
Affordable mid- and low-range phones have propelled Xiaomi to number one in China’s smartphone rankings, and third worldwide, while also emphasizing that China’s next smartphone boom will come at the lower-end of the price scale as technology reaches new demographics.
There’s huge potential in that connectivity. A short Alibaba documentary shows how smartphones can provide access to a more varied selection of products and unearth business opportunities in more remote areas where there are fewer retailers and limited access to supplies.
Alibaba does, of course, have a vested interest in telling this story, since its Taobao and Tmall marketplaces are the primary e-commerce options in China — indeed we highlighted the importance of both mobile and less developed cities for Alibaba following this year’s Singles’ Day. Nonetheless, the core findings of Alipay’s report make for interesting reading into how the dynamics of China’s tech space are shifting as mobile internet access grows.