Why China Is Leading the Fintech Race


  • Why China Is Leading the Fintech Race - Knowledge Wharton

    But there are actually seven tech firms in the global top 10 now — the other two are Chinese: Alibaba and Tencent. In China, everyone knows “BAT” (Baidu, the Chinese Google, along with Alibaba and Tencent). There is much less BAT buzz outside China, for two reasons.

    First, the Chinese government’s “great firewall” around the internet not only restricts the flow of information in China, it also helps protect Chinese firms from international competition. Second, the Chinese tech companies have tended to be rapid adopters and adapters of innovations generated elsewhere rather than breakthrough inventors themselves.

    The first point continues to hold: “techno-nationalism” is a new term of concern in the West when it comes to China’s aspirations to chart its own course to global prominence in technology, by protecting the domestic market and always with a close eye on the IP of others.
    Knowledge@Wharton High School

    But the second reason for discounting Chinese tech — that they are incapable of creating true innovation — is rapidly receding as a viable criticism. Anyone who ignores Alibaba and Tencent does so at their own peril because of real innovations they are implementing in China, and what they hope to do globally tomorrow.

    When it comes to Alibaba, think less eBay meets Wal-Mart and Amazon, and more fintech. For Tencent, think less social media and e-sports and more fintech.

    Four hundred and sixty-nine million people made online payments in China in 2016. A larger number used phones to pay in offline retail stores. For comparison, the user base of Apple Pay, by far the dominant American player, was 12 million in the U.S. last year. I am now used to seeing people in China paying for everything from taxis and coffee to clothes and meals with either WeChat (Weixin) Pay or Alipay (Zhifubao) — another world from the China of the early 2000s when you had to pay hotel bills with a series of 100 RMB notes.

    No one knows who will win this global competition, but the recent history of digital payments underlines a key fact. The extraordinary innovativeness of the U.S. tech sector is justly acclaimed. However, it is no longer immune to the forces of globalization and global competition that have disrupted so many other industries in the past few decades.

    #GAFA #TAB #Chine #Fintech #Alibaba #Tencent #Baidu