Mobile spending picks up speed in China

Mobile spending picks up speed in China

Shopping via mobile phones is fast becoming the main option for spending money in China, with transactions from the not-so-developed western region of the country being the driving force, a report said on Monday.

The report, prepared by Alipay, the payment arm of e-commerce giant Alibaba Group Holding Ltd, said more than half of all online payment transactions were made with mobile phones so far this year.

Payments through mobile phones accounted for 54 per cent of all transactions conducted over Alipay in the first 10 months of the year while it accounted for 22 per cent of the total payment volume last year.

Inland regions in the western part of the country are fast becoming the powerhouse that is driving mobile shopping. Tibet autonomous region, Shaanxi province and Ningxia Hui autonomous region enjoyed the highest share of mobile payments during the first 10 months of the year, at 62.2 per cent, 59.6 per cent and 58.3 per cent, respectively.

In contrast, the well-developed cities of Beijing and Shanghai, and Guangdong province, only saw 29 per cent, 24 per cent and 27 per cent of transactions conducted through mobile phones.

Experts said the lack of broadband telecommunications infrastructure and the decreasing cost of mobile phones have been the main growth drivers for mobile e-commerce in the inland regions.

"As mobile penetration in rural China far outpaces fixed-line Internet penetration and with continued upgrades to mobile network connectivity and the popularity of new devices, it is natural that consumers are rapidly taking up mobile shopping," said Burghardt Groeber, an e-commerce expert and vice-president of greater China for enterprise software provider hybris AG, a division of Germany-based software giant SAP AG.

According to a report published by hybris earlier this year, the size of the mobile shopping market in China is expected to reach 1 trillion yuan (S$212.79 billion) by the end of 2017 while the size of the entire online shopping market in the country in 2013 was 1.8 trillion yuan.

Despite the growing popularity of mobile shopping in western China, it is still the cities in the developed eastern regions that rank higher in terms of absolute amount of shopping online.

According to Alipay's consumer spending report, online shoppers in Guangdong, Zhejiang and Jiangsu provinces, Shanghai and Beijing combined have accounted for more than 55 per cent of total China-based Alipay payments over the past decade. The number of payments that have been settled by Chinese people through the Alipay platform since its inception in December 2004 is about 42.3 billion (S$55.67 billion), it said.

People living in Hangzhou, Zhejiang, where Alipay's parent company Alibaba is based, ranked top in annual spending per capita in 2014 with average spending of about 44,197 yuan per head.

However, small cities showed the strongest growth momentum in online spending. The Alipay report said cities in the remote Tibet and Xinjiang Uygur autonomous regions were among the places where online spending is growing fast.

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