chinese fintech goes global - piie · 18/11/2019 · especially global applications. alternative...
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Chinese Fintech Goes Global
Martin ChorzempaResearch Fellow
PIIENovember 18, 2019
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Image Source: Herb Basics Chiang Mai
“[Not accepting Alipay is] a bit like not offering air conditioning in a car. If you’re a serious player in the world of payments you cannot say ‘No, I won’t do that…” -Jacques Behr, then-head of Europe and Africa for Ingenico, 2016
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Chinese Super Apps Coming for Your Wallet
• Ant Financial has major stakes in 9 countries' local fintech firms.
• These “local versions of Alipay” have hundreds of millions of users in countries like India, Thailand, and Korea.
• Alipay is accepted in 56 markets outside mainland China and handles dozens of currencies. Tencent’s WeChat is similar.
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Internationalization Strategy
Serve Chinese abroad (domestic
market)
Take stakes/forge strategic
partnerships with local fintech
firms
Spread Chinese brand, gain
Alipay/WeChat Pay Users
Advantages of Chinese Fintech Giants:
• Connection with Chinese tourist spending
• Compelling partners for local fintech companies
• Cutting edge technology for anti-fraud and large payment volumes
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Challenges for Internationalization StrategyReciprocity and Protectionism:
• Chinese model means foreigners (even Chinese) kept out to protect local champions• Worries of end-running local financial institutions and regulations (ex: Nepal)
Fintech and National Security• Financial data is “sensitive” for CFIUS and other countries (ex: Ant purchase of MoneyGram blocked)• Relationship with the Chinese state can lead to exclusion and limited trust abroad
Localization• ”Super app” model may not work outside China (ex: WeChat fails twice in India)• Protection led to excessive adaptation for home market
Lack Advantages Key to Success in China• Established user base and trust• Market dominance in other niches
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Implications
Not just data flows: banned Chinese P2P spreading criminal activity to Vietnam and Indonesia. One
fraud funneled millions to Myanmar
militias
Data from super apps abroad would be advantage to Ant
Financial/Tencent in A.I. development, especially global
applications
Alternative model of financial & tech
development pitted against American
payment companies. Watch intersection of tech and geopolitics in digital currency