Weekly Briefing: Mobile payments, O2O, and the IoT economy
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This week’s briefing starts off a bit personal. I’ve been in and out of Chinese media and tech since 2010. Since I joined TechNode last November, I’ve told many people the same thing: There’s no bad time to get involved in tech in China. The rate of change and adoption of this change is so high that no matter when you start, you’re not going to be too late because there’s always going to be something exciting and creative coming down the pipe. The three trends I’m talking about today are great examples of this
Much of what we see happening in China now is directly enabled by the number of people using mobile payments (mostly Alipay and WeChat). Taking cash and physical credit cards out of the equation have not only reduced purchase friction but also allowed internet technology to become embedded in our everyday life. It started off slowly with WeChat’s hongbao and the pre-Uber subsidy war, both requiring users to link their accounts. Fast forward to today and China has become the world’s number 1 place for mobile payments.
Technology is quickly addressing some of the major problems that China has faced for some time. For consumers, that problem is convenient access to goods and services. Even before mobile payments took hold, China’s entrepreneurs were looking for ways to solve this very painful problem, from tuangou and food delivery to cleaning services and at-home manicures. While mobile payments certainly reduced the friction and chances of fraud, these O2O services could still work because there was still someone who could receive money.
The newest O2O business models work because they fundamentally do not require any person-to-person interaction, much less the exchange of physical money. Instead, I can scan a QR code, register, pay a deposit, and start enjoying the benefits of, let’s say, renting a bike or a power bank. While this is what is being called the “sharing economy”1, this is actually laying the ground work for an IoT economy and the increased implementation of artificial intelligence.
There is no bad time to get into tech; you just have to make sure you’re ready to keep up.
- Incorrectly, I believe, as you are not “sharing” other people’s property as with ride-hailing. Rather you are renting a businesses property for a short period. Once you are done with it, someone else may use it. If this is the sharing economy, then so is public transportation, infrastructure, airline and train seats, restaurants, hotels…. ↩︎