China in your hand... is London missing a trick on Alipay?
Jimmy Robinson, Co-Founder of PingPong Digital, examines how UK business could benefit from the rising number of Chinese tourists in the UK.
People in the Capital are often at the forefront of adopting the latest technical innovations, from spearheading ownership of smartphones to contactless payments. Contactless cards, in particular, have been accelerated by Transport For London’s evolution of the Oyster card system to accept them for travel.
As a result, the UK is frequently cited as one of heaviest users of cashless payments in Europe. However, there is one payment innovation where the UK is resolutely behind the curve when it comes to rollout, and that is Alipay.
Alipay is the Chinese mobile-linked payment service which was established by Alibaba in 2004. By 2013 it had become the most used mobile payment service in the world, overtaking PayPal. In China alone, it has 700 million users, and stories about the widespread integration of mobile payments within the country are everywhere.
Some predictions have Chinese mobile payment use swelling to nearly four in five smartphone users by 2021, compared to 31% of users in the USA and 22% in Germany.
Alipay’s expansion outside of China has been much less speedy. Within the Chinese borders, Alipay benefits from the ‘app within an app’ functionality of its integration within Alibaba's owned platforms, in particular, e-commerce apps such as Tmall and Taobao (the Amazon and eBay of China).
Alipay began to roll out in the US in 2017, spurred on by significant inbound Chinese tourism, and grew to four million US retail locations in that year alone, before adding 35,000 more last year.
This may be a drop in the ocean when it comes to total US exposure, but these are clustered at the moment in areas heavily frequented by tourists and are set to expand beyond.
So, is London missing a trick? VisitBritain recently stated that bookings from Chinese visitors are up by a quarter year on year for the first half of 2019, and China has now entered the UK’s top ten most valuable inbound tourist locations. It makes sense that if these people are likely to visit, we should make it easy for them to spend while they’re here.
Chinese tourists spend more than three times the average for foreign visitors to the UK.
Just last year, Alipay announced rollout in 18 European countries, and staged its UK launch to coincide with National Day Golden Week in October; seven days of public holiday during which many Chinese travel abroad. Initially, the service’s footprint in the UK consists of high footfall tourist destinations, developed through a deal with the Merlin entertainments brand. It is also looking to expand through restaurants and venues in Chinatown and other popular tourist destinations.
This expansion may seem relatively slow for a tech giant, but in a time when the UK economy is looking to bolster its foreign links as a matter of priority, the capital and beyond will be keen to keep its overseas visitor numbers high and maximise their spend during their visit. This raises two issues: access to the service itself, and how the country and the capital can best attract those visitors above other global tourism hotspots.
Access is slowly growing, and Alipay competitors are also seeing the opportunity to expand in the UK. WeChat Pay launched in Heathrow last Autumn, and Union Pay has launched the UPayCard for business and personal travellers. This means options are slowly growing, but deals are there to be done to speed the process along.
Which leads us on to engagement. The UK is already high on many Chinese travellers’ lists as a holiday destination. But keeping the country in demand, and for brands, letting potential customers know that payments will be easier than expected when they arrive is quite another challenge.
The issues of western companies trying to engage with Chinese consumers are well documented; Chinese social networks are not quite so easily accessed as simply sponsoring a tweet – at least not if you plan on building any kind of long-term value or affiliation in the region.
We always advise our clients that effective planning is key. Prices for engaging through ‘social media’ in the region can be higher than many expect, especially at high-value times like Golden Week, Singles Day, or Chinese New Year.
Moreover, consumers in the region are not easily swayed with a single branded post. For British brands looking to truly build engagement with Chinese audiences, we would always recommend a solid dedicated social plan and strategy, rather than a ‘spray and pray’ approach to engagement.
If Britain is looking to get these Chinese tourists to keep coming back for more, whether in the Capital or beyond, it needs to demonstrate this desire and make it not just easy for sino-tourists, but particularly appealing.
Building acceptance of their chosen payment methods like Alipay and a dedicated and ongoing presence in their favourite channels should encourage happy travellers back to the UK to take in more of the country’s destinations.