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No Credit Card? No Problem. Chinese Online Purchasing Keeps Growing



By Frank Reed.

Since I learned a week ago about the Chinese and their dedication to workarounds regarding blogging, I have looked for other things that this ancient culture is doing to move itself into a modern economic powerhouse. I used to think that it would be best for my kids to learn Spanish as a second language here in the US but based on what might be coming down the pike from Asia, they may need to know Mandarin to compete in the future global economy.

At Silicon Hutong the author of a post on July 3 (I can’t find his / her name anywhere….hmmmmm…. I wonder why?) examines an interesting phenomenon that we in the US probably can’t even fathom. It’s the growth of e-commerce without the widespread use of credit cards. I started scratching my head wondering how in the world this could even be possible but then I thought about the fact that I am just spoiled here (and because of the “magic” of credit cards carrying more debt than I should!). As I learn more about the Chinese culture moving toward a 21st century online life it is fascinating to see the ingenuity and shear “can do” attitude that this culture exhibits.

Rather than bemoan the fact that they are hindered by the lack of credit card use in the country (only 1 in 20 adults even has one or just one in every 3.5 internet users) but the author points out that some observations of this apparent obstacle miss the mark:

No credit card, goes the thinking, no electronic retail. The ubiquitous Shaun Rein, CEO of Shanghai-based China Market Research Group, echoes this sentiment in an otherwise excellent editorial in Forbes magazine:

“Our findings suggest it is a lack of credit cards and other payment options, rather than a cultural aversion to buying online that has curtailed the growth of e-commerce in China.”

About half-right, I would say. The cultural aversion issue is a canard, and we will take that up in another post.

Personally I am looking forward to the other post but back to the story. To cut to the chase the Chinese have utilized one of the methods that we, I, America would find antiquated and probably say “Aww, isn’t that cute?”…….it’s good old fashioned C.O.D. (cash on delivery). I can’t remember the last time I did anything COD other than buying at the point of purchase. But what I do or what the rest of the world does is not the matter here. What does matter is that this huge market is finding ways to buy online despite not having credit cards. Maybe it’s the Law of Large Numbers in effect but the growth potential in China simply is staggering compared to anywhere else on the globe. In addition to the potential there is the desire. That is pretty cool.

Of course, there are inconveniences but they look worse when taken in from a Western point of view. This culture has been without so much that we call “normal” for so long that they are figuring out how to get things done. Banks are suspect of fraud online with credit cards so their reluctance to issue the cards is heightened. There are plenty of obstacles that, if removed, could open the floodgates but that may not happen. Until then I intend to keep a pretty close eye on the innovation and desire of the Chinese to compete with and benefit from the world economy that exists online.

As a marketer are you thinking “outside the box” to service the supposedly unserviceable right here in your own backyard? While we may not be looking to do business in China we should take lesson from them as to getting creative and maybe tapping some under served revenue streams.  In this day and age of economic downturns and gloomy forecasts it looks like the truly savvy will come out on the other side as a winner.

  • http://www.jozsoft.com/blog/ Joe Hall

    Why don’t they just use payment gateway systems like Paypal to interface with their bank accounts? Or better yet they could use virtual currency accounts. CODs seem *really* old school. I mean brand name catalogs don’t even use them anymore.

    Joe Hall’s last blog post..Top 5 National Real Estate Franchise Web Sites

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  • http://foolishmumbles.com Top Rated Digital

    Makes perfect sense really. Sometimes a low tech solution is the right solution, even in a high tech world. I didn’t even realize COD was an option on most commerce sites.

    Top Rated Digital’s last blog post..The Top 10 Digital Cameras Ripped Apart

  • http://www.seopositive.com_search_engine_marketing.htm Search Engine Optimisation

    I suppose people now use their credit cards though, as thats the only place that they have got the money, aas the credit crunch draws in harder.

  • http://www.netage.co.za Goran Web Design

    Here in South Africa we dont recommend payment gateways as often as we could and rather recommend that visitors pay through traditional payment processes. In each country we do business different way, so we understand.

  • http://www.futurefactory-software.com Warenwirtschaft

    Here in Europe Cash on Delivery is used quite often as well. Of course many people have credit cards but they dont trust the internet companies. So COD still has its fair market share.

  • http://www.kangye.org/ 康爷

    The online purchasing in China is more and more popular. And Ma-Yun,the CEO of Alibaba.com(owns taobao.com) ,once said the C2C in China is in advance in the world.

  • http://www.AllisonReynolds.com Allison Reynolds

    The “why don’t they” thing always bothers me…. meeting your market with “why don’t we” is surely the way to answer

  • http://bestyogaworkout.com Beginner Yoga Exercises

    China is becoming a powerhouse in the global economy and we might soon be seeing a change in the way we do business due their growth.

  • http://mp3leben.com Tiffany

    That’s interesting an maybe some of us think that this payment system is unusual. But as Yoga Exercise said, China is powerful in world economical. It is not impossible that soon the traditional system will be back and accepted by the world.

  • http://symbiancorner.blogspot.com Symbian

    In many other countries people don’t relay on credit cards too in e-commerce. They use online payment systems with prepaid voucher activation.

    Symbian’s last blog post..Nokia S60 Symbian Windows Live client available in Europe

  • http://www.greatpriceshere.com Nicole Price

    You may also want to get one of your children to learn Hindi! That is another market that is growing and there is no problem of credit cards there! Credit card as a product is one of the fastest growing businesses in India today.

    Nicole Price’s last blog post..Top Selling Albums of All Time

  • http://www.poems.md Ashley

    Hindi is really a great language but it is too difficult

  • http://articlewonders.com Raj Krishnaswamy

    The Chinese are using cod does not mean we should go their route. Going back to COD is like saying start pedalling to work, because gas prices are high. This is not a cue to e-commerce businesses to switch to accepting CODs rather a hint to credit card companies to start marketing their services into China. We are supposed to move forward, not backward. And by the way, are we to start putting Chinese sub-titles on to Sears and JCPenney stores too?

  • http://www.frankthinking.com Frank Reed

    Raj, as marketers we are supposed to gauge what the market needs and responds to. I personally hate to leave money on the table just because someone hasn’t “kept up” the pace, so to speak. COD money spends the same as credit card money in my book ;-) Fortunately, no one HAS to do anything so if there are companies that will go that route (address this potential market with COD offerings) and make that money for themselves then more power to them.

    Frank Reed’s last blog post..SEO Tools In The Wrong Hands Could Lead To Disappointment

  • http://www.gadgets4nowt.co.uk PS3

    When I saw the headline I thought you were going to blog about an increase in online takeaway orders :)

    Cash on delivery is very common here in the UK, more so for trade merchants than private individuals though.

  • http://www.forumistan.net Forumistan

    Yeah, Hindi is really a great language but it is too difficult…