QR codes and the Chinese consumers' digital opportunity for European businesses

When I first started travelling to China regularly in 2015, I was struck by how the country’s consumers, in particular its Millennials, had become increasingly digital: payments were almost exclusively made by scanning QR codes, and nearly every aspect of daily life – from hailing cabs and finding food to managing finances and booking medical appointments – was made with a few taps on their mobile phones. 

Can European businesses benefit from the digital revolution of Chinese consumers, viewed by many as one of the important growth engines of the world? I firmly believe so. Businesses here should already be preparing themselves, so they can quickly capture these consumer trends amid a global recovery that the OECD predicts will be led by developing economies in Asia. 

From China to Europe 

Why is keeping up and adapting to these fast-changing trends important? We know the average European millennial, born since the 1980s, has seen huge lifestyle changes brought about by technology, the advent of the Internet, and an almost doubling of per capita GDP in their lifetimes. But the changes experienced by the Chinese millennial have been even more significant, driven by growth that’s more than ten times greater. 

And while a big part of the spending power in Europe is concentrated among the older generation, or the so-called ‘silver economy’, China’s urban young are driving much of its consumption growth. This is partly enabled by much higher salaries in the cities, and also because of demographic change from past population control policies, which have seen a funnelling of resources from older to younger generations. 

Chinese consumers are also savvier and wiser about their spending post-COVID, with surveys showing young consumers intending to save more, more interested in insurance products, and keen on better quality, healthier, and eco-friendly purchases. 

European retailers should take note, as there is a huge opportunity to sell quality products to these savvy consumers who also happen to be digital natives, by diversifying sales channels to take advantage of cross-border ecommerce platforms such as Tmall Global and Shopify. 

Some European businesses find this prospect daunting, believing they may be too small to export, that the process will be too complicated, or that there won’t be strong enough demand for their products overseas. But this reflects a huge disconnect between perception and reality. 

In November 2020, more than a thousand British brands took part in China’s famous 11.11 global shopping festival, among which Welsh beauty company SmoothSkin and British tech giant Dyson made it into the top ten list of brands globally selling into China, according to a report by Alibaba. QR codes and the Chinese consumers’ digital opportunity for European businesses.

These tech platforms enable businesses to ‘start small’ and trial selling their products globally without huge upfront investment. 

We had also seen before the pandemic how Chinese consumers’ digital habits travelled overseas, including to France and the UK, named as two of Chinese tourists’ favourite places to use mobile payments. Retailers have benefited in return, with four-fifths of those in the UK who adopted Alipay for customer payments experiencing increases in both footfall and revenue, according to a 2019 survey by Nielsen.

While the coronavirus has made international leisure travel almost impossible today, there are some signs of green shoots. The director of the International Air Transport Association noted that while many countries remain cautious, personal and leisure travel will start recovering from the second half of 2021 as borders gradually reopen to tourists. 

The good news for European businesses? We recently surveyed over 500 Alipay users who had travelled to the UK previously and nearly 90% told us they planned to restart international travel in the next two years. China has announced plans for a ‘vaccine passport’ for its citizens, which should avoid barriers to their travel plans.

The opportunities that lie ahead

As more people start to travel overseas again, our aim at Alipay is to help businesses around the world easily connect, engage with, and market to them, including by adding Alipay as a mobile payment option. We also partner financial institutions around the world, among which European banks such as Spain’s BBVA, to help local merchants increase sales from Chinese tourists by adopting QR code payments.

Over 90% of Chinese tourists surveyed by Nielsen in 2018 said they would be more likely to shop with merchants that accepted their digital wallet. Yet the reality was that they could only make 28% of their spending via mobile payments. This presents an untapped opportunity to appeal to a group of consumers who were among the world’s top shoppers, spending an average of about EUR 2,5000 per overseas trip. 

One of McKinsey’s recent reports called Chinese consumers the ‘Growth Engine of the World’. As the world economy starts recoveringfrom the after-effects of the pandemic, don’t miss the chance to add this growth engine to your business.

This article is part of the Payment Methods Report 2021 – Latest Trends in Payment Preferences, a comprehensive overview of the payment methods in scope for 2021, as well as best practices for checkout optimisation and customer conversion by addressing digital transformation, security, and localisation.

Jonathan Quin is the head of Europe Strategy for Ant Group and Alipay, China’s leading digital payment platform. He is the co-founder and previously Chief Executive Officer of UK-based WorldFirst, which became a part of the Ant family in 2019.

About Ant Group

Ant Group s the owner and operator of Alipay. Its aim is to create the infrastructure and platform to support the digital transformation of the service industry.