Is it time you were trading in China?
Under the new partnership, Worldpay will become the first processor to acquire online payments made to retailers in the US and most of Europe using leading Chinese bank card China UnionPay. That makes it easier and more secure for British retailers to accept payments made by consumers who hail both from China or use a UnionPay card from outside that country.
The news, said WorldPay chief executive Ron Kalifa, is “incredibly significant for merchants that want to sell to China online. Ecommerce has removed geographical boundaries, opening up the opportunities for merchants to sell to consumers regardless of country or origin.
“WorldPay is now able to make this a reality for merchants that want to sell to China, opening up a lucrative market.”
UnionPay president Xu Luode says that his company is stepping up efforts to boost overseas acceptance of UnionPay cards, now accepted in 125 countries and areas around the world.
So does this news make now a good time to consider selling to China? Retailers might bear in mind that this emerging market has a strong and growing middle class. WorldPay cites figures showing that the middle-class population is expected to top 100m households in 2016, up from 35m in 2006, and that this population is expected to travel more in future. The Chinese government estimates, says WorldPay, that 64m Chinese people travelled abroad in 2011, up from 12m in 2001. Predictions are that the figure will grow by 11% year-on-year.
“China is rapidly overtaking many nations to become one of the biggest spending powers in the world,” said WorldPay’s Kalifa.
Such business certainly seems to have had an impact in London stores. In the UK, Selfridges was the first retailer to introduce China UnionPay terminals to its stores, and store director, Meave Wall, says the move has helped boost trade. “The number of Chinese visitors to the UK ha grown exponentially in the last couple of years,” she said.
“China UnionPay is one of the most widely-recognised card schemes in the world and since the introduction of China UnionPay terminals in our stores, we have seen a significant increase in the footfall of Chinese visitors and the amount of money they spend, particularly on our luxury brand ranges.”
And many of this new middle-class population are now spending online, and on luxury goods, according to Chinese online luxury retailer VIPStore. Its chief executive Allan Yang said: “The emerging middle class, representing a population of about 250 million people, and the rise in its disposable income, are certainly one of the main drivers of growth of luxury sales in China. The middle class is definitely the new core target for European luxury brands.” He cites a report from iResearch, a Chinese internet research company showing that in 2011 online luxury sales grew by 68.8%, to 10.73bn Yuan. “The Internet represents a huge opportunity for the luxury brands in China,” said Yang, “and we expect online luxury sales to literally explode by 2015 while it is still today in its infancy.”
British luxury brands with a focus on China include Burberry, which now lists 58 Chinese stores on its online store locator, including nine in Beijing. In other sectors, Argos last year announced a multichannel joint venture that will take it into China, while Wiggle.co.uk also unveiled a Chinese language website at the end of 2011.
But many retailers and brands are still holding back. The new ability to accept Chinese bank cards should give reassurance about the payments aspect, though there will still be questions around other business areas. VIPStore says that many European brands are reluctant to invest because they simply don’t know enough about the Chinese market – and that it is seeing more brands entering the market by using its systems. Emmanuel Levy, general manager, EMEA at VIPSTore, said: “European brands are working more and more with pure players like VIPStore which handles all the back-end activities and allow European brands to enter the Chinese market rapidly and efficiently.”