China’s e-commerce market represents a $38.5 billion dollar opportunity. In particular, the B2C market is experiencing tremendous growth. Online shops that may have began as a single person operation on a C2C site such as Taobao.com, are incorporating into formal online businesses – while at the same time traditional businesses in China are stepping into the e-commerce arena as well.
In order to gain additional insight into how China-based businesses reach their overseas customers, I had the opportunity to speak with Alan Tien, General Manager of PayPal China. Tien oversees PayPal’s domestic Chinese payment platform Beibao as well as the acquiring of customers in China for the company’s international website.
Joel Backaler: You have certainly led an impressive career having started in the management consulting field with Accenture upon graduation from Stanford followed by management positions at a series of successful technology firms in the US. I am always curious to find out how people began their career in China. Could you tell us about what initially brought you to China and ultimately to your current position as General Manager of PayPal Beibao?
Alan Tien: At the bottom of the Internet Bubble bust, I was lucky enough to get a job at PayPal, an undiscovered jewel among all the rubble. I was amazed at the beautiful business model, built on top of eBay’s astounding network model. I started as a Product Manager in the tiny Merchant Services team, still called “off-eBay” at the time because we didn’t know any better. After I launched APIs, Meg Whitman made China the top priority for PayPal, and I was put in charge of the BeiBao product development. Upon launch, our China Country Manager Jeff Liao (now eBay’s GM for Greater China, SEA, and Japan) recruited me to China to become China Country Product Manager. PM is a great role to learn the business, so when the PnL role opened up, Jeff offered it to me. It’s been a fabulous experience so far, growing our business at double digit rates.
Joel Backaler: PayPal’s clear advantage in China is the fact that it is a global company. It is naturally positioned to act as an intermediary facilitating payment for Chinese businesses looking to conduct e-commerce outside of China. However, what measures are PayPal taking to further expand domestically for everyday Chinese online consumers?
Alan Tien: You are right in that we have amazing strengths as a global company, with presence in 190 countries, supporting 24 currencies, and being the preferred online payment method for 84m buyers around the world. We are very focused on this “cross border” model, allowing our Chinese merchants to sell their goods abroad through a B2C channel. As we announced earlier this year, we signed an alliance with China UnionPay which will open up the reverse channel, enabling Chinese consumers to shop and pay with their CUP card on any of our 8 million merchants around the world. By facilitating this cross-border business for Chinese consumers and businesses every day, we are demonstrating the value proposition of our global business model for China’s burgeoning e-commerce market.
Joel BackalerThe reason I asked about opportunities to expand in China’s domestic market is because I feel that there is tremendous growth potential for 3rd party mobile payment companies in China. This is an area that is still at the early stages of development with limited competition. I understand as early as three years ago, Alipay created a special team to develop solutions for mobile payments. Does Paypal Baobei have any plans to enter this space?
Alan Tien: I agree with your assessment of the opportunities in the mobile payment area. PayPal is making significant investments in mobile, not just for China but globally. Our iPhone app has just passed 2m downloads and we’ve recently launched our Mobile Payments Library for the Android mobile OS platform! In addition, we are seeing many developer innovations based on our mobile payment platform all over the world, such as Magento’s new mobile solution in Europe. With our mobile payment solutions available on the two leading Smartphone OSes and developers around the world using our mobile payment library, I’m confident that we have a strong position in the mobile payments area that we can leverage for the China market.
Joel Backaler: Much of PayPal’s growth in China will continue to come from small-mid sized Chinese companies looking to expand overseas. Many of these business owners do not know what e-commerce is nor do they understand the potential impact it can have on their business. How do you go about educating them about the benefits of e-commerce?
Alan Tien: You are absolutely correct in that e-commerce is a big mystery to most of the SMEs in China but they are learning that they must get in to the game quickly, or their competitors will kill them. When you take this idea of e-commerce and extend it to cross border transactions, the difficulties are compounded. That’s why we launched a Chinese portal www.paypal-biz.com to explain the intricacies of cross border B2C business. We need to help Chinese SMEs to piece together the entire puzzle including the critical element of how to receive payments, especially from overseas buyers.
Joel Backaler: PayPal recently announced its partnership with China UnionPay. What do you see as the key advantages to this partnership? What do you think about some Chinese concerns regarding the sensitivity of Chinese account information being shared with a foreign company?
Alan Tien: As mentioned above, our CUP partnership will provide an easy way for millions of savvy Chinese consumers to purchase products from all over the world. Consumers are right to worry about putting their financial information out on the web, especially with foreign or unknown merchants. That’s one of the key reasons why a Chinese consumer would use PayPal – we keep the financial information private and secure, never sharing it with the merchant. We also use some of the most sophisticated fraud prevention tools in the industry to ensure the security of our system. Thus Chinese consumers will enjoy the same level of safety and security as our millions of users around the world.
Disclosure: No positions