What are special considerations which Apple Pay faces in China which it does not face in other markets?
Harsh, ruthless local competition. In China, Apple Pay won ‘t compete with international brands - like Samsung or HTC for iPhones - but with local players that have deep roots in the daily life of Chinese audience, like Alibaba and Tencent.
Chinese people are already using their phones for micro-payments (a lot). The main communication / social network app Tencent Weixin has its own phone payment system which is widely used to pay for transportation, restaurants and many other daily expenses. The other big player in mobile payment is Alibaba Alipay which is the common way to buy stuff from online platforms as Tmall or Taobao.
A very tough competition have been ongoing for the last 2-3 years between both companies to take over the mobile payment market in China. To give you an idea of the current state of affairs, Wechat have blocked all links from its competitor Alibaba on its service. It is pretty much like Facebook preventing you to post any links from Ebay and blocking all the existing ones.
During the last 2 days, the competition has became even more intense with the arrival of the Chinese New Year (CNY). The tradition in China is that people will give red envelopes containing money to their close family and friends as a gift for the new year. Tencent and Alibaba have been trying all sort of tricks to make people exchange those red envelopes through their mobile platforms. Think about it : with the red envelopes, those micro-payments will become part of the tradition ! That is a huge marketing and symbolic win. Also, this is an enormous lot of cash flowing when you imagine the numbers of families in China.
It looks like Tencent Weixin have been winning this year ‘s round with a tipping point during the Spring Festival Gala on CNY eve. With more than 800 million viewers in 2014, this very boring TV show is part of the CNY routine : almost every family watch it. This year, CCTV partnered with Tencent to bring a new form of entertainment : when a specific icon appeared on TV, you could instantly shake your phone to receive some red envelope in your Weixin wallet (1-10 ~ RMB). More than 1 billion red envelopes have been exchanged in a single night for a total up to 500 millions RMB (approx USD 70 millions) [1 ]. Families were all shaking their phones to grasp those red envelops, sometimes 3-4 devices at the times. From grannies to the new-borns, the whole family now has Weixin mobile payment accounts and know how to exchange money with it.
Apple will have to consider the existence of such local competitors if it wants to enter the game. Those have been part of the “family “ for at least a decade now. Also, besides the complex political barriers that Quora User have described in details here, Chinese middle class start to be bored of Apple “Californian dream “ marketing. They will go for the best service, so it may be a tough round to bring Apple Pay to success in China.
[1 ] Data from 微信公开课
This text was originally published in quora.