Payment Technology Mobile Payments

Western payment companies must be the ‘right type of different’ in China

By Arnold Ma, CEO

September 21, 2017 | 4 min read

Many of the world’s biggest brands have a desire to crack China, home to over 1.3 billion consumers. And with the country’s citizens eagerly embracing cashless transactions – even some city buskers take payment via QR code – it’s even less of a shock that Western payment platforms are at the front of the queue.


Against this backdrop, recent reports that US-based American Express, Mastercard and Visa are amongst the payment providers preparing to submit licences to operate in China should come as no surprise.

These banking megabrands have been knocking for some time but had faced an uphill struggle to compete with state-backed UnionPay, which currently enjoys a domestic monopoly. Then in 2012 the World Trade Organisation ruled that the Chinese government had to open up the market to other domestic and foreign providers. So while regulatory hurdles remain, there is now grounds for cautious optimism.

The payments landscape will continue to shift at a relentless pace. The two dominant mobile players – WeChat Pay and Alibaba’s Alipay – are quickly rendering card transactions obsolete in much of urban China. Both are growing at more than twice the rate of UnionPay thanks to the mobile internet boom and the popularity of m-commerce.

However, the emergence of a more daring generation of Chinese consumer and their growing love of Western brands has created new possibilities for foreign imports. Thanks to adventurous youngsters and an expanding middle class with more disposable income, the likes of Ikea, Starbucks and Apple have found a way to thrive despite challenging conditions.

Great branding and positioning have been the real driving force behind these success stories. In each case they are not just selling a product, they are selling an experience. Ikea is a furniture playground while Starbucks is not just a coffee brand but a cool place to hang out.

Apple in particular has been testing the boundaries of possibility. Having struck up a partnership with UnionPay two years ago, the first videos from their joint advertising campaign have now gone live, highlighting the convenience of using Apple Pay to sustain a modern, cash-less life. This makes Apple one of the first major western payment platforms to leverage strong creative work as a way of making an emotional connection with a young Chinese audience.

If other Western payment firms really want to change the status quo they will have to rely heavily on their brand positioning. This means overcoming cultural differences and the language barrier, both of which have been huge stumbling blocks for other Western brands. 2017 has already seen a number of big names fail to hit the mark in China by being either too traditional or too edgy.

Airbnb was guilty of the former. Its Chinese name ‘Àibǐyíng’ received ridicule on social media, with people claiming the name sounded un-modern at best and unpleasant at worst. D&G made the opposite mistake with its ‘Loves China’ campaign. Ads showing smartly dressed ‘new’ Chinese models juxtaposed against ‘traditional’ settings in Beijing were criticised for showing contempt for Chinese values and culture.

Avoiding the wide variety of potential cultural pitfalls that can derail your marketing efforts means investing time and resources to develop the best possible understanding of your target customers and actively shape demand for your products and services both before and after launch. American Express is arguably the best equipped to manage this transition as it already has aspirational focus. The added-value perks it offers its cardholders, all based on its deep knowledge of what makes them tick.

Making it as a challenger brand in China depends on being the right type of different. With a startup mindset and a healthy dose of creativity there could be room for Western brands to flourish in China’s payment ecosystem.

Arnold Ma is CEO of China-focused digital marketing agency Qumin

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