China is the world’s second-largest economy. Its total trade volume is RMB 24.59 trillion (US$3.95 trillion), and its export value is the highest in the world (US$2.27 trillion). What opportunities and challenges exist for the world’s biggest exporter? The China Trade Finance 2016 Report reviews the basics of international trade finance, presents the latest global trends and discusses the particular issues and future developments in international trade finance that are relevant regarding China.
With online commerce booming in China, consumers are able to order just about anything online and have it delivered cheaply and efficiently. Traditionally these transactions were conducted as 'cash on delivery', but this is rapidly changing as online payment providers start to fill the gap.
Cultural, geographical and political challenges have for many years kept China a very cash-based society. When credit cards first started to appear on the market, uptake was slow and banks struggled to find a business model that worked. Several years later, the market has changed dramatically. Now as an increasingly popular payment tool, the credit card has played a pivotal role in the stimulation of domestic consumption, with card circulation exceeding 280 million and total transaction value accounting for 42% of China’s total retail spending value.
Offering a relatively cheap and certainly more convenient method of making payments than traditional cash or card methods, payments made through the mobile phone promise to change the way we pay for goods and services and are a rapidly growing area of the global financial industry. We saw a number of advancements in 2011 and expect this to continue at an even faster pace in 2012. The mobile payment industry in China is growing rapidly as well.
In 2017, new bank account regulation was introduced limiting each individual to 3 different types of debit accounts. The purpose of these new regulations is to put a restraint on Money Laundering and prevent telecommunication fraud. While this new regulation will affect people’s lives, it also puts the banks in a position of opportunity where they are able to adapt to the change and use it to their advantage.
Online To Offline e-commerce has redefined products and services in China as both existing providers and new tech leverage a growing trend in China as they sell to billions of Chinese customers.
Prepaid / stored value cards are an important part of the payments market in China and are used to pay for almost everything such as from daily public transit to grocery supermarket and from movie tickets to clothes in shopping centers.
China's Millennials are demanding, especially from their banks and what they expect from financial services. The China's Millennials report from Kapronasia and the Disruption House provides critical insight into how Millennials are changing the way they bank.
Kapronasia was in Singapore for Buy Side Technology Asia Summit in June 2014 and Zennon Kapron presented the attached slides on the latest trends and issues in Asia's buy-side cloud technology.
Although Chinese banks have in the past not focused tremendously on risk management, recent events and comments from regulators indicate that risk management will be more of a focus for banks. In the second in our series of reports on risk management in China, we look at credit operational risk management in Chinese banks to understand more about what it is, how things are different in China and what will happen in the near future.