As Chinese consumers continue to spend more money online, one of China’s biggest tech companies wants to profit from their spending on overseas websites.
Baidu, which runs China’s biggest search engine, has partnered with PayPal, to allow its users to shop on overseas sites with funds from their Baidu Wallet.
With the tie-up, this opens Baidu users to some 17 million PayPal-accepting merchants across the world.
And for those PayPal merchants, they get Baidu’s 100 million users.
PayPal also opens itself to a market hungry for overseas spending. China’s e-commerce spending at home is already huge online retail sales reached $752 billion in 2016 alone.
Consider China’s Singles’ Day shopping festival, its version of Black Friday: Alibaba reached $18 billion in sales in the 24 hours last year, with 82 percent of purchases made through mobile phones.
Lots of tie-ups, driven by overseas spending
The deal comes on the heels of fellow Chinese tech giants Alibaba and Tencent, which have similarly moved to expand their payment networks overseas.
Alipay, Alibaba’s mobile wallet, had earlier in April announced its merger with HelloPay, a Southeast Asian platform.
Tencent’s WeChat Pay also announced earlier this month that it had applied for a Malaysian payment license.
US startup Stripe also earlier announced its collaboration with Alipay and WeChat Pay.
China is huge on mobile payment, but not on credit cards.
These moves have been necessary because despite China’s strong take-up of mobile payment, credit card usage has remained low in the country. In 2014, only 16 percent of Chinese consumers owned a credit card, according to the Economist.
Instead, the average Chinese shopper has preferred to use the mobile wallets provided by the likes of Alibaba and Tencent, because they’ve been seamlessly integrated into their mobile apps, allowing people to pay for utilities and even roadside vendors, with a quick scanning of a QR code between phones.
This preference for local payment modes has posed a barrier for western retailers, which often require credit cards on their online stores.
Tencent and Alibaba’s platforms also have a considerably higher number of users compared with Baidu.
So perhaps the tie-up with PayPal is just what Baidu needs to give it that extra edge.
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