In January of this year, Irish native Paul O’Brien, a Chinese market access specialist and trade policy expert, posted an interesting video on his LinkedIn channel where he filmed himself over the course of a day going about his usual routine in the Chinese city of Hangzhou.
The point of the video was to illustrate how China is becoming an increasingly cashless society, particularly in the tier 1 cities such as Hangzhou, Beijing and Shanghai. In place of cash, Chinese consumers are increasingly adopting online or mobile phone payments and disrupting traditional forms of commerce.
In the video, O’Brien visits a local supermarket come restaurant chain that he says perfectly encapsulates the rapidly changing consumer preferences in China. The supermarket is entirely self-service but is also entirely cashless.
A transaction completed electronically or via cash ultimately makes little difference to the buyer or the seller but what is significant is the technology that enables the change in payment method – the smartphone
To make a purchase in the store, consumers must have a mobile payment app such as Apple Pay or WePay, the mobile payment service offered by WeChat, a Chinese messaging app with more than one billion monthly users.
Over the remainder of the video, O’Brien further illustrates the market penetration of mobile payments in Hangzhou as he uses his smartphone to ride the subway, rent a city bicycle and even make a contactless payment to a stranger on the street for a lift downtown on their motorbike.
The move to cashless payments is sweeping through China. In 2012, about 50m Chinese consumers used mobile payment systems. By 2016, this figure had soared close to half a billion users, or one-third of the Chinese population.
The adoption of cashless technology in China and other Asian countries has been much more rapid than in developed countries, where cash payments remain stubbornly high.
In the US, where the smartphone revolution emanated from, mobile payments stood at $112bn in 2016. By contrast, Chinese consumers are using mobile payments to pay for just about everything today with mobile transactions reaching $9 trillion in 2016 – that’s 80 times higher than in the US. Chinese consumers also order 10 times more food online than US consumers.
Rapid shift
Behind the rapid shift to this new form of commerce is Alibaba, the Chinese online retail giant led by executive chair Jack Ma. Alibaba offers customers a mobile payments service known as Alipay, which accounts for 54% of all mobile payments made in China today. For Alibaba, the real payoff of the move to mobile payments is the valuable consumer data it collects, allowing it to better target emerging trends. It also makes the company more relevant to consumers in their day-to-day offline lives and not just in the online world.
In 2014, Alibaba shattered all records when it claimed the title for the largest initial public offering (IPO) in history at $25bn.
The company has built its success on the back of online sales events such as Singles Day, a Chinese shopping day similar to Black Friday in the US and Europe, which generated $25bn in sales in one day for Alibaba last year.
However, Alibaba clearly views mobile payments as the next frontier in the e-commerce market as smartphones double seamlessly as wallets for today’s consumer. While initially slow to take off in Europe and the US, it is likely that mobile payments will rapidly take off in the developed world over the next decade. But what does the move towards a cashless society actually mean? A transaction completed electronically or via cash ultimately makes little difference to the buyer or the seller but what is significant is the technology that enables the change in payment method – the smartphone.
The adoption of cashless technology in China and other Asian countries has been much more rapid than in developed countries, where cash payments remain stubbornly high. Reach customers directly
For companies selling to mass markets such as China, the smartphone offers a new opportunity to differentiate and reach consumers directly.
Smartphone penetration in the global market is forecast to reach 66% this year, with market penetration of 80% to 90% already in most developed countries.
China is the world’s largest smartphone market with almost half the country’s 1.4bn citizens owning a smartphone today. With Chinese consumers increasingly using their mobile phones to buy their day-to-day groceries, it presents a new opening for food companies and farmers to communicate directly with the consumer. Consumers today are more discerning in how they shop for their food.
Yes, price point remains critical for the majority of shoppers but health concerns, animal welfare, environmental impact and food provenance are playing an increasingly important role in how people purchase their food.
Smart label technology
Ultimately, the smartphone offers the chance to bring the farmer and the end consumer closer together after decades of drifting further apart in a globalised economy.
Smart label technology, which is a simple QR code printed on the packaging, will allow consumers instant access in store to identify where their food was produced, how it was produced, as well as who is the primary producer of the meat, milk or grain in the product they are buying.
For Ireland’s food industry, this technology offers the chance to add value to our meat and dairy exports by marketing the tractability of our food supply chain directly to consumers in the US, Asia or the Middle East with a smartphone in their hands.
Already, large multinational food companies such as Unilever, Nestlé, PepsiCo and Coca Cola are investing in smart labelling as a means of reaching their consumers directly. By 2020, it is forecast that 80% of all food sold in the US will have smart labelling, particularly to inform consumers if their food has been made using GMOs or hormones.
Today’s consumer is living their life more and more via their smartphone. What started as a mobile telephone has morphed into a device that people use as a camera, newsfeed, audio and video player, and now as their wallet.
To reach these consumers directly, companies need to rethink traditional marketing strategies to a mobile world. For companies that never had a direct marketing relationships with consumers up to now, the smartphone era allows for the first time a cheap, cost-effective means to communicate their product.
This article appears in AgriBusiness, an Irish Farmers Journal report in association with KPMG. The report is free with the Irish Farmers Journal edition of 26 May.
In January of this year, Irish native Paul O’Brien, a Chinese market access specialist and trade policy expert, posted an interesting video on his LinkedIn channel where he filmed himself over the course of a day going about his usual routine in the Chinese city of Hangzhou.
The point of the video was to illustrate how China is becoming an increasingly cashless society, particularly in the tier 1 cities such as Hangzhou, Beijing and Shanghai. In place of cash, Chinese consumers are increasingly adopting online or mobile phone payments and disrupting traditional forms of commerce.
In the video, O’Brien visits a local supermarket come restaurant chain that he says perfectly encapsulates the rapidly changing consumer preferences in China. The supermarket is entirely self-service but is also entirely cashless.
A transaction completed electronically or via cash ultimately makes little difference to the buyer or the seller but what is significant is the technology that enables the change in payment method – the smartphone
To make a purchase in the store, consumers must have a mobile payment app such as Apple Pay or WePay, the mobile payment service offered by WeChat, a Chinese messaging app with more than one billion monthly users.
Over the remainder of the video, O’Brien further illustrates the market penetration of mobile payments in Hangzhou as he uses his smartphone to ride the subway, rent a city bicycle and even make a contactless payment to a stranger on the street for a lift downtown on their motorbike.
The move to cashless payments is sweeping through China. In 2012, about 50m Chinese consumers used mobile payment systems. By 2016, this figure had soared close to half a billion users, or one-third of the Chinese population.
The adoption of cashless technology in China and other Asian countries has been much more rapid than in developed countries, where cash payments remain stubbornly high.
In the US, where the smartphone revolution emanated from, mobile payments stood at $112bn in 2016. By contrast, Chinese consumers are using mobile payments to pay for just about everything today with mobile transactions reaching $9 trillion in 2016 – that’s 80 times higher than in the US. Chinese consumers also order 10 times more food online than US consumers.
Rapid shift
Behind the rapid shift to this new form of commerce is Alibaba, the Chinese online retail giant led by executive chair Jack Ma. Alibaba offers customers a mobile payments service known as Alipay, which accounts for 54% of all mobile payments made in China today. For Alibaba, the real payoff of the move to mobile payments is the valuable consumer data it collects, allowing it to better target emerging trends. It also makes the company more relevant to consumers in their day-to-day offline lives and not just in the online world.
In 2014, Alibaba shattered all records when it claimed the title for the largest initial public offering (IPO) in history at $25bn.
The company has built its success on the back of online sales events such as Singles Day, a Chinese shopping day similar to Black Friday in the US and Europe, which generated $25bn in sales in one day for Alibaba last year.
However, Alibaba clearly views mobile payments as the next frontier in the e-commerce market as smartphones double seamlessly as wallets for today’s consumer. While initially slow to take off in Europe and the US, it is likely that mobile payments will rapidly take off in the developed world over the next decade. But what does the move towards a cashless society actually mean? A transaction completed electronically or via cash ultimately makes little difference to the buyer or the seller but what is significant is the technology that enables the change in payment method – the smartphone.
The adoption of cashless technology in China and other Asian countries has been much more rapid than in developed countries, where cash payments remain stubbornly high. Reach customers directly
For companies selling to mass markets such as China, the smartphone offers a new opportunity to differentiate and reach consumers directly.
Smartphone penetration in the global market is forecast to reach 66% this year, with market penetration of 80% to 90% already in most developed countries.
China is the world’s largest smartphone market with almost half the country’s 1.4bn citizens owning a smartphone today. With Chinese consumers increasingly using their mobile phones to buy their day-to-day groceries, it presents a new opening for food companies and farmers to communicate directly with the consumer. Consumers today are more discerning in how they shop for their food.
Yes, price point remains critical for the majority of shoppers but health concerns, animal welfare, environmental impact and food provenance are playing an increasingly important role in how people purchase their food.
Smart label technology
Ultimately, the smartphone offers the chance to bring the farmer and the end consumer closer together after decades of drifting further apart in a globalised economy.
Smart label technology, which is a simple QR code printed on the packaging, will allow consumers instant access in store to identify where their food was produced, how it was produced, as well as who is the primary producer of the meat, milk or grain in the product they are buying.
For Ireland’s food industry, this technology offers the chance to add value to our meat and dairy exports by marketing the tractability of our food supply chain directly to consumers in the US, Asia or the Middle East with a smartphone in their hands.
Already, large multinational food companies such as Unilever, Nestlé, PepsiCo and Coca Cola are investing in smart labelling as a means of reaching their consumers directly. By 2020, it is forecast that 80% of all food sold in the US will have smart labelling, particularly to inform consumers if their food has been made using GMOs or hormones.
Today’s consumer is living their life more and more via their smartphone. What started as a mobile telephone has morphed into a device that people use as a camera, newsfeed, audio and video player, and now as their wallet.
To reach these consumers directly, companies need to rethink traditional marketing strategies to a mobile world. For companies that never had a direct marketing relationships with consumers up to now, the smartphone era allows for the first time a cheap, cost-effective means to communicate their product.
This article appears in AgriBusiness, an Irish Farmers Journal report in association with KPMG. The report is free with the Irish Farmers Journal edition of 26 May. 
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