Dean Wharton was shocked by the Chinese WeChat red envelope

The innovation capability of the US technology industry is deserved, and China is far ahead in the rapidly developing financial technology industry. India is also catching up. Wharton Dean Geoffrey Garrett is here . Said in the commentary.

When it comes to technology, all innovations are concentrated in the US, right?

Amazon’s retail transformation has made Jeff Bezos the richest man in the world. Google and Facebook are the masters of the Internet world. Apple devices are as ubiquitous as Microsoft’s software. As the New York Times columnist Tom Friedman told us at the Wharton Global Forum in Hong Kong in June , the past decade has been a truly revolutionary decade. .

Take a look at the data of the world’s largest listed companies in 2007 and 2017 (Wikipedia’s data updates as of the second quarter of 2017). Ten years ago, Microsoft was the only technology company in the top ten companies.

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Above: Top 10 companies in the global market capitalization of Q2 in 2007 (Wikipedia)

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Above: Top 10 companies in the global market capitalization of 2017 Q1 & Q2 (Wikipedia)

But now, seven of the world’s top ten companies are technology companies, and the other two are China’s Alibaba and Tencent. In China, everyone knows Baidu, Alibaba and Tencent. However, there are very few news about these three companies abroad, and many commentators believe that there are two reasons.

First, the Chinese government’s Internet “firewall” not only limits the flow of information to China, but also protects Chinese companies from international competitors. Second, Chinese technology companies are more rapidly adopting and adapting to innovative technologies emerging elsewhere, rather than breaking through innovation. 

The first point has not changed. The new term “techno-nationalism” expresses Western concerns about China in this area – China hopes to become an important player in the global technology sector by protecting the domestic market and closely monitoring foreign websites.

But the second reason, saying that China does not have the ability to truly innovate, is to seriously underestimate the strength of Chinese technology companies. Those who ignore Alibaba and Tencent are putting themselves in danger. The two companies are making real innovations in China and are intended to be global.

I am not saying that Alibaba sells more goods than Amazon, although this is true from sales. I am not saying that Tencent’s WeChat is a product that integrates Facebook, Facetime and LinkedIn, although this is true. The huge increase in sales is due to the size of the Chinese market and the unique lifestyle of the Chinese, not China’s innovation.

On the contrary, I am most shocked by China’s huge lead in mobile payments, which is 50 times that of the United States. Most people believe that in the next decade, the world will usher in a revolutionary dynamic change in the field of mobile payments. The following Financial Times chart shows everything.

When it comes to Alibaba, think less about eBay, Wal-Mart and Amazon, and think about some financial technology. When it comes to Tencent, I don’t think about social media and e-sports, and I want to think more about financial technology.

In 2016, 469 million people in China used online payment. More people pay online through the mobile phone under the retail store. In contrast, Apple paid only 12 million US users last year, although they are by far the most important mobile payment participants in the United States. I am now used to seeing that in China, people, whether they are taking a taxi, drinking coffee, buying clothes, or eating, pay with WeChat or Alipay. This is another world compared to China in the early 2000s. At that time, you lived in the hotel. You have to pay for it with a stack of 100 banknotes.

I attended a breakfast meeting in Shanghai a few months ago, and I really saw the world. The day is the birthday of someone on the table. To celebrate, this person sent a red envelope to everyone on the table. Red envelopes are an ancient tradition in China. In order to celebrate a special moment, people put a different amount of cash into a red envelope, and people who receive the red envelope will be surprised when they open it.

Of course, there are no real red envelopes on the table, only a lot of smart phones with WeChat red envelope software. Of course, not only my friends at the table will do this. During the Lunar New Year last year, people sent out 14 billion electronic red envelopes through WeChat, which means that China’s 1.4 billion people have issued an average of 10 each.

Some people at the table turned their red envelopes into gold, and they used their own red envelopes to buy gold on another WeChat app (may not exceed one hundredth of an ounce). I really don’t know how this gold deal is implemented, but if there is a way in the US that allows you to trade gold on your phone, then I definitely haven’t found it yet.

There is also the rise of banking-like businesses in China, all based on the fact that people can put their money on their mobile phones and then pay with their mobile phones. The leader of this industry is Alibaba’s balance treasure. This is a money market fund with 370 million accounts and $211 billion in assets, which grew by 100% last year. According to data from Morningstar, the company is currently the world’s largest money market fund. The Morgan Asset Management Company, founded in 1895, can only take second place.

If China is mobile payment now, and India may be the future. Think about two recent developments in India.

First, India is the global leader in today’s biometric digital IDs . India launched the Aadhaar program in 2009. Today, 1.17 billion Indian nationals (99% of India’s 18-year-old population) have a digital ID, which includes a two-dimensional code similar to a Super American Social Security number, as well as an electronic photo, retina scan and ten electronic fingerprints. .

Second, last year the Indian government launched an unprecedented “demonetization” , and without warning, India completely abolished 500 rubles and 1,000 rubles of banknotes (worth less than $10 and $20, respectively). The circulation of the paper money is estimated to account for 86% of all currency in the country.

Both the Aadhaar program and the currency abolition have been sharply criticized, the former triggering concerns about privacy, which slowed the development of the Indian economy. But combining these two things, they will set off a gold payment for digital payments in India in the next few years.

All global players from the US to China are already in the Indian market, and of course there are some important Indian companies.

No one knows who will be the winner of this global competition, but the development of digital payments in recent years has highlighted a key fact that the extraordinary innovation capabilities of the US technology industry are obvious to all, but they can no longer compete from globalization and globally. The storm was spared because so many industries have been subverted by this wave in the past few decades.

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