Move over Silicon Valley, the Chinese are already here
China is leading the world in financial technology innovation, Piyush Gupta, chief executive of DBS Group said yesterday. In a pro-China, pro-Asia plenary speech, Gupta highlighted a number of technological advances and was also positive on the economic prospects for the region.
“Jamie Dimon said in his annual report Silicon Valley is coming. I tell you the Chinese are here,” said Gupta.
The size of the Chinese market is staggering: Alibaba, the Chinese e-commerce site, dwarfs that of its peers in other markets. Gupta compared Alibaba’s Singles Day, which was created as an equivalent to Cyber Monday in the US. Alibaba transacted $9.4 billion of business on that day, compared to Cyber Monday’s relatively paltry $2.6 billion.
The most profound changes in the payments space are in China, Gupta said. Alipay, the payment network that supports Alibaba currently has 300 million users and 80 million transactions a day. The individual transaction values are low at present, but “to step from low value to high value payments is not such a high step”, he said.
And Alipay has entered the fundraising space. Yu’ebao, the money market fund offered by Alipay, in eight months has become the fourth-largest money market fund in the world, said Gupta. Lending to e-commerce customers is also growing rapidly in China. In addition, China’s peer to peer lending industry is bigger than those of the US and UK combined, both in value and in volume, said Gupta.
As far as know your customer (KYC) requirements are concerned, the Chinese are “one step ahead”. WeBank, which was launched by Tencent in January 2015, is using voice and facial recognition to meet KYC requirements for its bank accounts. “The Chinese companies are making a profound impact,” said Gupta.
Gupta noted that there had been concerns about China’s slowdown, the volatility in the markets, and China’s high level of debt. While China is slowing, he noted, the 6 to 7 per cent growth rates are on an economy of $11 trillion. Gupta said China was effectively creating an economy the size of Germany’s every four years. “That kind of growth is extraordinary,” he said.
China has two economies: the first is the industrial economy, which is showing hardly any growth. Meanwhile, the retail economy in China is experiencing double digit growth. This means that companies such as Apple have a bigger market in China than they do in the US.
China, he noted, is undergoing a “move from the factory of the world to being the marketplace of the world,” he said.
He referred to those who believe that the balance in the world economy is shifting back from the East to the West. He told them: “Do not give up on Asia yet. We are alive and kicking and will be around for some time yet.”
