The budding digital economy: Internet finance grows in China

WARC, 21 March 2014

BEIJING: A majority of Chinese consumers have invested in some sort of internet wealth management product despite their lack of understanding of this sector and their concerns about security.

Xinhua reported a survey by the China Youth Daily newspaper, which drew 10,234 respondents, indicating that 85% of people had put money into such a product. Further, two thirds were also planning to divert some of their bank deposits into internet finance products as they sought higher returns and greater convenience.

But there was widespread ignorance of the sector, as 55% admitted they knew little about how internet finance funds operated and 37% had no idea about the risks involved.

Around four in ten people expressed fears about account security or possible insolvency and for a similar proportion (44%) making improvements to keep funds secure was a priority.

Yu'ebao, an online fund set up by Alipay, the third-party payment platform, was especially popular – 63% of internet finance investors had put money into it. This meant, noted Xinhua, that, numerically, the 81 million users who had signed up outnumbered investors in China's A share market.

In a separate development, the Internet Society of China announced that online shopping was valued at 1.8 trillion yuan in 2013 and is forecast to account for 10% of all retail sales in 2015.

Announcing the figures, Lu Wei, the organisation's secretary-general, also said that mobile internet consumption was growing fast and would amount to 2.16 trillion yuan next year.

A recent KPMG report noted that luxury consumers were especially enthusiastic online shoppers, with 70% using their desktop every day, and 60% their smartphones, to purchase items or search for information on luxury products.

Wei further said that the acceleration of ecommerce would create new business and service models which would soon become part of everyday lives, such as location-based services, mobile health care and the internet of vehicles.

Data sourced from Xinhua; additional content by Warc staff

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