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Interview: PayPal China Country Head Jeff Liao
Tags: 99Bill, Alipay, Jeff Liao, PayPal, Shang Koo, Taobao,
After much anticipation, eBay's Paypal has finally arrived in China. However, C2C site Taobao's payment system Alipay has a head start, with almost two years of operating experience and more than 2 million users. Paypal is not worried. Pacific Epoch editors Paul Waide and Shang Koo sat down with Paypal China country manager Jeff Liao and talked about Paypal's plans in China.
PE:What's the biggest obstacle to success for PayPal in China?
LJ: Every company faces its own challenges. I love challenges. According to our global experience the success of online payment is built on a number of key factors. Number one: well developed e-commerce, the more developed the e-commerce the better the environment for online payments. Second, the PayPal service is built on the existing financial infrastructure and credit system. So, the more developed the financial infrastructure and credit system, the better for our business model. The third one obviously is if you have a good, mature, legislative regulatory framework to encourage new market players, and to stimulate competition.
Of course for China, despite the fact that ecommerce has seen rapid development over the past one or two years, is basically still at the nascent stage. So, our challenge is how do we operate effectively in today's China ecommerce environment, quickly build up presence, and quickly build our network.
PE: To succeed in other markets you just listed three things that China doesn't have?
Relatively, this is our experience overseas. Number one, ecommerce, relatively is still at its nascent stage but it is developing very rapidly. The financial/credit system, I would say overseas they have a relatively more developed infrastructure system. On the regulatory framework, as it evolves we will be able to help the process. What we can bring to China is our global experience, our global expertise.
PE: Talking about helping develop the regulatory framework, who regulates you?
In China we operate in a partnership with a local Chinese company called Shanghai Wang Fuyi Information Technology Co., which is a Chinese company with the right to use our name and technology platform in China. And Shanghai Wang Fuyi has an Internet Content Provider license issued by MII.
Alipay is your biggest competitor at least in the media's eyes. Are you worried about competitors in China?
Not at all. PayPal pioneered online payment back in 1998, we were the one that identified the unique business model and we now own 72 million accounts. China is the second largest market in the world, with more than 100 million users and there are a couple of payment companies in the market but I don't see any that are serious players. The one you've mentioned is only being used on one site. We have Netease, we have Tom Online, we have a strategic alliance with ChinaPay - the alliance is to share their Internet merchant base with us. PayPal, "Bei Bao" in China is going to be an open platform. So almost any Chinese Internet site can use PayPal.
Two, three, five years I think there will be competition, there will be two, three, four, five major players. But today, I don't see that.
One of the advantages of PayPal around the globe is that we always follow eBay. Globally, it is the number one auction site, eBay Eachnet is the number one auction site in China. Do our competitors have that advantage.
PayPal is an open platform, anybody can use it. From day one we are on Netease, from day one we are on Tom Online. Have you seen any other payment company, whether it is mobile or online, getting traction? No.
PE: On the competitor issue, it does not sound like you will expand via acquisition in China?
Who are we going to acquire? If you don't have a significant player, who are we going to acquire? We have the technology, we are the global leader.
What about in mobile?
This is a very strategic question, not just for us, not just for China, it is a strategic question for every payment company in the world. We understand the fact that we have more mobile phone subscribers in China than we have Internet subscribers. However, we haven't seen any mobile payments solution that in China, or globally, has really got traction.
Now in China, there are different payment companies online, mobile, but again we haven't seen any significant players, we haven't seen any nationwide players, we haven't seen anybody getting any traction. Going forward, whether mobile or Internet will dominate the market, the users will decide. Once we have found, in China, that either solution will dominate, we will be the ones going into that solution.
PE: How is success going to be measured for you?
Our objective in China is initially to build our presence, build our network, ensuring we have tailored service for Chinese users. I came out from GE Capital, I like to use these words, "exceed customer expectations." So, the measure of success is how satisfied customers are with our products and services.
PE: Metrics?
My mission for PayPal in China is to become the Chinese online payment standard. So initially I have to ensure I can deliver products and services that meet Chinese users' needs. I need to build presence, I need to build network, so userbase is of course important. What I want to emphasize is this: We have been successful globally, we have 14 localized sites in operation, and in each of those 14 countries we have localized product services. China, you've seen our site. It's in Chinese, we tailor for Chinese market needs, we work directly with commercial banks. From day one we have enabled users to fund their PayPal accounts from 15 banks. So basically, we have tailored services that fit local Internet users' needs but we also have the advantage of leveraging our global technology and experience, which is unique in China.
Know more about China's nascent ecommerce industry, GET THE PACIFIC EPOCH CHINA ECOMMERCE REPORT.
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