PayPal enters China
Photo credit: The China Project illustration
A rare bit of positive U.S.-China business news: While many sectors of the Chinese economy remain unfriendly to — or outright restricted for — foreign businesses, the finance sector is genuinely reforming. Last week, PayPal became the first foreign payment platform to enter China to provide online payment services, with the approval of its 70 percent equity stake in GoPay (Guofubao Information Technology Co. Ltd.).
But PayPal will face two gargantuan competitors: Alipay and WeChat Wallet. Affiliated with China’s two biggest tech firms, Alibaba and Tencent, these services have already captured nearly 100 percent of the payments markets in China. Catching up, or even just finding a niche sector to dominate, will not be easy.
Better late than never
A cynic might note that China was supposed to open the finance sector, along with many other parts of its economy, to foreign investment when it joined the WTO in 2001. As of now, no foreign credit card or payments company has anything beyond a token presence in China — but PayPal now has a chance to change that.
Eighteen years is a long time to wait, and it’s easy to imagine how the frustration of these companies contributed to the bipartisan support for “getting tough on China” that now underpins the U.S. attitude in the trade war.
