China On Online Payments: If You’re Not Local, Your E-Money’s No Good Here

Written by Frank Hayes
May 17th, 2011

Here’s a reminder that governments are starting to treat online payments like real money. On May 12, Chinese E-Commerce giant Alibaba Group said it transfered its online payment business, Alipay, to Alibaba founder Jack Ma last year because of new government regulations that could outlaw foreign ownership of Internet payment services in China. (It made financial headlines in the U.S. because Yahoo, which owns 43 percent of Alibaba, said it didn’t know about the transfer and hadn’t been compensated for losing ownership of a sizable chunk of that business.)

It’s hard enough for E-tailers to deal with cross-border business complexities like taxes, duties and local bureaucracies. But this is one more argument against trying to manage E-Commerce by yourself from halfway around the world: In big markets like China, the government literally may not let outsiders handle the E-money. Either make sure you choose payment partners who will definitely pass muster with xenophobic regulators—or be prepared to change partners fast.


One Comment | Read China On Online Payments: If You’re Not Local, Your E-Money’s No Good Here

  1. Albert Drouart Says:

    There are a lot of complexities, as you mention about doing business in China especially if you are shipping physical goods, but that said, some of the payments companies in China have actually made it possible to collect money from consumers, legally and safely, even if you are off shore. Of all the BRIC countries, China is actually one of the better ones in my opinion.

    As long as you are just a merchant and not a payments company you can start to interact with the Chinese market after localization, etc.


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