China has been pursuing a policy of market-oriented economic development since 1978, when President Deng Xiaoping came to power. Although the state has come in for international criticism for its record on human rights, there’s little arguing with the global economic clout that the Asian giant now wields. Over the past three decades China has opened up to foreign trade and investment to become, by the second decade of the new millennium, the world’s largest exporter of goods and the second largest economy after the United States.
While political control remains tight, living standards for its close to 1.4 billion inhabitants have risen enormously, and led to the creation of a burgeoning middle class. However, in spite of these strong market indicators, GDP per capita remains below the world average, standing at US$8,400 in 2010.
In the same year, the country had 294.383 million land lines and 859 million cell connections. Back in 2008 it consolidated its six telecoms operators into three: China Telecom, China Mobile and China Unicom, providing both fixed-line and cellular services. By 2011 it had 19.772 million internet hosts and 389 million internet users.
China is a country that is in a hurry. It continues to show a keen interest in using bridging technologies rather than waiting for greater quantities of NFC-enabled handsets. For example, WatchData revealed that in 2011 it delivered more than 2.5 million units of its SIMpass NFC bridging technology in 20 cities and provinces across the country, including Beijing, Fujian, Hunan and Jiangsu.
Optimism about China‘s enthusiasm for contactless and NFC was a real factor in 2011, something that was reflected in various industry reports. For example, IMS Research predicted that the number of payment and banking smart cards shipped in the country would leap from 17 million in 2010 to more than one billion by 2016. A key factor in this forecast was the People’s Bank of China’s announcement that, by 2015, all new cards issued in the country would be smart cards, most likely dual interface.
ABI Research, in its ‘Mobile Payments in China’ report, forecast that NFC payments in China would total more than US$8 billion by 2014, up from US$900 million in 2011. It said this increase would be driven in part by the nation’s huge number of cell phone subscribers, which stood at more than 868 million in March 2011. According to the research firm, the Chinese government has expressed interest in an NFC SIM card solution that will serve as a bridging solution to stimulate the contactless payments market. As a result, more NFC handset add-ons have been shipped than actual NFC-enabled mobile handsets. ABI expects shipment of bridging technologies is expected to grow to 6.5 million in 2014, while shipment of full NFC phones shipped in 2014 is predicted to rise to 7 million.
The payments market continued to make progress in 2011. Bank card association China UnionPay moved forward with its plans to roll out mobile payment on microSD cards and full NFC handsets, including tie-ups with China Construction Bank and smaller regional banks involving more than 100,000 users.
Following trials in the western province of Sichuan, China UnionPay also confirmed plans to deploy GoTrust’s SWP microSD cards in 500,000 HTC Incredible NFC Android smart phones. In addition to being used for payment, this technology can be used to turn phones into mobile point of sale terminals, essential in a region where agriculture is the main industry.
The association inked a number of other deals with HTC. In the western city of Chongqing, it deployed NFC-enabled Jiang Yu banking phones based on HTC technology in conjunction with Chongqing Rural Commercial (CRC) Bank. These can be used by customers for remote bill payments, contactless payments and city transit. The rollout is being supported by an expansion in the number of contactless payments terminals in the city, with at least 9,000 scheduled to be online by the end of the year. In fact, across the whole country, China UnionPay worked hard in 2011 to equip between 300,000 and 400,000 terminals for contactless payment and retrofitted as many as 700,000.
HTC is also providing its NFC-enabled, Android-powered Stunning handsets to China UnionPay customers to enable them to make contactless payments.
Progress was also made in the mass transit sector. China Unicom launched its Single Card NFC solution in China’s capital, Beijing. The technology is being used to provide the city’s 22 million residents with mobile payment for its automated fare collection system. It can be used on in excess of 50,000 buses, in 60,000 taxis and at 2,000 merchants. It can also be used for payment in other locations such as supermarkets, restaurants, parking lots, pharmacies and cinemas.
ASK was selected to supply 7.5 million contactless paper C.tickets for the 2011 Xi’an International Horticultural Expo. Visitors could purchase single and multiple day tickets at outlets such as China Mobile, China Post and the Line Supermarkets.
VingCard installed its Signature RFID door locks and VISION hotel locking system at Beijing’s China World Summit Wing Hotel in the China World Tower. The 278 rooms can be accessed with a contactless key card, which is also compatible with devices such as wristbands, key fobs and NFC phones.
Location-based service provider Jiepang ran a number of NFC pilots for its social-local-mobile (SoLoMo) service which currently has 1 million users across China, Hong Kong and Taiwan. The firm distributed 1,500 key chains and cell phone stickers with NFC tags to people attending Beijing’s Strawberry Music Festival. It followed this later in the year with the announcement of a tie-in with Nokia involving the handset manufacturer’s NFC-enabled smartphones. This enables Jiepang users to check in at restaurants, shops and other places and share their experiences with friends by tapping their Nokia smartphones on tags embedded in stickers at these locations. The stickers are being distributed to merchants in Beijing, Shanghai, Guangzhou and Chengdu as well as those in Hong Kong and Taiwan.