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China’s embrace of all things digital creates a new class of have-nots

PUBLISHED : Saturday, 31 March, 2018, 12:02pm
UPDATED : Saturday, 31 March, 2018, 12:50pm

With nearly every aspect of life in China migrating to mobile phones, the less tech-savvy or those not inclined to follow digital trends have become a new class of digital have nots – and there could be hundreds of millions of them.

At the age of 62, retired elementary school teacher Wang Yaqing made up her mind to dive into the digital world, something she never considered before. Living in Suzhou, an affluent Chinese city about 100 kilometres north of Shanghai, Wang was wary after hearing reports of consumers being cheated out of large sums of money by scammers taking advantage of digital loopholes and the victim’s ignorance of smartphone technology.

“Making payments on mobile phones looks fancy but it only caters to young people, not to me,” she said.

What changed her mind was the inconvenience of standing in long queues at her local hospital to make bookings and payments because she couldn’t use the automated terminals that were increasingly being installed. Making the experience even worse, elderly people in the long lines at the service counters could only look on as younger Chinese used smartphones to process bookings in less than a minute. 

“I couldn’t bear queuing up at hospitals any more as the limited number of service windows are now overcrowded with elderly people and it takes hours to register and make payments,” Wang said. “I needed to learn from my son how to use smartphones for mobile payments.” 

Although it is the world’s second largest economy, China’s economic development is still extremely unbalanced. The average per capita disposable income in Shanghai was 59,000 yuan (US$9,327) last year, the highest in the country, yet more than 43 million people in mostly rural areas live below the national poverty line, earning less than 2,300 yuan per year – the equivalent of a medium-priced smartphone. The Chinese government has pledged to eliminate abject poverty by 2020.

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Unlike Wang, who is well educated and lives in a wealthy region of China, most digital have nots in the country live in remote areas and do not have the opportunity to go digital even if they wanted to. There are more than 750 million mobile phone users in a country with a total population of 1.3 billion, meaning those without number in the hundreds of millions.

Teng Yukuan, 75, lives in a small town in Liaoning province, hundreds of kilometres from the major seaport city of Dalian. Like many of his relatives and neighbours of a similar age, Teng does not own a smartphone and is not connected to the internet at home. Television remains his primary source of information.

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Teng said he has heard of people using smartphones to shop, with the goods being delivered directly to their doorstep. He has also seen people using smartphones to video chat with friends and relatives living in other places but he has never heard of WeChat – Tencent’s social messaging app with more than 700 million users in China, and he has no idea how to use a smartphone.

However, Teng has basically given up on technology given his limited knowledge and meagre income.

“My way of life has hardly changed over the past few decades but this is common among people of our ages so we are already used to it,” he said.

Meanwhile, thanks to aggressive marketing by China’s two leading technology companies, Alibaba Group Holding and Tencent Holdings, mobile payment systems Alipay and WeChat Pay have permeated many parts of the country, producing a society where anything from instant noodles to automobiles, even aeroplanes, can be paid for by smartphones. China’s younger generations enabled these changes when they skipped desktop computers for mobile phones and credit cards for mobile payments and online bank loans. 

During rush hour in Chinese cities like Beijing and Shenzhen, taxi drivers with empty back seats whizz past people waving them down because they are on their way to pick up riders who booked on Didi Chuxing – the mobile car-hailing platform in China whose daily bookings exceed 25 million.

Walking into an empty restaurant may not guarantee a table because they might have been held for diners who made reservations through a dining app on mobile phones. Some restaurants in China have even stopped giving out phone numbers for customers to use for reservations.

Even at many McDonald’s and KFC outlets in the southern Chinese city of Shenzhen, staff are now advising customers to scan a QR code to place orders on their mobile phones, as only one staff member is serving at the counter, creating long queues, while the rest are busy fulfilling the app orders.

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In January, a month before the traditional Lunar New Year when most Chinese people travel back to their home province to unite with family, a 58-year-old man queued at the ticket window of a Shanghai railway station six different times trying to buy offline tickets.

“The railway station staff told me to buy tickets on a phone but I don’t know how to do it,” said the man on his knees in tears at the ticket office, according to local Chinese news reports that went viral on social media.

During chunyun or “spring transport”, as the busy Chinese holiday travel period is known, even the tech savvy need to download multiple mobile apps and pay premiums to secure tickets to the most popular destinations that sell out just a few seconds after their release.

China’s mobile payment penetration rate has soared from 25 per cent in 2013 to 68 per cent in 2016, while individual mobile payments totalled US$790 billion in 2016, 11 times more than the US, according to a McKinsey Global Institute report in December.

Of the total mobile phone users in China, 73 per cent are aged between 10 and 39. Of the 230 million in China aged 60 or above, only 39 million are using smartphones, according to a report released late January by the state-backed China Internet Network Information Centre.

Ouyang Liangyi, an associate professor at Peking University HSBC Business School, said the digital transformation was an irreversible trend in society and certain groups will adapt more slowly, paying the price of progress.

“Developers should try to make their apps as simple as possible so everyone will not be scared to use the new technology,” he said.

“But the truth is that many elderly people are learning technologies much faster than we would imagine. Just look at how good many of them are at using smartphones, and we should never underestimate their capacity [to do so].”

WeChat, whose active monthly users hit 1 billion during the Lunar New Year in February, had 50 million users aged between 55 and 70 years as of September, according to the 2017 WeChat report released in November.

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China’s biggest e-commerce company, Alibaba, which owns the South China Morning Post, is also recruiting people older than 60 years, and paying them up to 400,000 yuan a year, to help it better understand how elderly consumers shop online and devise ways to improve that experience. On Alibaba’s Taobao and Tmall e-commerce platforms, 30 million users are aged over 50 and they spent an average of 5,000 yuan each during the first nine months of last year.

However, retired teacher Wang is not one of them as she still considers online shopping too complicated. But she has started using WeChat to book and pay for hospital visits and during the recent Lunar New Year received several hundred yuan in digital red packets via the messaging platform. 

She plans to use the money to pay for future hospital visits.