The Rise of QR Code in China and its Effect on the Travel Industry

The Quick Response Code, now universally called the QR code the type of matrix barcode (or two-dimensional barcode) that first appeared in Japan. The square QR code consists of black squares arranged in a square grid on a white background, which can be read by an imaging device such as a camera. The QR code contains information about the item to which it is attached. It has fast readability and greater compared to standard UPC barcodes, is often used in product tracking, item identification, and document management.

In 2002, the QR Code became widespread among the general public in Japan due to mobile phones with a QR Code-reading feature. The QR Code-reading feature makes it possible for people to access a website or obtain a coupon by just scanning the pattern. The sheer convenience helped to rapidly heighten the popularity of the code among the general public.
However, in Europe and North America, QR codes are rarely seen at scale outside of B2B environments, except on a concert ticket or an airline boarding pass.

Apple has added QR reading to its camera, and you could argue that finally it has decided to take cues on the future of mobile from Asia. That marks a change in attitude from a few years ago, when US and European firms largely ignored the trends emerging in the East.

The Rise of the QR Code in China
In Asia — particularly in China — the QR codes is a well-established way of enabling payments, website discovery or driving app downloads for example. It’s the same story in India, Japan and other countries were QR code usage is notable. However, nobody is on the same level as China, since they are a means to an end for established services due to three elements: the Chinese love of smartphones, the exponential growth of WeChat and the matching growth of mobile payment apps such as Alipay.

Chinese consumers are on smartphones at least two hours a day. Internet users in China reached 668 million in June 2015 and 549 million of those users, almost 90%, accessed the internet on a mobile device. In other words, the number of internet users in China is more than twice the population of the US and almost the population of Europe, and most of those individuals are walking around with a smartphone. But, this has barely started: the total number of internet users represents less than half of China’s population of over 1.3 billion.

In China the QR code has become the magic sauce of mobile commerce largely as a result of the rapid adoption of WeChat, the mobile text and voice messaging service developed by Tencent in 2010, with its 900 million monthly active users.

If you have not heard of WeChat, download it immediately. WeChat had 35% year-on-year growth in 2016: 50% of WeChat users are on the App for 90 minutes a day, typically sending around 80 messages. What is WeChat? Think of WhatsApp, mixed with Facebook and Twitter. And throw in Skype and Facetime. WeChat’s roots extend back to its original hit, the QQ instant-messaging program launched by Tencent.

Every time the WeChat App is downloaded onto a mobile phone, so too is an embedded QR code reader which can facilitate a whole range of O2O (Offline to Online) services from scanning posters in subway stations, to joining social networks and for making payments. When a consumer uses WeChat to scan a QR code offline, the business identified by the QR code can continue the conversation with the consumer online.

Given the success enjoyed by WeChat through the use of scannable codes, all the major internet giants in China such as Alibaba, Baidu and Sina Weibo have added a built-in QR code reader to their own Apps to easily connect their users to additional services and content via any mobile device, anytime, anywhere.

How WeChat links businesses with users
WeChat enables businesses to register as an Official Account of which there are now more than 8 million such accounts. Followers who scan the QR code of the business, either from the website of the business or at a physical location, can then ‘follow’ the business through the Official Account without the need to sign-up through yet another registration form.

Think about how much less friction is involved in using Official Account Apps for services such as hospital pre-registrations, visa applications or credit card services. A WeChat Official Account also allows a business to perform outbound marketing to its followers with up to four promotional messages per month (via text, audio or video).

What is so significant about the above activities? The answer is that WeChat has become a ‘CRM’ platform that controls the intermediation between businesses and consumers through owning and managing user profiles. It is so simple, but so powerful.

Where there is commerce there is money
WeChat supports payment and money transfer, which allows their users to perform peer-to-peer transfer and electronic bill payment. With WeChat Pay plus an Official Account, a business can accept payment from a customer through the use of a QR code. The customer uses their WeChat Pay App to create a QR code detailing the required payment and the business simply scans the mobile phone QR image to complete the transaction. Think about how powerful this model is when you apply it to small retailers or street vendors who use their WeChat QR code reader on their mobile phones instead of a dedicated Point of Sale terminal. On mobile, consumers talk, text, shop, order food, hail taxis, book travel, trade stocks, pay for products and services, deposit money into their bank or transfer money. About half of all ecommerce in China happens on mobile, compared to just over a fifth in the US and around a third in the UK.

What about the travel industry?
The question asked in the West is: what is our strategy for mobile? In China, mobile is the strategy. Mobile is so ubiquitous in China – a way of life, not only a medium of communication. Brands are not just purveyors of products and services, but partners helping consumers with daily living. Most Chinese companies have recognised this, and build their advertising and marketing, social communication, shopping, purchasing, and payment programmes around mobile.

China is becoming the largest source market for international travel, overtaking the US in 2014. The income growth and expansion of China’s middle class makes long-haul travel more achievable. The rapid expansion of airlines such as Hainan Airlines on the international stage makes the Chinese traveller a more accessible consumer.

Already, Chinese travellers are ranked among the top spenders on a per-trip basis. Their preferences are rapidly shifting towards long-haul travel, higher-cost accommodation and up-scale shopping. Cities are the primary attraction for Chinese outbound travellers: nearly 92% of total Chinese outbound travel spending is received by major global cities.

Apart from QR codes appearing on boarding passes worldwide, the broader use of QR codes within the travel industry continues to be China centric. Nearly all Chinese travel brands, and indeed Western travel brands with services to China, enable their customers to transact through WeChat; the user simply scans the brand’s QR code and then follows the brand.

To book a flight, simply go to the airline App within WeChat. To receive customer service, again you can use WeChat to send a voice or text message to an agent in a call centre detailing your request. What about when you arrive into your hotel room? Simply scan the unique QR code in the room and use the in-room App on your mobile phone to control the temperature, the lighting or room service payable through WeChat Pay.

This has ramifications for hotels and retailers welcoming Chinese tourists: nearly all Chinese travel brands – and indeed Western travel brands with services to China – already enable their customers to transact through WeChat. The user simply scans the brand’s QR code and then follows the brand.

To book a flight, simply go to the airline app within WeChat. To receive customer service, again use WeChat to send a voice or text message to an agent in a call centre detailing your request. What about when you arrive into your hotel room? Simply scan the unique QR code in the room and use the in-room app on your mobile phone to control the temperature, the lighting or room service, payable through WeChat Pay.

In summary, although the Chinese market appears to be so different to the West, it is just further along. China really gives us a glimpse into the future of travel with its mobile centricity and payment mechanisms built around the QR code.

Speak to OpenJaw today about how we can help you develop this strategy for your business.


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