Guanxi - How AliPay Built Market Leadership in China

China is already the world’s biggest e-commerce market and almost half of the transactions on it are made using Alipay - an online payment system set up by Alibaba.

Nearly a decade ago Alibaba launched Alipay - China's answer to online payment giant PayPal. Today it's seen as the magic password at the gate of China's online commerce treasure trove.

Unlike PayPal, used by many Western internet companies, Alipay takes money up front and puts it in an escrow account. Vendors can be sure that payments made through it will be honoured.

This works so well because many Chinese are reluctant to trust strangers. The Alipay system helps build trust (guanxi) between buyer and seller. Simple!

This video shows Alipay in action.