China: Cross-border B2B payments were disrupted

Mainland China continues to grow and expand its reach into many industries across the
globe. As it expands it is under increasing pressure to address the B2B cross border
bottleneck that afflicts the current system of payment. The cross-border B2B payment
problem is a serious issue for medium and small-sized businesses who are unable to access
the countries banking system due to the restrictions in China. This B2B payment bottleneck
impacts businesses that do business with SMEs in China and overseas.

Monopoly in Chinese Bank B2B Payment Monopoly

Three ways to make B2B payments in China. The first and the most well-known is the bank
transfer, which is also referred to as telegraphic transfers. Telegraphic transfers are the most
popular method to make cross-border payments, including to Chinese companies based in
mainland China. This option can be difficult to obtain for SMEs because they might not have
the funds or documents needed to allow bank transfers within China as well as to transfer
money into China. It is also extremely time-consuming to set up the telegraphic transfer.

Transfers to banks can take between five and seven business days after the transaction was
made. If funds are to be electronically transferred to their accounts, the recipient business
may need to transfer paperwork and personnel to China.

However, even though SME's as well as newly established companies can be able to send
and receive funds via telegraphic transfer there is the problem of Chinese banks blocking
access to small financial institutions as well as nonbanking organizations for bank transfers.
At present, there are four hundred banks in China who are authorized to send and receive
bank transfers.

While this number is huge, it's not enough to satisfy demand of the market. The numerous
transactions that travel back and forth across China's borders cause a tangle in the
systemthat is unable to provide the market's requirements.

Electronic Payments

Electronic payments have become increasingly popular with the mainland Chinese
consumers. In 2018, 92% of urban consumers and 47% of rural customers in China used
their smartphones daily to pay for purchases. WeChat Pay is the main service provider.
Alipay is also a popular option. These transactions are extremely easy. The buyer simply
scans the QR code of the seller to pay.

The applications are used by retailers from outside China for selling goods to Chinese
tourists. Electronic payments increase the chance of Chinese customers purchasing
products. Their spending can amount to up to 25% of sales from brands in one year.
Merchants need to sign up to the Chinese payment system to be able to process sales
through it. This could pose a significant problem for firms with fewer contacts or have
business activities in China.

Cash on Delivery (COD)

Cash On Delivery is one of the most well-known payment system used by Chinese
consumers today. Since it is available for those without an online banking account, or who do
not possess technical abilities, the system could outdo electronic payments and bank
transfers. COD is preferred as customers can inspect the quality of the products before they
pay for them. For a small fee, the non-banking service provider will carry out this service and
then return the rest of the amount to the seller. This is a system that benefits all. Dangdang
and Amazon are the most significant third-party non-banking payment services providers.

This approach has its drawbacks. Third parties must be paid in order to supply the items or
process payments. A third party in the transaction may increase the time required for the
seller to receive customer payment and decrease the profits from these payments because
of third party transaction/service fees. It is best for the seller and customer to eliminate the
third party out of the transaction. This can streamline the delivery of goods and services, and
the transfer of money from the customer to sellers.

Financial Sector Innovation is driven by SMEs

As of 2015 the mainland Chinese small and medium-sized enterprises accounted for over
60% of foreign trade and were the principal driver behind the rapid development of e-
commerce and fintech solutions to cross border problems with e-commerce. At present,
SMEs from mainland China are driving the disruption to the Chinese banking system, and
are making it easier to transact cross-border transactions within and outside China. In
addition, since SMEs cater to the particular niches that big established companies are unable
to serve, there will be even greater pressure on the Chinese banking system to simplify and
streamline commercial transactions, so that small, less established businesses can grow and
meet the rising demands of China's expanding commercial sector.

As the belt-road initiative is gaining momentum, big companies must concentrate on

satisfying the requirements of the Chinese government in order to be able to trade with
China. Small and medium-sized enterprises will be the ones that serve the needs of the
economically less wealthy and more wealthy. They need banking products that are easily
accessible for both their customers and themselves.

B2C, Fintech

Aleta Planet's long-term answer to bottlenecks in cross-border transactions and the speedier
delivery of payment and the easier transaction process result in local industry expansion.
These advancements are good for fintech as well as SME industries. These technological
advances are creating global B2C E-commerce spending. This is in turn leading to the
development of solutions for fintech to B2C transactions.

It is essential to ensure that the Chinese border does not impede the flow of goods or money
as the Chinese economy grows more consumer-focused. AP-1 Business platform payments
to Chinese suppliers are more reliable and are able to receive payments on time.

Fintech is the rescue

Fintech companies have realised the need for better service. They are working with SMEs,
ecommerce sellers, and companies in the new tech sector to offer more efficient financial
services. Fintech firms combine technology along with finance and creative thinking to come
up with innovative solutions that eliminate the restrictions imposed on SMEs and make it
easier for them to conduct business.

These firms aim to make cross-border B2B payments easier, more accessible, less stressful,
and an ideal method to do business in China. Aleta Planet is one such business that has a
hand in this trend. Aleta Planet has designed a system that rides on the UnionPay network to
facilitate payments into and out of China and make regular payments to foreigners more
sustainable.

AP-1 Business

AP-1 Business is a virtual business account that is available to businesses outside of China.
It allows transactions in T+1 this is the greatest aspect about it. Bank transfers are typically
made in T+5 and more, while AP-1 Business is accessible in T+1. Since AP-1 Business is a
member of the UnionPay Network, the transaction is transferred quickly and securely from an
offshore UnionPay Account (AP-1 Business), to an inshore UnionPay Account belonging to
the supplier.
AP-1 business offers additional advantages. Foreign companies doing business with Chinese
companies will find all of the AP-1 Business benefits attractive.

Key Features

All-in-One Service

AP-1 Business offers a one-stop service that lets customers send, receive and process
money transfer. It can be utilized by non-natives and there aren't any limitations on foreign
shareholders and owners with respect to business accounts set up with the AP-1 Business.
The AP-1Business service allows businesses to open accounts for business without the need
for a director.

Because cross border B2B Payments that of the UnionPay platform, AP-1 Business has the
ability to provide top customer service and all-in-one services to its customers. All Chinese
banks as well as financial institutions can utilize the UnionPay platform. With the platform AP-
1 Business removed the middleman out of the equation.

In contrast to banks that must transfer funds through intermediary banks like banks, money
transferred via APC Business is immediately credited to the account of the beneficiary. AP-1
Business also permits users to withdraw cash from ATMs throughout the world. The system
is supported by Huawei Pay and Visa. This ATM cash withdrawal facility will become
operational in the second quarter of 2021.

Attractive rates of foreign exchange

Another great feature of AP-1 is its forex (FX) rates. AP-1 Business provides direct FX rates
(SGD and RMB) to China through the UnionPay network. These rates are competitive
considering that some payment platforms offer higher rates on FX exchanges but charge a
fee to transfer funds across the borders. It is AP-1 Business's guarantee that customers
receive the most competitive FX rates any time cross-border transactions are required.

There are no minimum balances to be met or minimum balances

Contrary to other business accounts AP-1 Business doesn't require customers to maintain a
minimum balance or make minimum deposits. The lack of a minimum balance or deposit
requirement has enabled some SMEs to maintain their business operations during the
COVID-19 outbreak and to recover with time even if it's slow. That's why AP-1 Business aims
to provide modern day solutions for financial services that cannot be addressed by the
reigning banking industry.

AP-1 Business customers can make cross-border payments to China using the AP-1
Business Virtual Card. The card works as credit card that is prepaid, and transactions or
purchases are debited from the current funds that are within the account.

The use of AP-1 Business cards allows the users to avoid the time-consuming and
cumbersome process of clearing transactions, submitting documentation, as well as other
processes that banks need to complete for international bank transfer transactions. This is a
win/win scenario for SMEs that participate in trans-border B2B and ecommerce.

The Roadmap of Aleta Planet for the Future

Aleta Planet, like other fintech firms, has experienced immense growth and continues to
evolve with the Chinese economy expands and online commerce transactions rise. Although
the COVID-19 outbreak had a significant impact on China's economy it was the only country
that has seen economic growth.

Conclusion

The three systems that are utilized to manage commercial transactions on China's mainland
lack flexibility and can be difficult for foreigners to use. The AP-1 Business platform from
Aleta Planet addresses this issue by allowing businesses from overseas to have easy access
Chinese products, services as well as payments. The simple, seamless access is a catalyst
for the growth of Chinese SME's, which is a part of the mainland Chinese consumer
economy, as well as the advancements in modern payment methods that allow financial
transactions for B2Bs as well as B2Cs. AP-1 is a leading player in this area, assisting sellers
and buyers to get around China's business bottlenecks and grow their businesses.