The bitcoin community has been abuzz about news that Chinese retail giant Suning is in talks with BTC China, the world’s largest bitcoin exchange by volume, about integrating bitcoin payments into the retailer’s e-commerce platform. But Bobby Lee, BTC China’s founder, says the news is not accurate.
“Sorry, I have actually not heard about this. Where did you see this?” Lee wrote in an e-mail after CoinDesk contacted him for clarification on the supposed partnership.
News about a supposed deal between the two firms discussed on reddit four days ago. The reddit post pointed to an article published on iFeng, a respected Chinese news site, on 5th Dec. iFeng is published by Phoenix New Media, a New York Stock Exchange-listed media firm. The publisher grew out of Phoenix Satellite Television, a global Chinese-language network based in Hong Kong.
The iFeng article claimed that a Suning insider had leaked the news that the retailer was in talks with BTC China to enable bitcoin payments on Suning Yigou, the retailer’s e-commerce platform where it sells electronics and other products direct to consumers. According to the article, the two parties were in close talks.
Redditors jumped on the news with excitement, with the reddit thread attracting 29 comments, and counting. The thread’s title announced optimistically:
“China’s largest electrical appliance retailer, Suning, is planning to adopt bitcoin”
A separate reddit thread suggested Suning was also preparing to accept payments in another digital currency, litecoin.
China’s bitcoin buzz
China has been at the centre of several major developments surrounding the use and regulation of bitcoin in the last week. On 5th Dec, China’s central bank issued its first statement on bitcoin, publishing a note on its website saying that financial institutions were not permitted to deal in bitcoin. Bitcoin exchanges would also be required to register their users as anonymous trading in the digital currency would not be permitted. However, the bank made clear that individuals could freely use the cryptocurrency.
As a result of the Chinese central bank statement, two major Chinese companies appeared to withdraw their plans to start accepting bitcoin for products and services. One of those companies is Baidu, the search engine giant. It published a statement on 6th Dec saying that it would no longer accept bitcoin payments for its Jiasule website optimisation service. The firm had announced it would take bitcoin payments on 14th Oct.
China Telecom, which dominates the country’s fixed-line subscriptions, also appeared to have removed all references to accepting bitcoin payments from several advertisements it had published earlier. One of these was an offer for customers to buy a gold iPhone 5S with bitcoin. China Telecom has the third-largest mobile subscriber base in the country, lagging behind market leader China Mobile.
Hybrid financial models
China’s rapid adoption of bitcoin is just the latest example of the innovative, hybrid financial models that have gained popularity in the People’s Republic. According to Zennon Kapron, founder of financial services consulting firm Kapronasia, one of the key issues in China is the line dividing financial institutions from other firms. Kapron recently gave a talk to the Shanghai Foreign Correspondents’ Club on bitcoin in China. He said:
“The line is really blurring right now in China as to which companies are considered financial institutions.”
Kapron gave the example of e-commerce titan Alibaba, which has introduced more bank-like features to its online payments platform Alipay. Users can opt for a new investment tool from Alipay called Yu’ebao, an online-only money-market fund that offers users a yield of more than 6%. The service has proved popular, with 2.5 million users signing up for it within three weeks of its launch.
“The Alipay division of Alibaba now offers a high-yield money market option called Yu’ebao, [so it is] gradually becoming more like a bank,” Kapron said.
Kapron said firms that wanted the benefits of accepting bitcoin, like Baidu, were probably taking precautionary moves, such as suspending their plans for bitcoin transactions, in the wake of the central bank announcement to protect their core business. He said:
“Bitcoin for Baidu is good, but it’s not worth the risk of attracting the attention of regulators.”
Suning is China’s largest electronics retailer, operating more than 1,600 stores in over 600 cities in the country and Japan. It announced a major investment online retailing earlier this year. It faces competition from retailers like Gome and 360Buy, which have both online and physical retail stores.