How Did the FinTech Industry Emerge in China?

Abstract

This thesis has investigated how the FinTech industry in China has emerged and contributes to the academic - theoretical field of the industry emergence literature. In order to explain the phenomenon at hand the researcher has conducted an extensive literature review, while applying Schumpeter’s model of innovation and entrepreneurship. In line with Schumpeter, the study has found that technology and innovation are key drivers of the competitiveness and economic dynamics of China’s FinTech evolution. Especially the internet company Alibaba - after its success with Alipay in 1995 – is the key entrepreneur who initiated – triggered the overall development and inspired multiple other firms – entrepreneurs to enter the emerging FinTech industry. Following that, the study has found that the FinTech Industry in China at the beginning was mainly influenced by e-commerce giants. The initial and co-evolutionary stage were trigged by Alibaba’s online payment system Alipay, unmet financial needs of the Chinese consumers and an exponential growth in digital connectivity. The subsequent growth stage was highly influenced by China’s FinTech ready generation, the government and investors. Last but not least, it was China’s transition from a planned economy to a market economy that has been crucial for the development of the FinTech industry in China.