Code for success

By Zhao Qian Source:Global Times Published: 2013-1-20 20:28:01

Consumers pass by a huge QD code-shaped cake in a shopping mall in Beijing. Taking photos of the code allows access to an Internet firm's services. Photo: CFP
Consumers pass by a huge QD code-shaped cake in a shopping mall in Beijing. Taking photos of the code allows access to an Internet firm's services. Photo: CFP

It has become more and more common recently to see people using their smartphones to take pictures of posters at public places like shopping malls, subways and even elevators.

They are not taking photos of their celebrity idols, but scanning a QR (quick response) code, which is a two-dimensional bar-code readable by QR bar-code readers and smartphones.

Through scanning the QR code and entering an account name and password via an app on the smartphone, consumers can purchase products or services, or get access to more information about them or even a discount coupon.

The QR code was first created for the Japanese automotive industry in 1994 to allow high-speed scanning of auto components, but remained a fairly specialized area of technology until recently.

After nearly two decades of development, the code has suddenly become trendy among ordinary phone users in China, thanks to the popularization of smartphones and the development of mobile Internet services.

Mushrooming business

QR codes have actually been in use in China for around 10 years, albeit in a limited number of areas, such as registering employees' presence at work through scanning their QR codes. The codes are also printed on tickets readable by bar-code readers at the entrances of theaters and parks.

But they had not been used by ordinary consumers until several large Internet companies started to base new services on the code. Tencent Holdings, a leading Internet and mobile phone services provider, launched its QR code scanning service in 2012 via its Wechat software, a mobile phone text and voice messaging service that has over 200 million users.

Microblog website Sina Weibo, which has around 400 million registered users, launched its QR code services in September 2012, through which people could add other users' contact details by scanning their QR codes or open Internet pages just by scanning the codes, rather than having to type in the address or search for the page via a search engine.

As well as being a new way for people to get access to goods and services, scanning QR codes also started to get fashionable among mobile users.

"QR codes make it more convenient for users to operate their smartphones, and will be an important tool for mobile Internet use in the future," Li Zhi, a senior analyst at Beijing-based Internet services firm Analysys International, told the Global Times Wednesday.

Some small-sized providers of QR code technology and service are also making efforts to entice users and grab the business opportunity.

"The business ecosystem for QD codes is huge, so everyone will have an opportunity," Wang Pengfei, CEO of Beijing Lingdong Kuaipai Information Technology Co, told the Global Times Tuesday.

Lingdong Kuaipai has developed four types of products, through which users can scan the codes of products with the Kuaipai app on their phones. Based on the purchases made, Kuaipai can draw up reports on topics such as purchasing habits, and then sell the reports to producers of goods. Wang said the company currently has limited profit models and is exploring for more.

Cao Yuehua, CEO of Beijing Fengxiafei Technology Co, told the Global Times that her firm, which develops QD code technology and services, has received over 20 million yuan ($32 million) in investment from a Shanghai-based investment company, and has also accumulated around 6 million registered users.

Zhang Bo, director of business supporting at Shanghai Imageco Information Technology Co, another firm in the QD code sector, told the Global Times that his company is involved in services in about 20 different sectors.

Imageco has set up cooperative relationships with some well-known firms, including McDonald's.

Consumers can pay for McDonald's food online on, and receive a QD code sent to their mobile phone. They can then eat at any McDonald's restaurant nationwide just by showing the code to the staff. Imageco is paid a fee by McDonald's for offering the service.

 Wider applications

QR codes will be a vital link in the online-to-offline (O2O) connection of businesses, said Li Zhi of Analysys International.

Unlike the traditionally separate business models of offline shopping and e-commerce, O2O is a new model that makes online payment a necessary step in a wide range of offline services.

"Anyone with the Alipay payment app on their smartphone can pay with their phone in offline stores by scanning the QR code on the products and entering their Alipay account name and password," Zhu Jian, a manager at the PR department of Alipay, a third-party online payment platform under Alibaba Group, told the Global Times.

Sales based on people using QR codes with the Alipay app on their mobile phones in 2012 increased by five times compared with the previous year, said Zhu.

"The QR code will never become an independent industry, and it will be an important entrance to the mobile Internet market," Ma Huateng, CEO of Tencent, said in a news release e-mailed to the Global Times Tuesday.

Meanwhile, Tencent is continuing with efforts to promote its Wechat QD code application. Users can scan codes printed on posters in restaurants, shopping malls, hotels and cinemas, and then receive membership cards or coupons. They can also share the codes they have scanned via Wechat, which can increase the popularity and use of the technology.

No copycat game 

Facing serious competition from larger companies, small firms have to find the right business model.

"It is not bad news for us that Tencent has set its sights on QD code applications," said Cao Yuehua of Fengxiafei Technology, noting that Wechat has made the use of QD codes more popular among ordinary users, pushing forward the use of the new tool.

"The companies should develop their own business models to fight against serious competition," Cao noted, "and copying will not be a good choice."

Cao said her company focuses on the tourism industry, and is developing a business chain in the sector.

"People can buy tourism tickets by phone, and then listen to an introduction to places of interest through scanning QD codes at each place. They can also purchase products through scanning the QD codes and save money in advance," Cao said.

Posted in: Insight

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