 This is Think Tech Hawaii. The immunity matters here. Here's the carry force store. Ah, that's Russell Liu. And that's Jay Fidel. Yeah, he's co-host and host here on Think Tech Asia. We're going to talk about, gee, WeChat. WeChat? WeChat. WeChat. It's a real deal. It's WeChat versus Apple, in fact. Okay, and it's changing western business models. And you are excited about that. I'm excited. You can't even breathe about it, I know. Yes. Welcome to the show. Thank you, Jay. That's Russell. He is a longtime lawyer in Honolulu and also in Beijing, 15 years in Beijing. He's a law professor in China. And he's a consultant about things Chinese and American in Beijing. And I don't know, you know, what he does with his spare time. Maybe he does this with his spare time. All my energies are devoted to this show. So WeChat. We are so interested in WeChat. We talked about it last time. We only had a, you know, like touch and go last time. There's much more about WeChat. And I put it on my phone. I don't know how to use it yet, but let's talk about what WeChat is. What is WeChat? Well, WeChat started off as a communication network, social network device. Just like Line, WhatsApp, Facebook. You know, you could send pictures over it. You could send messages, text messages. You can send voice files. You can send word files, PowerPoint files, videos. Sounds like email to me. Yes. But it's more than that. But there's a revolution in WeChat. And you can see in China, everybody in China uses smartphones. Got a picture? We got a picture. We got a picture of that. Show you exactly how intense that is. I mean, they're surpassing the U.S. And this is a typical day. Issue the intensity. This is a typical day lining up right now at a subway station. It's incredible how people, spare moments, are productive. You think that they're playing the games, no, they're doing things on WeChat. They don't do games, right? I mean, they must do games at other times. But my sense of it is the Chinese with the smartphones, they're doing business. They're doing constructive things or communication things. Well, they discovered the American way. They're doing games too. Okay. But what's the beauty about WeChat is that it's transformed the lives of 938 million people in China. That's like, oh gee, that's probably about 70% of the whole country. That's a very big country. And the amount of volume of transactions done through WeChat is going to be incredible. We're going to talk about that. But what I say it's transformed the lives of the revolution, it's because now with this one app, it does it all. It's a lifestyle changer. You can do many things that you couldn't do in America. For example, through WeChat, if you go to a restaurant, you can split a bill. Imagine that street. Imagine the problem, my bill is $10.68. And if you're the smart guy, I'm sorry guys, I've got a $20 bill and can't change it. So he forgets about it and completely doesn't pay for a share. But in China with WeChat, you can easily take out your application, type in $10.68, send it to the guy who's paying it to his, who's the host is paying on to his bill. So you can adjust the bill that way. Adjust the bill. And everybody's paid in real time. Everybody walks away happy. Nobody feels short-shaded. No, you can do that with PayPal. Why is WeChat better than PayPal? Well, you can do more than just that. You can go to stores. You can go out to buy a cup of coffee. You've got a picture shot of some of these where you're actually making payments. And also, you can do things called group chat. Let me talk about that for a minute. Forget about it. And we've got a picture of the group chat. What is group chat? Is this group chat? That's group chat. See on the top, it says group chat. You can add as many users as you want on this group chat. For example, when I have a law class of 81 students, I have one group chat room. One-way chat room with 78 suits. So when I say, we're going to have to read these cases out of the textbook. I'll scan the cases. I'll send it over to WeChat. Everybody has the cases. No excuses. Everybody comes prepared for class. And if I have a problem with them to solve, I send it out to WeChat. If somebody has a question, they send me a message in WeChat. Everybody in the class gets to see it. So it's a revolution changing. So it's like an enhanced message. An enhanced SMS message. That's right. I can see everybody's messages together. And I can see who's there, right? That's right. Well, let me tell you, how does it affect Hawaii? You know, last year at the Hawaii Tourism Authority, their major global conference, September, we had a representative from Sea Trips, the largest online tour operator from China. You're talking millions of millions of Chinese travelers that buy online everything from hotels to plane tickets to train tickets to running cars. And it's incredible because what they do, for example, if they have 230 people traveling to Hawaii, they may not be in the same tour group, but they will set up a WeChat group chat for all of these travelers coming to Hawaii. And in real time, somebody could be at Helena's restaurant and saying, this poi tastes excellent. Oh, wow. Takes a picture of poi, say, you guys should try it. So they can be all over town talking to each other. That's right. The group remains, you know, connected. They have an integrity as a group, whatever they do. And so, exactly. So through this real-time communication, somebody else in the group will say, well, we better schedule to go to Helena's. Food's great. Or if the service is bad at this restaurant, they'll put it down. So it's a real game changer. Now, you know, it has all kinds of social effects, right? Because, you know, of course, of course, and we can get to this in a minute, that's good for business, too. A business organization would benefit by that big time. But, you know, where you have a vertical kind of hierarchy, where the boss tells everybody what to do and nobody can really respond to him, or at least they can't do horizontal vertical connection, right? With WeChat, WeChat, and this group chat thing. Everybody's in the same room, including the boss, including everybody else. They become one team as big as you ever wanted it to be. That's right. This allows for the organization of the group, whether it's a travel group or a business organization where everybody can talk to each other and share ideas and come up with new solutions and be creative, you know? That's very interesting. It's very dynamic. So it's really changing and transforming the lives of everyday people from people in the workplace, people traveling, students in a college class. It's dynamic, too. Tell me you can't do that on any other software. You know, I don't think there's any other software that can do that. But, you know, the beauty about it is that it covers your whole life. The whole day you can be in this ecosystem of WeChat. For example, when I go out and get a cup of coffee, my favorite place is Costa Coffee. We've got a picture of Costa Coffee. I'm at the coffee shop. This is a picture we've seen. And it's called Costa Coffee's 26 Quiet. I don't carry cash. And I simply go to Costa Coffee. Costa is the competitor Starbucks. It's actually a large UK-British coffee house. And so there you go with my cup of coffee. That's about $2.50 for that cup of coffee. But actually, it's more than that. Whatever. But you see, I get to do my payment. And that's through the other ones, Alipay. Alibaba has their type of WeChat pay. But again, this is transfer of lives. In case anybody didn't see the last time we did this, can you describe how this transaction is accomplished? Sure. Simply take out my application turn on WeChat. It's usually already on in my smartphone. And I will simply, for example, go to the store. For example, it's just a transaction. I've got one where the store even has a sign. There's a store here, and it has a sign. And simply I'm going to buy something. And it tells me it accepts WeChat pay. Okay. And I just will scan the Q-code. And when I scan the Q-code, You're just taking a picture of the Q-code. I take a picture of it. I look at the bar scanner. And it scans it. And then what happens is that I will scan it. And they will have on the scanner maybe the price. And I will type it in. This is the amount. Bingle. And I hit pay. You got to say pay. I'll hit pay. I'll hit the bar to pay. And then it says authentication. So I have my fingerprint. I touch the phone. And it secures it. And what happens is the funds in my bank automatically transfer away. Instantly. Instantly. So imagine cash. Don't forget the sound. There's no swish, unfortunately. Is there a bing sound? No bing. Not yet. It just happens all by itself. It happens all by itself. But it will say, say, payment's successful. And it's wonderful because you know what happens? On my bank application, my bank application to the banks of China, they'll send me an SMS text that says, you have just to conclude the transaction. This amount was taken from the account. You know as much as they do. Everybody's on the same page. Everybody's on the same page. And so the beauty about it is that cash turns faster in an economy. You don't need to carry cash. And remember about credit cards. Credit cards, they've got to do that. Check on the computer. Are you the right drape? Adele, do you have money? Did you pay your last billing cycle? Did you pay? We're not going to approve of it. But this goes from the bank. And the money's either there or not there. And transactions are done deal. There's no waiting. What happens if I don't have money in my account? Well, I think it would say the transaction is not successful. And there's a story. Everybody knows it. And so you'll get... Including the guy with the coffee. You'll get your cash off. But again, the beauty about it is that everything's done in real time. And you can affect a lot of people. So this is preferable to anything else? I mean, is there anything else that competes with it? Well, that's why it's interesting because it's a change in model now we have. It's a change in model, Jay. It's a change of how we rethink business, okay? Let's look at the Apple. The Apple has been very successful. But again, Apple is successful but let's take a look what WeChat does. In 2016, $1.2 trillion in mobile payments were made. Okay? Trillion. One Apple. And again, Apple is not within the top five mobile payments platform. So the $1.2 trillion is Apple or WeChat? That is WeChat. WeChat. WeChat. Apple is less than that. Not even on the list. Not on the list of five e-commerce vendors. So, but I mean, if I'm living in China, you know, and I'm all excited about WeChat, is there any other arrangement that I would consider or is this the one where, you know, nearly a billion people use it? If that's that, it's a settled issue. There's WeChat Pay, there's Oli Pay, there's a couple of others, but WeChat does it all. WeChat, you can even, even if you're locating a taxi and you need a taxi. WeChat will find a taxi. WeChat will find a taxi and dispatch a taxi to come and pick you up. So it's like Uber in that regard. Uber and PayPal and email and messaging and all that all rolled into one. Or, for example, if you're going to go to a wedding and you don't have time to buy a gift, but you want to send the Chinese ways and send an envelope, a red packet of money, so you would send it through WeChat. And somebody would deliver a red packet of money. It would deliver directly to the recipient. Well, that's lovely. It saves you all that trouble. And it's incredible because the transactions today are global, so we're going to see WeChat more and more in the U.S. For example, imagine all these trading stores that came to Hawaii, came to Waikiki Beach, all the vendors that accepted WeChat, they're not limited to $10,000 of cash. The old problem of bringing it in, the customs regulation, they're pumping a lot of money in their economy. They're buying things, a lot of things. The cash thing about $10,000 is no longer relevant. Yes, well, there's no regulations yet, but again, so imagine what can happen. It's a revolution. You know, you don't need to fuzzle and hassle with that. What does it cost me to have WeChat? It's free. You can download it. It's free. You said it's free. I thought you said it's free. It's free. Completely free. So if I want to pay for dinner, no charge to me, just for dinner. If I want to buy the coffee, no charge, just the coffee. Well, you get the WeChat pay. You use the WeChat pay. Okay, but is there a percentage coming out? Well, yeah. The difference is that in the American model, typically through Apple, if you buy an application through Apple Store, every application you buy, Apple takes a 30% chunk of it, 30%. But in WeChat, in that ecosystem, It's free. It's free. There can be games, applications. There can be maybe some videos. But there's actually selling you something on it. I mean, it's got all this functionality. What happens is... You have to pay anything and how do they get paid? Well, the way the Chinese do it is that their customers will send a tip through WeChat. I'm going to send you a tip because this is great. Really? Great. But you know what? WeChat doesn't take a percentage, right? But now Apple says, wait a minute, if you were in our ecosystem and you've got an iPhone, that means we should take a royalty out of this 30% chunk. That's the big fight. That's a big fight. So the big fight is now Apple stepping its foot in China and saying, you are going to have to be in our ecosystem. You're going to have to pay us that royalty fee. And so they're clamping down on WeChat. So there's a little fight going on between that. But it challenges the way business is done in China. So we're going to weigh 738 million users. 938. 900, what's that? 938. A lot of users, right? So anyway, let's take a short break while we can sort of integrate all this information and then we're going to come back and I'd like to talk about how we here in Americaville can take advantage of WeChat or WeChat however you pronounce it because I know it goes both ways and see what the future is like for us as well as them. That's Russell Liu. He's a lawyer and a consultant and a law professor. All those things rolled into one. Kind of a WeChat of all the legal things you can imagine. All in one ecosystem. All in one fantastic package. We'll be right back after this break. This is Think Tech Hawaii, raising public awareness. Hello, I'm Helen Dora Hayden, the host of Voice of the Veteran, seen here live every Thursday afternoon at 1 p.m. on Think Tech Hawaii. As a fellow veteran and veterans advocate with over 23 years experience serving veterans, active duty, and family members, I hope to educate everyone on benefits and accessibility services by inviting professionals in the field to appear on the show. In addition, I hope to plan on inviting guest veterans to talk about their concerns and possibly offer solutions. As we navigate and work together through issues, we can all benefit. Please join me every Thursday at 1 p.m. for the Voice of the Veteran. Aloha. I told you we'd come back. I'm Jay Fidel. That is Russell Liu, law professor, lawyer, multi-jurisdictions consultant, speaks Mandarin, says something in Mandarin. I knew you'd say that. And we're talking today about WeChat or WeChat, depending on where you are. And, you know, the thing about it is that Russell explained this to me last time and I downloaded WeChat on my phone. It's living on my phone now. Very interesting sophisticated program and it's got a real future, you know, in the U.S. but you have to have an account somewhere with all that money passing and you have an account in China. So your account is in a bank in China somewhere but there are no accounts that we know of here yet, right, in this country. So you go down to Waikiki. Like any Chinese visitor, you go down to Waikiki and you want to have a chance to have a Chinese visitor, you go down to Waikiki and you want to do something, can you do something? Can you spend money with your WeChat, WeChat? Well, unfortunately, I can't use WeChat to pay or buy things here. I just, by quits, I bumped into one of the, I guess, General Counsel with Bank of Hawaii yesterday and I was talking about WeChat, how excited I was. And so, well, Bank of Hawaii's coming out with something where you can pay each other money. But the question was, can you pay vendors? How about somebody who has WeChat that has a big bank account in China? Imagine if there's a bank here that was a clearinghouse that did a joint venture with Bank of China or one of the Chinese banks and Chinese tourists can come here electronically, make the payment out of their account, go through the bank here locally, converts it, boom, payment's made in a local vendor. You know, things are becoming much more global. Well, they are, except I have to say that Hawaii, generally speaking, in terms of banking is behind. You know, we're not that sophisticated about internet banking or about banking online at all. And the mainland, you know, you can find much more sophisticated arrangements with, you know, the big banks, even the small banks. So, you know, if you're asking whether the local banks here in Hawaii are going to adopt WeChat or allow banking operations to permit WeChat, I don't think that's going to happen right away. What's your answer to that? Well, my answer is this. It's very simple. It's because we have a very different culture in China, in terms of technology, a very different culture in the U.S. In the U.S., we started with computers, desktop computers. Then it went to laptops. Then it got to iPads. And it kind of stopped there. It kind of stopped on your MacBook Pro with Touch Bar. Okay? And when you're online banking, you get through your computer. Okay? Maybe through your phone. But in China, it leapfrog. It went from laptop straight to the smart phone. Forget about the iPads. That iPhone or Huawei phone or any smart phone, as long as it got my WeChat, I can be anywhere in the country. I can buy things. I can buy over the Internet. I can send money to somebody in Xinjiang, Xinjiang. I can do anything where they want. I can buy real tickets. I can sell things, too, right? That's right. I can sell things. I can do everything through a WeChat. I don't need anything else. I can do it 24 hours. That's why people are on their smart phones. You're going to have a business standing on the street corner. You know, and for example, I'll give you an example. It has brought back small business in China. You know, a backbone of any economy is not just the big companies. It's a small business. For example, at the university, there is a big shop in the underground floor of a university center in the corner, in the back. And so my friends in the U.S. came visiting and said, well, how do these guys make money? They're a coffee shop. They're a big shop. Nobody's going to see them. Location, location, location. And I said, yeah. The Chinese are not in bricks and mortar. They're not in the physical location. Just get it done. No, no, no. That store at 2 o'clock. It finishes taking all the orders that are sent over through the smartphone. And it bakes everything from 2 o'clock tonight. And that business books a larger order than university students coming to buy a cup of coffee or a cheesecake. So next morning, the delivery guys come and they take all those orders out, send it across Beijing. And that guy is smart because he's got a big shop that low overhead is connected through the smartphone and the internet. This front end is all on the smartphone. That's right. So what I'm saying is changing the ecosystem of how we're doing business. Again, we're challenging the American model, bricks and motors, big retail alma mater shopping centers. We're challenging the way Apple does its business. If you want to run that app, you come through my store, but I take 30% off. In China, they're having tons of people, developers, entertainers, artists that are contributing through the WeChat system. And WeChat doesn't take any money from them. And people will say, that's good. So I'll tip you. So they make more money by getting the nationwide out of 930 million users. What's an average tip? Well, they say it's about $86 in some odd sense a month. That's how much the typical WeChat user is sending in tip money a month, whoever it may be. So I've been interested in me is bringing it here. How do you bring it here? This sounds very appealing, right? And the only essential element that's missing, it seems like, I downloaded it. Anybody can download WeChat right now today. Anybody in this country can download it. But you can't really send money with it because you have to have an account somewhere. And I don't know if there are any American banks that have bought into this WeChat account, WeChat account. So the question is, am I right? That's all it needs. It needs this banking arrangement. And once somebody can establish a bank that supports WeChat. In this country it's called WeChat. That would open the floodgates on this program. Well, I think that if I were smart, if I was a bank, I'd have a separate company that would facilitate all the payments through a WeChat. American company? Well, maybe do a joint venture of WeChat. I don't know if it has to be an American company. It can be a global company. Legal problem there. Well, you can put the server back in the U.S. and then you have certain data privacy laws and so forth. But the important point is that you've got the software running, you've got the banks, you've got your consumers and vendors who all deposit accounts there and all the banks will send an interbank agreement saying let's use this vehicle. You'd have to make a deposit into this bank. Well, you'd have a bank account. It's like a debit card. But think of not having a card but through your phone. And the good thing about it is is that if I exceed my deposit, my debit card deposit, so to speak, it's going to stop. You're going to say no funds, sorry, no soap, can't do that. Or is it going to give me credit on it and charge me interest on it? It's a transaction not authorized, so I'm sorry. You must have money to cover. So you must have money to cover in your bank account. So it changes drastically how we do business in America. It makes the genuine the genuine. You have to have money in your account, okay? It's going to be he can see himself getting paid and he can get paid before he provides the goods. Exactly. And again, all of these things, there has to be changes but the culture has to change the US. And if I were Apple, I would start taking the platform. We'd be making money on hardware. We don't need to. They must know about this. Why haven't they done it? Because remember, it sort of like goes against the way we do business in America, okay? The bricks and mortar's idea. The hardware. Apple is known for its hardware. Static design. Beautiful iPhone. Beautiful MacBook design. And in China, it's a prestige thing. It costs a little bit more but things are changing. Apple is not one of the top sellers in China anymore. Look in the websites. Look at Huawei. It's coming out there. Tons of it because WeChat does it all. You don't need the iPhone. You don't need the Apple iOS ecosystem. You don't know. WeChat does not depend on iOS. It doesn't depend on iOS. It's generic. It's generic. It can go Android. Anything. And so we're seeing Apple actually has slipping on its sales on its iPhone. And so these things you have to start rethinking it because again. I agree that I think people here in this country in the state of Hawaii anyway would love to have this. It makes it so easy. It facilitates commerce and I understand it and I agree with you. It spins up, you know, it sort of accelerates the flow of goods and services and money. I don't understand why nobody's doing it. Again, it's not only just the banks. We have to have a whole ecosystem. We have to have Apple open its architecture up. You have no longer this App Store. Okay. And then, you know, and we have to have the phone carriers. We have these contracts where they lock in the contracts two years. We give these incentives. Don't have them in China. Don't have them in China. I pay as a go and when I use my time up I simply will take my WeChat. I press the buttons to pop up, transfer another 100 rem in the mic into that phone account. Boom. I'm good to go. I don't need to go to the store. Okay. I just simply do it to WeChat. Well, I agree with you. This is low hanging fruit. It's not that hard to set up. Somebody's going to get this idea. Maybe they'll look at this show. Maybe they'll hear what you have to say, Russell. And I think it could sweep the country. It could sweep the economy as a whole. Right now. It's not just a confident about the news that WeChat is trying to make life easier. And maybe they'll look at this in the conversation between They Chat and WeChat. to how does it here locally well why can't we set up a model jurisdiction why can't we be more aggressive in this jurisdiction like kind of like a Singapore of the US I guarantee you went out in the street or you know in this city and talk to Millennials anyway but most people and say look no charge you can download this thing and when you put some money in the county even a modest amount of money you can do business instantly with everyone of course you got to get the merchants to buy in but I think they will I mean this is this is an event waiting to happen so we got to close now we're out of time Russell I'd like you to look at Vivian that's camera two over there and tell her what you'd like people to take away from this show okay ready go I think we all have to think differently we've got to think the future is now and we're gonna have to learn from other models and I think learning from the WeChat model we can make our dream better and I think that learning from the Chinese is important because they're leapfrogging with technology and it shows about technology transforming people's lives yeah they leapfrog us and guess what we can leapfrog them again thank you Russell great to talk to you Jay Aloha Sajin Sajin