China's virtual gifting market is luring major financial institutions and tech firms, keen to boost their trade in gold. Ryan Brooks reports.
You could call it China's digital gold rush. The latest trend in the country's love for virtual gift-giving. State banking giant ICBC has begun backing digital packets of so-called "microgold" with the real thing. An idea based on popular app WeChat's "virtual cash envelopes," which were exchanged an astonishing 46 billion times over the Lunar New Year holiday alone. In that same period, 14 million dollars worth gold was also sent by mobile users. Reuters Adam Jourdan says the new fad could be a gateway for millennial customers. (SOUNDBITE) (Mandarin) REUTERS CHINA CHIEF COMPANY NEWS CORRESPONDENT ADAM JOURDAN SAYING: "To a certain degree these online gold-gifting markets are a bit gimmicky, they're a great way of luring in younger consumers on their smartphones, and it's a bit different from giving just digital cash, you're giving a bit of gold, whether that's digital or tied to some real gold some real gold behind it which people can eventually cash out on. People like ICBC, China's biggest bank, they say this is a great way of luring in these consumers into the more traditional gold products they sell. These guys start on WeChat and hopefully end up migrating to the products they traditionally sold through the bank." For many young Chinese, gold has emotional and economic significance, and property is losing its investment appeal as prices spike. (SOUNDBITE) (Mandarin) REUTERS CHINA CHIEF COMPANY NEWS CORRESPONDENT ADAM JOURDAN SAYING: "Some of the younger consumers we spoke to mentioned their parents and family had invested in gold but through gold bars or buying jewelry as gifts or an investment. What they're doing now is they're taking that history and tradition and moving it online, so perhaps you know the younger, twenty-something-year-olds can't afford to spend money on a house yet, but they can afford to spend money into an online gold account and keep that for the future as a small investment." Analysts see China's millennials as drivers of the new economy. One trading platform saying they make up 60 percent of the online gold market. That's piqued the interest of Beijing which last week called on tech firms to start piling into the gold trade.