Let’s assume you were an average Chinese consumer, or an expat living in China, for that matter…where would you prefer to go shopping? To an expensive shopping mall downtown? To the local market right next to your house? To one of the huge wholesale markets that are about to be dismantled? Well, if you are familiar with the country and with a peculiar Chinese habit, you will probably know that none of the above is the right answer, since China seems to be preferring virtual shops to physical ones.
In 2013, the PRC was the second biggest e-commerce market in the world, as reported by Remarkety, but in a merely 2-year span, China was able to climb up the ladder and become the country with the highest number of online shoppers worldwide.
As indicated by the National Bureau of Statistics of China, in 2015, $562.66b was the total amount of e-commerce spending in Mainland China, 69percent of which was generated by pc led purchases, followed by an 33percent of spending equally distributed between tablets and cellphones. It was in between 2014 and 2015 that the Asian giant stripped the US from their title of biggest ecommerce-lovers and relegated them to the second position in the ranking of world’s biggest e-commerce markets. In 2015, the US e-commerce spending amounted to $349.06b, most of which was again generated by pc purchases. The two countries where then followed by the UK and Japan, also pretty big fans of online shopping.
Several reasons are at the basis of the major development that the e-commerce experienced in China, a country characterised by an enormous population and an economy that, despite the recent slowdown, has been leading the world and helped a big portion of its population to stepped out of the poverty cycle.
An aspect of the development of the e-commerce in China that might appear curious to most, is the fact that online shopping saw a huge rise especially in rural areas of the country that accounted for 22.4percent of total purchases in 2015, as reported by the National Bureau of Statistics of China. This unexpected trend is due to the difficulties of finding a wide range of products in remote areas of the Chinese countryside and the discount applied to those products that would obviously be more expensive if bought at local markets. But the e-commerce is not only helping the rural population to obtain what it needs, it also introduced the internet miracle where it still hadn’t reached, and boosted the economy of those villages that started selling their products online.
One of the main problems that China has been facing for a long time, is its products overcapacity. The country manufactures too much of everything, but thanks to the online shopping, it’s finally getting rid of exceeding supply at a cheap price, targeting areas of the country that weren’t necessarily part of the company’s consumers focus. Given the lower prices that can be found online, the new Chinese middle class, which started developing from the mid 2000 on, grew new interest in online purchases. Thanks to a specific government measure that saw an increase in the wages by 10percent Y-o-y starting from 2008, the Chinese consumption grew, enhancing also the country’s online spending. In addition, the development of the infrastructures sponsored by the Chinese government in the last 20 years made it possible to producers to easily transport their products to the closest ports for shipment.
In the opinion of Jonathan Ensslen, founder of ClearCut, one of the fastest-growing IT companies in China, the development of online payments in China, therefore of the e-commerce practice, is due to both the immediate adoption of some new technologies, such as NFC, block-chain and one touch, and the phenomenon of aggregation that made it possible to use the listed new technologies to pay in almost every shop in the country. During “Payment in Progress”, a short panel that BenCham organised in Beijing on July 21, Mr. Ensslen also looked at the future of the e-commerce in China, forecasting a future evolution of payment aggregation and the birth of a personal digital assistant, that would eventually mark the end of online payment branding.
The Chinese online shopping market is expected to keep growing at a fast peace in the upcoming years, reaching a total of $1.1T by 2020, as reported by Emarketer in their “Worldwide retail ecommerce sales” report. The continuous development will most likely be a synonym of new business opportunities, not only for local vendors, but also foreign companies interested in promoting innovative and “exotic” products in the country. So far, what Chinese customers have mostly been buying are milk powder, diapers and pet food, even though a bigger range of products might soon become appealing to the rising middle class.
We’ve collected a list of the main characteristics an online shop is supposed to present in order to be successful in this promising but competitive market. Some of the foreign companies that were able to functionally approach the Chinese e-commerce industry understood how localisation is playing a major role in each single sector of the economy, e-commerce included. In this specific field, localisation stands for local host, and if you get to obtain an ICP certificate, that would most likely help you to avoid the government censorship. It goes without saying that having a good reputation is at the basis of the business, especially in China. In addition to cross cultural advertising campaigns that increase the appeal toward old and new customers, following the Chinese standards in the creation of a webpage targeting Chinese audience would likely increase the company’s visibility. In comparison to most of the Western-style online shopping platforms, Chinese ones present more text, longer captions and a wider range of colours. It is also fundamental to easily appear on Chinese browsers, such as Baidu, which will enhance your visibility toward netizens. Last, try not to make the purchasing process too long and complicated. Chinese customers barely stand 4-5 pages when ordering goods online, keep the process simple and immediate.
China has long been considered a global manufacturer and storage room but, as we have had the opportunity to observe in the last decade, the country has been trying to implement consumers spending and internal purchases. This current trend, together with the reasons previously listed in our article, lead us to suggest that if you are considering to enter the e-commerce business, you’ll definitely have to do that in China.
Lucrezia Dal Pra
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