China flag China: Buying and Selling

E-commerce in China

E-commerce

Internet access
As of July 2017, there were 751 million internet users in China (almost 20 million more than 2016), thus the internet penetration rate in China reached 54.3%, up by 1.1% from the previous year. Nevertheless, the difference in penetration between urban and rural areas remains high, the latter recording a rate of 34% compared to 73.3% of urban areas. In terms of network usage among internet users, the urban-rural gap is smallest in instant messaging, where the rural penetration rate is only 2% lower than urban, but when it comes to business transactions, mobile payments, news, and similar applications, the gap is much higher. Beijing, Shanghai, and Guangdong are the top three regions in China with the highest internet penetration rates of over 74%. The number of mobile internet users in China rose to reach 724 million at the end of the first half of 2017. Smartphones were the top devices for internet access in China in 2016 with over 95% users, followed by desktop computers (60.1%) and laptops (36.8%). The search engines market is dominated by local players, with Baidu having a prominent role (76%), followed by Shenma (8.78%), 360 Search (7.87%) and Sogou (3.31%).
E-commerce market
China is the largest e-commerce market in the world. According to eMarketer, e-commerce sales in China are estimated to have passed US$ 1.13 trillion in 2017, accounting for nearly half of the worldwide retail e-commerce sales and 23.1% of all retail sales in China (with an expected increase to 40.8% by 2021). The growth compared to 2016 reached a spectacular 33%. The total number of e-shoppers is projected to surpass 650 million by 2018. In recent years, the online retailing growth was driven by third and fourth tier cities, and for the first time, these cities have surpassed first and second tier cities, due mostly to Alibaba’s investments in delivery infrastructure across the nation that facilitated greater access to rural and smaller urban areas. The top five categories of internet applications in China are instant messengers, news, search engines, videos, and music. In 2017, 45.3% of Chinese companies deployed online sales activities, 45.6% online purchase and 38.7% online marketing. Alibaba is the biggest Chinese e-commerce platform, with more than 500 million people using its shopping apps. The group as a whole - which includes Taobao, TMall, and Alibaba.com together with the payment platform AliPay and other businesses – had a turnover of US$ 23.8 billion and lead operations in more than 200 countries. Tmall - a Chinese-language website for B2C online retail operated by Alibaba Group and one of the world's top 20 most visited websites – is a platform for local Chinese and international businesses to sell brand name goods to consumers in mainland China, Hong Kong SAR, Macau SAR and Taiwan, China. JD.com is one of China’s largest online retailer by revenue, offering direct sales of electronics products, general merchandise, books, home appliances, digital communications, apparel, food, and other goods. Vipshop Holdings is one of China’s leading online discount retailers and distribution companies, characterised by flash sales and time-limited offers. Other platforms include Suning, Gome, Yihaodian, Dangdang, Amazon.cn, and JMei. China’s whole digital scene is mobile dominated, so that optimising store pages for mobile is of pivotal importance. Virtual reality shopping has also exploded with consumers able to explore products digitally via virtual reality simulations. Intellectual property rights infringement across e-commerce platforms is common in China.
E-commerce sales and customers
According to the U.S.-China Business Council, roughly half of all China’s e-commerce sales are made on mobile devices, nearly 16% more than the global average. The rise of m-commerce is expected to continue, with eMarketer predicting more than 75% of ecommerce sales – over US$ 1 trillion - will be transacted via a mobile device in the next future. Cross-boarder shopping is also growing, with Chinese buying abroad items that are either too expensive or too scarce at domestic vendors. Chinese consumers’ primary motivation for shopping online has moved from price, assortment and convenience to quality, value, service and experience. Thus, developing a platform with a smooth, intuitive shopping experience is evermore an important factor in the Chinese e-commerce market. The ease and security of e-payment (with mobile apps connected to a user’s banking) is also cited as a key reason for the rise of e-retail spending. China’s mobile digital payment systems via WeChat & Alipay are widely used (nearly half a billion businesses within China use Alipay and consumers are now even using it overseas when they travel). Credit card remains the main payment method, while cash on delivery, PayPal, debit card and bank transfer are less used.
Social media
China is the world's largest social network market. As of 2018, there are an estimated 911 million social network users in China (Hootsuite). Leading international social-media platforms (such as Facebook, Twitter, Instagram, WhatsApp, Snapchat, Pinterest, Tumblr etc.) as well as video/audio streaming platforms (such as YouTube, DailyMotion, Vimeo, Twitch, Spotify etc.) are all blocked in China due to the Chinese government’s restrictve internet filtering policy (also referred to as the “Great Firewall”). The majority of Chinese digital consumers use social media to do product research or get recommendations. The three biggest social media players are WeChat (963 million monthly active accounts), a social network QQ Zone (861 million monthly active accounts) and a micro blog Weibo (300 million monthly active users). WeChat allows retailers to feature online stores and has a third-party payment function.  It also features push messages to introduce new product lines or deliver promotions. In early 2018, WeChat reached 1 billion user accounts across the world. With Weibo (a hybrid between Facebook and Twitter), in addition to publishing long articles with images or short posts, hyperlinks or videos, users can also repost, comment, search and send messages on trending topics. Weibo has also had an impact with influencers: Weibo posts for brand influencers are now used for direct product promotion and sales, especially since the platform was purchased by Alibaba. QQ is a messaging platform owned by Tencent, the same company that owns WeChat. It started as a desktop app rather than a phone app, in fact users don't need a phone number to use QQ, which means younger people who don't have a phone yet can use it to send and receive messages. Youku - one of China’s top online video and streaming platforms - is more similar to YouTube, except that it contains more professionally created videos compared to the more user generated content of YouTube.

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Latest Update: June 2022

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