Cross Border e Commerce China: China's Market Opportunity and Key Trends

The China market opportunity is enormous, with China’s social and economic transformation over the past decade giving rise to a new age of consumerism. Rapid urbanisation, increased affluence and digital commerce have seen private consumption rise dramatically. It is forecast to grow by another 50% by 2020, to A$8.6 trillion, making it one of the main drivers of China’s future GDP growth.

Cross Border e Commerce China Trends

This surging consumption and growing market opportunity for Australian and Western businesses is fuelled by three key trends.

1. The Rise of the Upper-Middle Class and Affluent

As China shifts from low paid manufacturing based industries to service and high tech industries, hundreds of millions of Chinese people have moved from poverty into the emerging-middle and middle classes.

According to research by Boston Consulting Group (BCG) and Alibaba’s research arm, AliSearch, per capita income in China has risen 11% per year since 2010 and this trend will continue to accelerate.

Income in China has risen 11% per year since 2010 and this trend will continue to accelerate.

By 2020, 81% of urban Chinese consumption growth is predicted to come from upper-middle class households, with annual disposable incomes of between $31,580 and $60,526, and affluent households, with annual disposable incomes of more than $60,526. These households are also predicted to double in number to 100 million and to account for 30% of all urban households, compared with 17% in 2015 and only 7% in 2010.

2. The Growth of Digital and Mobile Commerce

Digital commerce has further fuelled spending in cross border e commerce. China has by far the largest internet population in the world, with 688 million internet users. The number of online shoppers in China almost trebled from 161 million in 2010 to 413 million in 20152, as did the amount each consumer spent online. In 2015 online sales were worth A$769.2 billion and are forecast to almost double by 2018.

China e-commerce market is forecast to grow strongly, and this trend is expected to continue as mobile commerce booms. Data from iResearch shows that mobile shopping sales volume has soared, from $2.4 billion in 2011 to $190.4 billion in 2014. In fact, mobile commerce now exceeds desktop-based transactions, accounting for 51% of total e-commerce volume in 2015 and expected to increase to 74% by 2020.

China has by far the largest internet population in the world, with 688 million internet users.

Chinese consumers are also increasingly using their smartphones to search for information. For example, data from Sogou, one of China’s largest search engines, reveals the sharp growth in smartphone use by Chinese travellers for researching overseas travel destinations. The number of searches on mobile phones for travel to Australia increased by 231% between 2014 and 2015 compared with 188% via desktops over the same period.

3. New Generation of Consumers

Born in the 1980s, the “new generation” of Chinese consumers is distinct from the “last generation” born prior to that. This new generation has a vastly different lifestyle and aspirations to earlier generations.

The new generation are actively online. Data from the Chinese Internet Network Information Centre (CNNIC) shows that in 2015, 75% of online users in China were aged 10 to 39, with the 20 to 29 bracket accounting for 30%.

It is this younger generation of Chinese, who aspire to own more, that will drive both future growth in spending and the types of products and services that will be in demand.

Affluent, and have not lived through the same difficult and unstable economic conditions as their parents and grandparents, the new generation are willing to spend more. Their consumption is growing at 14% per year, twice that of older Chinese.

Chinese millennial consumers are the world’s most brand conscious. They are more likely to engage with brands online, with 49% saying they would advocate for brands either personally or online, compared with 34% of US consumers of a similar age. To help cement your brand in the China market and reach this target segment, it is important to get to know SEM China

It is this younger generation of Chinese, who aspire to own more, that will drive both future growth in spending and the types of products and services that will be in demand.

These key trends are not only driving spending but are having a huge impact on the types of products and services that consumers are seeking and the technologies and platforms they use to access them.

Understanding these drivers and recognising the differences in Chinese consumer behaviour are essential for businesses marketing in China who want to tap into the cross border e Commerce China market opportunity. We've published a blog article recently which delves into how to sell to China online

The 10-point Guide to Target Chinese Online CustomersBusinesses are feeling the lucrative pull of China. However, the journey into online China isn’t easy and there are a number of hurdles along the way. Our free whitepaper The 10-point guide to target Chinese online customers provides you with a handy framework, helping you to navigate the Chinese digital space, allowing you to understand, invest and adapt in a diverse and vibrant market. Download it now.
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