The Chinese internet and its users remain the most dynamic and rapidly evolving digital ecosystem in the world. In 2016, over 668 million people in China were connected to the internet, with 596 million of them being mobile internet users. Fast forward to the end of 2020 and China was set to break the one billion internet user mark, with figures released by the China Internet Network Information Centre (CNNIC) showing China had 989 million internet users, representing a whopping 48% increase on 2016. To put that in perspective, more Chinese digital consumers gained online access in just four years than the populations of Russia, Germany and the UK combined.
This massive jump was in part due to the COVID-19 pandemic outbreak and what came with it – lockdowns, limitation of movement and the need to use the internet to take care of daily necessities. As a result, online retail sales reached 11.76 trillion yuan in 2020, an increase of 10.9 per cent compared to 2019. This development further cemented China’s position as the world's largest online retail market - a title the country has now held for eight consecutive years.
Digging a little deeper into the statistics reveals that Chinese digital consumers spend much of their time watching short videos, with 94% enjoying engaging with content this way. Alongside this, e-commerce live streaming began to surge in popularity, with a threefold increase during 2020 from 123 million to 388 million (we wrote about this in our ‘live-streaming farmers’ article). Crucial to anyone digital marketing into China is the fact that nearly two-thirds of Chinese live-stream viewers subsequently went on to make a purchase.
This is further borne out in the degree of mobile payment penetration in China, which is triple that of the US. China’s e-commerce payments, accounting for over 25% of total purchases made.
Consequently, China – led by e-commerce giants such as the Alibaba group and its assortment of e-commerce platforms – is the world’s largest e-commerce market, accounting for over 50 per cent of global e-commerce.
Chinese digital consumer groups
As alluded to above, sub-groups within the wider Chinese digital consumer community are using the internet in a range of different ways.
As well as the devices they use to access the internet, a 2018 McKinsey Report - Understanding China’s Digital Consumers - identified three groups of users that can be further broken down into seven key consumer segments in China, each with varying usage patterns and preferences for apps and devices.
Heavy Users come in the form of two segments of Chinese digital consumers who spend more than 28 hours a week on digital media.
- The Digital Junkie, comprising 6% of the market spending on average 34 hours each week on digital media each week, is young, gadget-oriented and prefers using mobile devices and laptops.
- Gamers make up 9% of the market and spend most of their online time playing video games or on Chinese social media. They tend to be primarily young, lower-income consumers living in low-tier cities using PCs rather than mobile gaming devices.
Moderate Users are broken into two consumer segments who spend an average of 14-28 hours a week on digital media - Info-centrics are 17% of the market and predominantly in the 25-34 age range. They tend to have higher incomes and prefer desktop over mobile to take advantage of more practical internet applications.
- Mobile Mavens, comprising 8% of the market and dedicating 39% of their digital time on mobile, are quick to latch onto the latest portable devices and twice as likely to replace them every 12 months.
At 60% of all Chinese digital consumers, Light Users dominate the wider digital community, spending less than 14 hours per week on digital media. - Traditionalists at 25% of the market and using digital media for 14 hours per week are the largest sub-category of the Chinese Digital Consumer market. Living in smaller cities and less educated, they tend to watch more TV than other segments and are less likely to own, want or use digital devices.
- Online Traders, mainly made up of middle-aged men in tier 1 and 2 cities, comprise 18% of the market and use the internet to trade and track their online stocks.
- Basic Users at 17% of the market and spending the least amount of time on digital media are typically high school students or blue-collar workers on a tight budget. They spend the least amount of time on any media – digital or traditional – with an average of 8.5 hours per week on digital media. However, 24% own a mobile phone equipped with basic entertainment features such as MP3 playback.
COVID-19 and the Chinese digital consumer
Prior to the pandemic, the technological innovation culture within China saw continuous investment in key digital tech, driving further the ongoing evolution of the digital landscape in China. However, COVID-19 accelerated this even further in three key areas.
B2C interactions
This digital relationship, more than any other in China, has been impacted most during the pandemic, particularly around the use of online channels. As Chinese netizens turned to the internet to help with more of their day-to-day lives, some of these behaviours look set to become entrenched post-pandemic. Take groceries, for example. A McKinsey 2021 survey showed that over 50% of consumers are likely to continue buying groceries online even when the necessity to do so has fully receded, with 74% of those surveyed indicating they will increase their online activity around this. This means that B2C companies that have established digital platforms will benefit most and outperform those that don’t.
B2C sectors traditionally reliant on physical interactions
Even sectors that typically rely more on traditional non-digital marketing pivoted during the pandemic to an online audience, deploying a range of digital tools to stay connected with consumers. Going forward, AR and VR look to be valuable digital tools to augment the shopping experience and give the semblance of physical interactions for consumers who prefer such when purchasing.
Business processes in the B2B sector
Similar to the above, B2B that have up until now been heavily reliant on face-to-face interactions introduced digital processes to navigate the harsh reality of the pandemic, leading to a fundamental shift in industry dynamics that is, at least to some degree, likely to continue into the future.
Room to grow
Notwithstanding the changes to consumer behaviour brought about by COVID-19, the digital landscape in China is rapidly evolving.
China’s digital consumers are constantly and quickly evolving, both in terms of the devices they use and where/how they spend their time online. Companies that invest in understanding these consumers, adjusting their marketing and advertising campaigns accordingly, will be better positioned to develop an attractive and profitable business model.
Unlike western consumers who traditionally respond well to television, billboard and newspaper advertising, Chinese consumers are progressively becoming more interested in what they can find online. And notably, one of the important characteristics of Chinese digital consumers is a preference for mobile devices when accessing the internet. Smartphones, rather than tablets, are the most dominant mobile device used to access the internet in China.
As overall e-commerce transactions exceeded 37.2 trillion yuan in 2020, up from 34.8 trillion in 2019 mobile commerce has also continuously risen so much so that China ranks first globally in mobile commerce penetration. The widespread use of platforms such as AliPay and WeChat Pay means the use of cash is becoming rarer and rarer, and mobile payments are more often the norm than not. Mobile payments are expected to eventually exceed GMV from PC devices to become the top driver for Chinese e-commerce growth. This strong growth momentum covers all industries: payments, ticketing, travel bookings, restaurant food delivery and more.
But whilst more and more consumers are turning to the internet and the tremendous new opportunities unlocked particularly via mobile, the Chinese digital revolution still has further room to grow before it reaches saturation. There is an important factor that is somewhat slowing the march to mobile payment saturation – a factor that businesses should consider when developing their online marketing strategies. Wariness by some Chinese consumers of digital activity beyond communication means not every consumer is jumping on the mobile payment train. While most Chinese love the social aspects of digital - such as chatting with their friends and keeping up with their lives online - some remain reluctant to shop online or trust online applications, particularly when it comes to higher-priced items, health and baby products, etc.
However, as tech innovation continues to drive better, more engaging e-commerce, companies will have the opportunity to work on building up the trust to promote their products and services through a range of digital avenues and in doing so increase even further the number of Chinese digital consumers to market products to.
A whole new world
The difference between Chinese digital consumers and those in the West is clear: China’s unique digital ecosystem and internet regulation mean that popular Western sites and apps are often unheard of in China. Chinese digital consumers spend their time in online environments tailormade for them that are often different to those of their Western peers.
For example, Facebook, Twitter and WhatsApp are replaced with micro-blogging and WeChat in China where users can publish social moments as well as call or instant message their friends. eBay and Amazon are both relatively unheard of in the region, however, e-commerce is dominated by local alternatives Taobao, T-mall and JD.com. And just as in the West, search engines remain crucial channels for generating digital traffic. However, given Google is effectively banned in China, it is replaced with local search engines such as Baidu, Sogou and 360, the top three search engines in China.
How to target Chinese digital consumers
To capitalise on the opportunities these rapid changes in the digital realm present, companies need to approach China as a unique market, taking the time to understand how and where Chinese digital consumers spend their time using digital technologies. The key to this is understanding where and how to interact with consumers both online and offline and learning how, why and when consumers browse and shop online.
This is where Sinorbis and our digital marketing software can help. We know China, understanding the different market segments and the intricacies of how China’s digital ecosystem interacts with these segments. Because of this, we can help your business gain a critical competitive advantage in the Chinese market.
Contact us today to find out how we can help you.
