1 Oct 2016
China E-commerce and Internet series: Understanding China’s e-commerce and Internet sectors: A guide for global retailers
China’s e-commerce sector continues to gain the world’s attention with its explosive growth and transformative effect on the commercial landscape. E-commerce is now a major driver of growth in China’s “new normal” economy. The announcement of the “Internet Plus” initiatives by the government 19 months ago has made e-commerce development a national priority. Changes in consumers’ preference and the emergence of innovative technologies and new business models have provided a strong impetus for the growth of the sector. Total transaction value of China’s e-commerce market is forecast to surpass 30 trillion yuan in 2018, up from 16.4 trillion yuan in 2015.
Fung Business Intelligence has identified ten major trends that are shaping the development of two of China’s hottest sectors – the e-commerce and the Internet sectors. Global brands and retailers looking to tap the China market via e-commerce channels should stay on top of these trends.
Words of advice for global retailers…
Global retailers who want to enter or consolidate their presence in China’s e-commerce market are advised to keep a close eye on the following areas:
Mobile, mobile and mobile. China is a mobile-first nation, and Chinese consumers have adopted mobile connectively as the dominant approach to accessing the Internet. Mobile-enabled websites or mobile apps with location-based and interactive functions can enable consumers to do all their shopping, payment, etc. are essential.
Social media strategy is a MUST; integrating e-commerce with social selling. The power of social media in China’s e-commerce sector cannot be ignored. Nowadays, social media platforms are not only popular market tools but increasingly a key selling tool. Global retailers could explore the possibility of selling on well-established mobile s-commerce platforms or live streaming platforms.
Catering to users across multiple channels. Nowadays, Chinese consumers are increasingly looking for seamless shopping experiences. While mobile-first strategy is essential, PC-based offerings should not be neglected. At the same time, a seamless bridge between online and offline channels is equally important. Thus, a well-thought-out O2O strategy that can provide consumers with a seamless and personalized shopping experience across multiple channels is highly desired.
CBEC is a great point of entry to China. Cross-border e-commerce (CBEC) is a relatively easier way for global retailers to test the waters as they do not need to obtain Chinese business license or register a company in China. Initial investment is lower and customers can enjoy lower tariffs than goods imported under the general trade. However, CBEC is subject to changing government policies. Global retailers have to keep a close watch on all the changes in policies.
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