New York-based eMarketer reported that annual mainland spending is forecast to grow 13.3pc to US $4.886 trillion. This will overtake the United States’ at US $4.823 trillion.
The Chinese mainland is home to the worlds largest e-commerce market and this year is set to become the largest retail market in the world. This news comes two years earlier than expected by initial forecasts but the huge uptake of e-commerce in the mysterious orient has been unprecedented. This is especially so now as smaller, lower tier cities have become increasingly connected with better internet connection nationwide and an improving infrastructure for the delivery of goods. Aliababa the Chinese internet behemoth now have the largest, most developed delivery network in the world across the China. From first tier to fifth tier cities.
Monica Beart, the forecasting director at eMarketer, said e-commerce will continue to anchor overall retail growth on the mainland in conjunction of the expansion of its middle class, deeper mobile and internet penetration, and improvement in logistics and infrastructure.
This is all part of the overall trend whereby China is gradually switching from a manufacturing based economy to a service based economy. Currently the combination of the two is proving to be an effective one.
The eMarketer data showed the gap between the overall retail spending in China and the US to significantly widen by 2020. Total retail sales on the mainland that year would hit US$7.086 trillion, compared with US$5.476 trillion in the US.“China will continue to see massive gains in retail e-commerce over the next few years, with sales topping US$2.416 trillion in 2020,” Beart said.
Recent data from iResearch showed that Tmall.com, the main online shopping platform of Alibaba Group, dominated with 58 per cent of China’s business-to-consumer e-commerce market last year. Jd.com which is backed by other digital giants Tencent held a 26% marketshare.
With the market showing continual signs of growth it is a crucial time for western firms to move into this lucrative market. There are a number of difficulties for western companies with different laws and regulations, customs policies and a whole different internet landscape to navigate. It is important to utilize Chinese connections and expertise in this area in order to expand effectively into the middle kingdom.
Growing markets to invest in currently include cosmetics, fashion and e-tourism. This fast paced digital landscape is certainly one of the most fascinating and lucrative in the world but firms need help navigating what can often seem like an alien world in China.
Benji is a marketing and e-commerce expert based in Shanghai. For more information see his blog and website here.