We’re overdue for an update on the China market and e-commerce, so here’s the latest news, highlights and developments. 13% of Chinese consumers spent more than $85.7 billion on cross-border e-commerce, reflecting strong interest in foreign products. Chinese authorities postponed a proposed cross-border e-commerce tax for one year to the relief of e-commerce companies and consumers. According to China’s National Bureau of Statistics, online sales increased 27.5%, accounting for about 11.1% of gross retail sales.
In 2015, fintech attracted a record $20.3 billion in 1,191 investments according to a “Money of the future” report by INSEAD. Online-to-offline (O2O) services in China are an important part of the growth of the country’s e-commerce sector according to a new report from McKinsey & Co. Subject to meeting regulations, foreign bank cards like Visa Inc and MasterCard will have access to China’s 55-trillion-yuan ($8.4 trillion) card payment market. Nearly half of Chinese consumers now shop with digital wallets says a recent MasterCard survey.
Alibaba global sales jumped 39% to 24.2 billion yuan (US$3.7 billion) in Q1 2016 with sales in China up 41% and mobile up 17%. JD.com launched a pilot program of drone deliveries to rural areas of China with drones that can handle up to 200 deliveries daily. As it works to build its business, Walmart has only 1.6% of China’s e-commerce market, according to Business of Fashion while Alibaba and JD.com hold 47% and 20% of the market. Nestlé’s overall China sales saw triple digit grow in 2015 and its e-commerce sales doubled to
China to spend $85.7B on cross-border e-commerce
More consumers in China are expected to make online purchases from foreign websites and third-parties, as the population enjoys a higher standard of living and is exposed to foreign products.
More than 15 percent of the Chinese population this year would make cross-border e-commerce purchases worth US$85.76 billion, according to figures from eMarketer. This was expected to increase to a quarter of the population by 2020, accounting for more than half of all digital buyers in the country.
More specifically, China, which can leverage its manufacturing hub and market size. However, e-commerce sites in the region should first resolve key challenges with user interface, service support, and logistics.
Online shoppers in China were expected to spend an average US$473.26 each in 2016 on goods outside the domestic market, accounting for 4.2 percent of total retail e-commerce purchases, said eMarketer in a report Tuesday. The marketer researcher added that online shopping in China increased by more than 70 percent last year, fuelled by a higher standard of living and greater exposure to foreign products. Via zdnet.com
China postpones cross-border sales tax over fears of e-commerce slowdown
If implemented, the new rules would have meant tighter customs treatment and higher tax rates on overseas goods sold on Chinese e-commerce sites, which previously allowed shoppers to buy imported goods via cross-border e-commerce zones on a special parcel tax rate.
However, when China imposed the stricter tax system last month, social media was filled with pictures of heaps of abandoned foreign purchases at Shanghai Pudong Airport as travelers attempted to avoid the tax fines. Shanghai customs later said that the posts were falsified rumors “spread by e-commerce companies and consumer-to-consumer (C2C) e-retailers” in order to pressure policymakers, China’s official Global Times reported. Via cnbc.com
eCommerce growth outpaces stores in China
A swing to eCommerce in China is indicated in official figures for the first quarter this year.
Online sales increased 27.5 per cent, accounting for about 11.1 per cent of gross retail sales, according to the National Bureau of Statistics (NBS).
Overall, retail sales were up 10.3 per cent year-on-year, and while urban consumers contributed the lion’s share of the increase, rural spending climbed faster. Retail sales grew 10.1 per cent last month, compared with 10.5 per cent growth in March. Via insideretail.asia
Five major fintech trends where China is leading the world
China, the unrivalled giant in e-commerce, added another crowning achievement when it emerged as a leader in the fintech world.
In 2015, fintech attracted a record US$20.3B spread across 1,191 investments. In the latest issue of “Money of the future,” a report by INSEAD and fintech fund Life.SREDA VC uncovered the latest trends in fintech, China was seen as a clear winner in a few key areas. Here are the five sectors in fintech that China seems to be leading the world in.
Alibaba, the owner of the South China Morning Post, had the largest IPO in history because the hugely popular retailer benefits almost any time someone in China spends money online. So now it’s trying to pump even more money into the Chinese online economy, through the introduction of more current financial systems. Via scmp.com
China O2O market grows beyond discount focus
The proliferation of online-to-offline services in China will continue to play a major role in the growth of the country’s eCommerce sector, global management consultancy McKinsey & Co predicts in a new report. But O2O, as it’s called, is quickly evolving beyond its focus on discounts, deals and promotions.
In its recent iConsumer China survey, “How Savvy, Social Shoppers Are Transforming eCommerce,” McKinsey outlines the ways in which consumers are coming to expect more from O2O. Where it had been a way for merchants to lure consumers into their bricks-and-mortar stores by offering reduced pricing via internet advertising, shoppers are now saying that the convenience and access to premium services that O2O provides are equally important.
For merchants, “offering new levels of value may be the keys to achieving mass-market acceptance and establishing business models that will thrive over the long-term,” McKinsey researchers wrote. McKinsey points to a few other well-established trends in China’s eCommerce sector in addition to O2O that will drive growth going forward, not least the rising consumption seen in smaller cities and the increasing propensity of shoppers to look overseas when buying goods. All of these sales channels hold “enormous potential,” the consultancy wrote. Via insideretail.asia
China opens its markets to foreign bank card companies
China will allow foreign payment card companies to operate in the country under rules issued on Tuesday, potentially giving groups like Visa Inc and MasterCard access to its 55-trillion-yuan ($8.4 trillion) card payment market. Visa and MasterCard, the world’s two largest credit and debit card companies, have been lobbying for more than a decade for direct access to China‘s cards market, which is projected to become the world’s biggest by 2020.
Bank card consumer transactions reached 55 trillion yuan in 2015, accounting for 48 percent of total social consumption, the People’s Bank of China said in a statement. The market is dominated by state-run China UnionPay Co Ltd.
The rules issued by the central bank and the China Banking Regulatory Commission require that applicants hold 1 billion yuan ($152.2 million) in registered capital in a local company. The foreign bank card companies must also meet China‘s national security and cyber security standards and be locally based. Via dealstreetasia.com
China quick to adopt digital wallets
Nearly half of consumers in China who took part in a new survey shop with digital wallets. Overall, the study shows that digital wallets are the fastest-growing payment technology in the region, with one in five of those surveyed using the technology.
MasterCard’s latest mobile shopping survey shows that digital wallets are used by 19.5 per cent of respondents in Asia Pacific, a two-fold increase from two years ago (9.7 per cent).
Emerging markets are leading the way with 45 per cent of smartphone users surveyed in China using digital wallets, 36.7 per cent in India and 23.3 per cent in Singapore. The results are based on interviews with 8500 people aged between 18 and 64 years across 14 markets in October and December. Via insideretail.asia
China still driving Alibaba sales
In posting its strongest revenue growth for the past four quarters, Alibaba has rounded off its fiscal year on a positive note. Although growth at the international division picked up strongly, it is China that has underpinned the group’s success.
Alibaba sales jumped 39 per cent to 24.2 billion yuan (US$3.7 billion) in the three months ended March. Net income rose 85 per cent to 5.3 billion yuan.
Despite the more challenging economic headwinds in China, Alibaba’s revenue from its various retail platforms in the country surged by 41 per cent over the quarter. Part of this is down to the growing audience, with active buyers across the various marketplaces growing by 16 per cent to an astonishing 423 million customers. Mobile platforms also saw growth with the number of monthly active users rising by 17 per cent to just over 410 million.
This uplift was boosted by the rise in average revenue per buyer which increased by almost 11 per cent over the same period in the prior year. For mobile users the increase was even sharper, up by just under 109 per cent on the prior year. Via insideretail.asia
Chinese E-commerce company JD.com launches drone deliveries to rural areas
JD.COM, China’s largest business-to-consumer (B2C) online retailer, is vying to be the first to reach the country’s rural areas with the unveiling of its first operational pilot program for drone deliveries, following in the footsteps of the U.S.-based Amazon.
According to Technode, the e-commerce company is deploying at least two types of unmanned aerial vehicles (UAV) to deliver to rural areas from designated distribution centers located outside of Suqian city in the northern Jiangsu province.
The drones can make deliveries of up to 15 kilograms each, as well as load and unload packages on their own, managing up to 200 packages per day in a single flight route and covering a maximum distance of 20 kilometers at 54 kilometers per hour. Via asiancorrespondent.com
Walmart Struggling to Catch Up with Rivals in China’s E-commerce Space
Dominating China’s online commerce does not appear to be an easy feat for the world’s largest company by revenue as it faces two local heavyweights: Alibaba and JD.com.
Walmart only accounts for 1.6 percent of China’s online market, per data gathered by Business of Fashion. Meanwhile, its biggest competitors Alibaba and JD.com hold 47 and 20 percent of the market, respectively. The American retail titan bought Chinese e-commerce site Yihaodian last year. According to Business Insider, Yihaodian operates 250 warehouses in 200 Chinese cities, while Alibaba operates 14,000 in rural China alone. JD.com has about 6,000 pickup stations and delivery warehouses.
To make a dent in the market, Walmart is boosting its grocery e-commerce business. With 46 percent of Chinese consumers buying their groceries online, this niche seems to be a viable focus for Walmart. “Yihaodian currently offers 250,000 products for same-day delivery, and groceries are on that list, so expect the company to heavily build out this inventory,” Business Insider said. Via en.yibada.com
Nestle works to be more nimble in China’s fast-moving e-commerce market
The company’s e-commerce business in China is now more profitable on average than sales through bricks-and-mortar retail channels, Reinhold Jakobi, managing director of the food and beverage business in greater China, said in an interview Sunday. Sales growth for its products online is now expanding at triple-digit rates, he said.
Nestle’s growth had been slowing in the past few years as the company didn’t react quickly enough to trends like e-commerce and healthier eating, which led shoppers to shun some packaged-food offerings. Its Yinlu brand, which makes peanut milk and a rice porridge called congee, has declined as consumers shift to more premium products. Via internetretailer.com
China leads global sales in many segments
For companies with a long-term strategy, China offers huge potential in every sector. Some of its successful companies like Alibaba are also strong international players in e-commerce, financial payments and other segments of business. We’ll help you keep an eye on the latest China news, brand highlights and business opportunities with regular updates.