With 2019 entering its second half of the year, the statistics collected thus far concerning the health status of E-commerce websites in China have not disappointed expectations. China continues to be the most attractive market for online traders, especially for cross-border E-commerce.
For those considering entering the Chinese market, it is important to know the composition of this market, as well as its economic forecasts for the coming years. It is equally important to understand the right mode of entry into this highly competitive market as well as the habits and preferences of Chinese users.
In this article, we have collected some particularly interesting data regarding online commerce in China as well as new E-commerce trends in China in 2019. This data is essential when planning your operations in this market.
The Market Size of E-commerce in China
We compared the Chinese and American E-commerce markets using statistics collected from official sources such as e-Marketers. The data confirms that in 2019, China will become the largest retail market in the world. Surpassing the U.S. which held the record until 2018. China’s retail sales in 2019 will exceed the U.S. total sales by more than $100 billion.
What is remarkably interesting, however, is the specific sales data generated by the E-commerce sector. Online sales will increase by 30% in 2019, representing 35.3% of total retail sales. Over the same period, online sales in the U.S. will only account for 10.9% of total retail sales.
Worldwide, the Chinese market in 2019 will produce 55.8% of global online sales and this figure is expected to reach 63% in 2022. Over the same period, the U.S. contribution to global online sales is expected to decrease to 15%.
These figures are especially important when considering the potential of this market. Clearly, they cannot be ignored by E-commerce businesses.
What makes the Chinese market exceptionally attractive is not only the statistical data but also the consumer behaviours of the Chinese. Despite the constant calls for a slowdown in its domestic economy, the Chinese market is still one of the most profitable markets on the international level. This bubbling domestic economy has contributed to the creation of a thriving middle class that has acquired considerable purchasing power.
This middle class continues to grow and is especially inclined to shop online, mainly when the shopping experience is fast and easy. It should also be noted that the former Tier-1 cities E-commerce market is also consolidating in non-Tier-1 cities. Thus, further expanding the market for E-commerce operators.
Latest E-commerce Trends in China
Although the data confirms that the Chinese E-commerce market has incredible potential, it remains a highly competitive market. This is becoming more evident as an increasing number of foreign operators are trying to carve out their own space within it.
Critical to success is understanding how to sell in China and the marketing mechanics in this part of the world. Below we have listed the most important E-commerce trends in China that will help you plan your sales strategy in China.
#1 Quality Imported E-commerce Goods
Chinese consumers continue to show great interest in high-quality foreign products. This trend is also spreading into Tier-2 cities where the middle-class is gaining more purchasing power.
Given the new regulations for online shopping abroad implemented at the end of 2018, this is also an excellent opportunity for cross-border E-commerce. The new regulation has increased the maximum spending limit for single purchases to RMB 5,000 and a maximum of RMB 26,000 per year. The regulation also applies to goods shipped from Hong Kong or free trade zones in China.
#2 Specialized Products on Sub-Niche Category
Chinese consumers are strongly attracted to big brands or what are known as super-brands. Companies that do not fall into these categories must work to create their own branding and educate their audiences about their products.
In 2019, however, Chinese consumers began to pay attention, not only to the most renowned brands, but they also began to notice quality products that focus on specific consumer needs. This has allowed niche sectors such as health and nutrition to carve out an important share of the market. This consumer change has opened the opportunity for many online stores to operate in small niches where competition is less intense and the potential for success is greater.
#3 Mobile E-commerce Is Still on the Rise
Users who buy online currently account for around 42% of total consumers and their numbers are continuing to grow. The Chinese audience loves a shopping experience that is simple, practical, and fast. Mobile shopping is the best way to meet this demand.
Over the last few years, the number of users who finalize their purchases on smartphones has been steadily growing due to the fact that popular social networks such as WeChat have provided specific tools for shopping on mobile devices (see the next point). With tools for fast and secure online payments being integrated into these social platforms, it has further encouraged consumers to use mobile shopping to a greater extent.
#4 WeChat Mini Programs Are Still Gaining Popularity
WeChat stores, together with WeChat Mini Programs, continue to be an important trend in 2019. These tools are linked to the popular social network WeChat and allow, not only the selling of products online, but they also allow for the creation of effective marketing campaigns to acquire and retain customers.
These tools are especially appreciated by smaller brands that manage to acquire a market share in China without having to open an official website in China. All major companies use WeChat Mini Programs intensively with excellent results. Currently, Chinese users expect a brand to have a presence on WeChat. Thus, an investment in this direction is highly recommended.
However, simply having a presence on WeChat is not enough. Businesses need to develop the right solutions for this specific audience; keeping in mind the makeup of the Chinese consumer. Marketing campaigns on social media must be well planned and strategically prepared as explained in the following point.
#5 New Marketing Approach
China is a highly competitive market and your brand runs the risk of not be noticed by the general public. For this reason, marketing in China is very important, and above all else, it needs to be very creative.
In 2019, many brands experimented with new approaches in marketing and often received more than satisfactory results. For example, short videos, live streaming events, games on WeChat, and influencers have all been very well received by their audiences. Whatever marketing tool you decide to use, the key point is that you must find a way to differentiate yourself and stand out from the crowd.
#6 Speed is Critical
This point refers, not to the browsing speed of your E-commerce site, which is very important also, but to your delivery speed. The Chinese consumer is getting used to surprisingly fast parcel delivery times and many large brands are adjusting their delivery systems, making them faster and more efficient.
This trend may put smaller companies with limited resources in trouble. Consequently, it is good to do what you can to optimize your operations and make the shipping process as fast as possible. Some companies with an established market in China, for example, have opted to establish warehouses in Hong Kong or in free trade zones in order to compete with this trend.
Having a warehouse located in these areas will enable your company to benefit from the new regulations on spending limits on cross-border E-commerce (see point #1).
#7 Fresh-Food, Health & Nutrition Are Gaining Traction
Among the niches that have seen considerable increases in sales in 2019 are the fresh-food, health, and nutrition industries. This is an indication that Chinese consumers are becoming more sophisticated, which means more opportunities for western brands.
These are still considered sub-niches, but considering the size of the Chinese market, there is an audience big enough to generate large numbers of consumers within the E-commerce of these sectors.
The Future of E-commerce in China
The future for E-commerce companies in China still looks bright. Many factors contribute to the belief that in the next few years this market will continue to expand considerably.
We already mentioned that the middle-class is growing, as well as their purchasing power. This phenomenon is affecting even non-Tier-1 cities. Thus, expanding the consumer base in China.
There are a few more conditions that make China more accessible to cross-border E-commerce. The Chinese government is lowering tariffs and restrictions on cross-border E-commerce companies. This is part of a policy intended to attract more foreign investors in China and this makes China more accessible to many companies.
Not long ago, the E-commerce market was dominated by huge online retailers like Tmall, JD Worldwide, and so on. However, recently we have seen companies leaving large marketplaces and establishing their own platform. This is another sign that Chinese consumers are now ready to trust smaller companies with strong branding.
When considering the stagnancy of many western markets, there are plenty of reasons for E-commerce businesses to take advantage of the Chinese market. Just consider that the number of online shoppers is expected to reach almost 1 billion by 2022. This alone represents a massive potential for every business.
The development that the Chinese E-commerce market has undergone in just the past few years has been amazing. QPSoftware has helped many companies to enter this market using the right E-commerce platform and developing social media solutions that resonate with the local audience.
With over 10 years of experience in the Chinese market, QPSoftware is a ecommerce agency located in Shanghai we can support your E-commerce business as it claims its share of the Chinese market. Contact us today and we will explain how we can help your operations in China to succeed.