Page 246 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
with mobile shopping, greater spending by consumers in the amount that occurred in the U.S. at the same time.
smaller cities, and the expansion in the variety of goods Total sales for the “6.18” anniversary event, the biggest
being purchased,” said eMarketer Senior Forecasting mid-year shopping spree, reached 119.9 billion yuan,
Analyst, Oscar Orozco (Leggatt). One of the most striking according to JD.com. This is close to the same amount
examples is the fact that Alibaba sold more than $14.3 of money spent during “Singles Day” in 2016. While most
billion in less than 24 hours during the “Single Day” in of the spending power still rests in China’s developed
November 2015, a better performance than the “Black eastern areas, the new report also notes e-commerce
Friday” in the United States. With a rising middle class, growth in China’s rural areas (Yu). Online retail volume
the demand of better quality goods has also increased reached over 1.4 trillion yuan ($200 billion) in the first
(E-commerce Guide). three months of 2017, up 32.1 percent year-on-year
and more than double the pace of total retail sales, data
Disposable income and consumer spending in China from the Ministry of Commerce (MOC) showed. Online
continues to grow at a slow but steady pace. Rising consumption of services such as tourism, dining and
incomes are helping boost the fortunes of the country’s entertainment continued to rise, with sales of travel and
e-commerce sector, which has been a clear beneficiary of take-away food rising by 64 percent and 163 percent
consumers’ growing largesse. According to an April 2017 respectively. Chinese consumers spent more on high-
forecast by iResearch Consulting Group, the average end products such as upscale clothing, smart glasses and
annual e-commerce spending in China continues to rise. sensor-controlled vehicles. Central and western regions
iResearch projects the average digital buyer in China posted stronger growth in online spending and online
will spend 12,198 yuan online in 2017, an increase of 7 shoppers in third-and-fourth-tier cities. Rural areas also
percent over 2016, but the data suggests e-commerce outperformed their counterparts in first-and-second-
spending is slowing, estimating the average annual tier cities. Alibaba and JD.com are expanding offline to
growth rate per digital buyer will dip below 5 percent improve the consumer experience with convenience
starting in 2018. Other data supports the idea that stores as an emerging market (Song, China’s Online).The
e-commerce sales are no longer growing at the sky-high numbers are up, however, the popular idea about China’s
rates that once characterized China’s online economy. e-market that “when there’s enough wind, even a pig can
Based on January 2017 forecast data from Fung Global fly” does not seem to hold true for all online businesses.
Retail and Technology, the share of sales captured by Chinese social trends consultant Manya Koetse says the
retail and consumer-to-consumer e-commerce in China industry is a dog-eat-dog world and already some big
will start to plateau after this year. While that share is online companies have exited China’s chaotic world
expected to reach 21 percent in 2017, it will increase by of e-commerce. With an ever-growing Chinese online
only 4 percentage points over the following three years, population and the world’s largest e-commerce market,
hitting 25 percent in 2020 (Kressmann). more companies seek to join, hoping to find a goldmine.
Instead, many of them soon end up on the e-commerce
The total online sales volumes from December 2016 graveyard (Koetse). Of course, China’s big three digital
to May 2017 reached 3 trillion yuan for the first time, giants Baidu, Alibaba, and Tencent have eroded brick-
according to a semi-year report by the Chinese Academy and-mortar market share. They now rank among China’s
of Social Sciences. The report released by the National top 5 most valuable brands with a collective brand value
Academy of Economic Strategy, Chinese Academy of approaching $200 billion. Yet, online sales in China still
Social Sciences (CASS), and China Central Television account for just 15 percent of all retail, significantly more
(CCTV) suggests Chinese consumers are becoming more than it did in 2012 but hardly a sea change. Despite
sophisticated and focusing more on the quality of the doomsday warnings, retail in China is not dying. The true
products they buy. The online sales of health products, threat to retail in China may not be online shopping. It’s
sports products and intellectual products such as books the increasing likelihood that the country’s e-commerce
have all seen a significant rise through the December giants will turn their attention to doing bricks-and-
2016 to May 2017 period compared to the previous mortar—better (Liu, Bai, Jia, and Wang).
six months. The report also shows the proportion of
online retail sales in China, as part of total retail sales of JD.com is China’s number two e-commerce player,
consumer goods, has now surpassed global averages. In ranked behind Alibaba. In 2016, the Chinese firm began
May 2017, Chinese consumers bought products worth hosting Wal-Mart’s e-commerce offerings on its platform.
over 1.4 trillion yuan on the Internet, more than twice Since then, both companies have been working to
246
with mobile shopping, greater spending by consumers in the amount that occurred in the U.S. at the same time.
smaller cities, and the expansion in the variety of goods Total sales for the “6.18” anniversary event, the biggest
being purchased,” said eMarketer Senior Forecasting mid-year shopping spree, reached 119.9 billion yuan,
Analyst, Oscar Orozco (Leggatt). One of the most striking according to JD.com. This is close to the same amount
examples is the fact that Alibaba sold more than $14.3 of money spent during “Singles Day” in 2016. While most
billion in less than 24 hours during the “Single Day” in of the spending power still rests in China’s developed
November 2015, a better performance than the “Black eastern areas, the new report also notes e-commerce
Friday” in the United States. With a rising middle class, growth in China’s rural areas (Yu). Online retail volume
the demand of better quality goods has also increased reached over 1.4 trillion yuan ($200 billion) in the first
(E-commerce Guide). three months of 2017, up 32.1 percent year-on-year
and more than double the pace of total retail sales, data
Disposable income and consumer spending in China from the Ministry of Commerce (MOC) showed. Online
continues to grow at a slow but steady pace. Rising consumption of services such as tourism, dining and
incomes are helping boost the fortunes of the country’s entertainment continued to rise, with sales of travel and
e-commerce sector, which has been a clear beneficiary of take-away food rising by 64 percent and 163 percent
consumers’ growing largesse. According to an April 2017 respectively. Chinese consumers spent more on high-
forecast by iResearch Consulting Group, the average end products such as upscale clothing, smart glasses and
annual e-commerce spending in China continues to rise. sensor-controlled vehicles. Central and western regions
iResearch projects the average digital buyer in China posted stronger growth in online spending and online
will spend 12,198 yuan online in 2017, an increase of 7 shoppers in third-and-fourth-tier cities. Rural areas also
percent over 2016, but the data suggests e-commerce outperformed their counterparts in first-and-second-
spending is slowing, estimating the average annual tier cities. Alibaba and JD.com are expanding offline to
growth rate per digital buyer will dip below 5 percent improve the consumer experience with convenience
starting in 2018. Other data supports the idea that stores as an emerging market (Song, China’s Online).The
e-commerce sales are no longer growing at the sky-high numbers are up, however, the popular idea about China’s
rates that once characterized China’s online economy. e-market that “when there’s enough wind, even a pig can
Based on January 2017 forecast data from Fung Global fly” does not seem to hold true for all online businesses.
Retail and Technology, the share of sales captured by Chinese social trends consultant Manya Koetse says the
retail and consumer-to-consumer e-commerce in China industry is a dog-eat-dog world and already some big
will start to plateau after this year. While that share is online companies have exited China’s chaotic world
expected to reach 21 percent in 2017, it will increase by of e-commerce. With an ever-growing Chinese online
only 4 percentage points over the following three years, population and the world’s largest e-commerce market,
hitting 25 percent in 2020 (Kressmann). more companies seek to join, hoping to find a goldmine.
Instead, many of them soon end up on the e-commerce
The total online sales volumes from December 2016 graveyard (Koetse). Of course, China’s big three digital
to May 2017 reached 3 trillion yuan for the first time, giants Baidu, Alibaba, and Tencent have eroded brick-
according to a semi-year report by the Chinese Academy and-mortar market share. They now rank among China’s
of Social Sciences. The report released by the National top 5 most valuable brands with a collective brand value
Academy of Economic Strategy, Chinese Academy of approaching $200 billion. Yet, online sales in China still
Social Sciences (CASS), and China Central Television account for just 15 percent of all retail, significantly more
(CCTV) suggests Chinese consumers are becoming more than it did in 2012 but hardly a sea change. Despite
sophisticated and focusing more on the quality of the doomsday warnings, retail in China is not dying. The true
products they buy. The online sales of health products, threat to retail in China may not be online shopping. It’s
sports products and intellectual products such as books the increasing likelihood that the country’s e-commerce
have all seen a significant rise through the December giants will turn their attention to doing bricks-and-
2016 to May 2017 period compared to the previous mortar—better (Liu, Bai, Jia, and Wang).
six months. The report also shows the proportion of
online retail sales in China, as part of total retail sales of JD.com is China’s number two e-commerce player,
consumer goods, has now surpassed global averages. In ranked behind Alibaba. In 2016, the Chinese firm began
May 2017, Chinese consumers bought products worth hosting Wal-Mart’s e-commerce offerings on its platform.
over 1.4 trillion yuan on the Internet, more than twice Since then, both companies have been working to
246
