E-Commerce in China expected to slow but growth remains strong

Global market intelligence agency Mintel has released a new report <Haitao Shopping-China 2017> predicting that the Haitao market would peak within China’s overall online retail market. It also reveals that the total combined online cross-border (including Business-to-Business and Business-to-Consumer) e-commerce market in China grew 10%, from RMB 53 billion in 2011 to an estimated RMB 626 billion in 2016, representing a CAGR (compound annual growth rate) of 64%. From 2016 to 2021, growth is expected to slow to a still-strong CAGR of 15%, and reach a total value of nearly RMB 1.3 trillion.

Today, the majority of Chinese consumers shop for foreign imported products from domestic shopping websites (73%), compared with only one quarter (27%) who shop from overseas retail websites. Indeed, more than double the proportion of consumers buy from physical stores within China (56%), than do from overseas shopping websites.

There is a clear association among Chinese consumers for certain products to be more desirable from certain countries. Mintel research reveals that  31% of consumers buy imported food from Taiwan; 36% buy alcoholic drinks from France (principally wine); and 45% buy beauty and personal care products from South Korea.

It is interesting that the only territory seeing increase in significance of purchasing among urban Chinese consumers was France, from which the average buying rate across all imported products online in 2016 was 16%, up from 15% in 2015, and from where beauty and personal care products (20%) and alcoholic drinks (36%) were the lead product sectors.

Matthew Crabbe, Director of Research, Asia-Pacific at Mintel, said: “This does not stop the Haitao route to Chinese consumers from offering significant potential market opportunities to foreign brands, but it does mean that Haitao is likely to be more can you buy amoxicillin online relevant to brands looking at initial market entry. Retailers and brands should therefore play to their different country specialities when attempting to differentiate from their competitors.”

When choosing where to buy imported products online, Chinese consumers rank quality of products first (68%), followed by ability to use third-party payment systems (44%). They also want detailed product information (36%) and Chinese-language customer service (25%).

Also, four in 10 (39%) surveyed people said they would like to see a better choice of payment options on overseas online shopping websites, and 35% are less confident about the returns policies of overseas websites than they are of domestic online shopping websites.

Crabbe added, “As well as providing a better and more entertaining experience for Chinese online shoppers of imported foreign products, brands and retailers can improve by providing better practical solutions. Offering better refund, returns and delivery options is a key area where overseas online retail websites can improve, as compared to domestic websites. This does create logistical issues, however, but having links through domestic online retail portals can help combat this.”

Mintel research reveals that 62% of surveyed consumers who have purchased overseas products agree that online shopping for imported products lacks the excitement of shopping when travelling overseas, including 20% who strongly agree. Additionally, 34% of consumers agree that they are excited by shopping from websites that run interesting advertising campaigns.

“When selling foreign products online to Chinese consumers, brands and retailers really need to create a sense of excitement and entertainment about the whole process, if they are to stand out in an increasingly competitive market. Simply offering a new product is no longer enough.” Crabbe concluded.