China e-commerce to be world's biggest

PUBLISHED : Wednesday, 23 November, 2011, 12:00am
UPDATED : Wednesday, 23 November, 2011, 12:00am


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China's internet retailing market may soon overtake the United States to become the world's largest, with more than two trillion yuan (HK$2.45 trillion) of transactions by 2015, a new report claimed yesterday.

E-commerce sales on the mainland almost quadrupled to 476 billion yuan in 2010 from 128 billion yuan in 2008, with 23 per cent of the urban population shopping online last year, the Boston Consulting Group (BCG) report said. It said e-commerce sales will grow from 3.3 per cent of the total mainland retail value this year to 7.4 per cent in 2015.

'Online shopping in China will see exponential growth through 2015,' said Waldemar Jap, a Hong Kong-based partner at BCG.

According to the report, about 145 million Chinese people have experience in internet shopping, compared to 170 million in the US. And that number may hit 329 million in four years, which means about 46 million additional Chinese consumers will be shopping online for the first time every year.

The rapid growth of the industry has benefited from the relatively low cost of shipping as well as affordable and widely available internet access services. It costs US$1 on average to post a 1kg parcel in China, compared to US$6 in America.

'Chinese consumers have turned from having a little familiarity with online shopping to a relatively high level of comfort and adaptation,' said Jap.

'We believe online spending of most of these consumers will double within five years.'

The report, based on a survey of 4,000 consumers in more than 20 mainland cities, found online customers spend an average of 3,100 yuan every year on the internet.

More than half are 'light spenders' who spend less than 2,000 yuan annually, while 7 per cent are 'super-heavy spenders' with an expenditure of more than 10,000 yuan.

'Fulfilling the emotional needs of China's super-heavy spenders will be key to future success in China's e-commerce landscape,' said Hubert Hsu, a senior partner at BCG and co-author of the report.

'It will be critical to engage them with value propositions beyond mere price savings.'

Unlike in other countries, internet access has far outpaced the reach of top physical retailers in China, making shopping portals a more effective channel to reach consumers than traditional chain stores., the largest shopping portal on the mainland, achieved a transaction volume of US$56 billion last year and accounted for nearly 80 per cent of total mainland e-commerce business.

Taobao's figure is even higher than the combined turnover from the mainland's top three chain retailers, which are home appliance sellers Gome and Suning, and supermarket operator Auchan.

The BCG report predicted the market share of business-to-consumer firms will grow significantly, and goods such as leisure wear, digital cameras, tourism and skincare products will see better sales online.