The Great e-Mall of China
Overseas retailers breaking into China are likely to invest more in internet shopping platforms rather than physical stores as consumers in the world's fastest-growing retail market increasingly spend online.
Sales from online shopping in China are expected to nearly double annually in the years ahead, according to the latest global retail market outlook from auditing firm PricewaterhouseCoopers.
While retail sales in the Asia-Pacific are expected to grow at an average 6 per cent annually to US$6.6 trillion this year and US$10.5 trillion in 2015, online shopping turnover in Asia will grow by an average of 20 per cent a year in the coming years. China is leading the growth, with its online retail sales nearly doubling to US$77.8 billion last year.
The firm conducted a survey with 7005 online shoppers from seven countries, including 905 from China. It found that Chinese consumers, despite their relatively short experience in e-commerce, not only surpassed Western consumers in their visits to online shops, but their tastes in online goods were broader.
Seventy per cent of mainland respondents said they shopped online for all kinds of products, ranging from clothing, to electrical appliances, groceries, jewellery and watches, while only 40 per cent of their Western counterparts did so. Respondents from Germany, Britain and the United States said they visited online stores mainly for books, movies, electronic goods and computer products.
While about two-thirds of Chinese shoppers said they only started online shopping in the last four years, nearly half of the respondents either visited virtual stores several times a week or every day. That is almost double that of Western shoppers.
'More retailers, especially overseas brands that haven't yet penetrated the mainland market, are considering reducing the number of store openings in China and diverting the resources to creating their own online retail platform,' PwC's Carrie Yu said. 'To do that they may look to acquire local dotcom firms.'
Although online retailing made up only 3.4 per cent of China's US$2.28 trillion in sales last year, some sites are having incredible growth. Taobao, China's top online marketplace, expects its transaction value to double to 200 billion yuan (HK$244 billion) next year. The shopping website hit a single-day transaction record of 4.3 billion yuan on Monday following a one-day promotion campaign.
In an interview with PwC, Taobao chief executive Daniel Zhang Yong said that while online shoppers made up only about one-third of all internet users in China last year, the proportion was expected to rise to half by 2014. Last year, 485 million Chinese, or 37.3 per cent of the population, had internet access. Various researchers expected the rate to surge to about 80 per cent by 2015.
Meanwhile, Hong Kong jewellery brands Luk Fook and Chow Tai Fook fell in popularity among mainland consumers according to a survey on spending on luxury goods.
Dwarfed by European brands - including Cartier, Tiffany and Bulgari - Chow Tai Fook slipped from the shoppers' third favourite brand last year to fifth this year, while Luk Fook fell to 10th place from sixth last year. Nicolas Jeanjean, of research firm Albatross Global Solutions, said mainlanders' interest in Hong Kong brands was fading as increased travel made them realise that they lagged behind Western brands in terms of reputation.
The percentage of mainland shoppers who bought a wide range of products online