China’s E-commerce Market: An Introduction
China’s e-commerce market continues to enjoy rapid growth annually. Thus causing companies and entrepreneurs around the world to take notice. And further, seek a piece of the action. Over the past three decades, social and tech progress has increased the disposable income of China’s 1.4 billion population. And now they have developed a newfound desire to spend and shop. This rise in spending has heavily added to China’s consumption and buying power. As well as turning industries, notably e-commerce, into the most lucrative in China’s history.
Whether you run a small start-up company or a large chain, you are interested in doing e-commerce in China – and who could blame you? According to China’s Ministry of Commerce, national e-commerce transactions reached 34.82 trillion yuan in 2019! In spite of the global pandemic, experts predict that e-commerce in China will continue to grow. Furthermore, it will account for 50% of retail sales in the upcoming years.
However, for a foreign company, breaking into China’s e-commerce market is not a walk in the park. Because of the ‘Great Firewall’ law, many popular Western social media platforms and websites are not reachable within mainland China. In response to this, China developed its own ecosystem of apps and platforms. These not only mirror their Western counterparts but surpass them in various ways. Because Chinese netizens use these apps, you may not have heard of some of them before! Clearly, foreign companies require a deep understanding of China’s online culture and marketplace. This article shares some of the essential things you need to know about Chinese online culture and China’s e-commerce market. This is especially important before you begin your business in China.
China’s Online History
To learn about China’s online culture, you must first look at China’s path into the digital space. In the late 1990s, the Chinese powers took action that would elevate the country as a rival on the global stage. These actions consisted of deepening the country’s access to global markets and technologies, such as the internet. During this decade, there were only some 40,000 internet users in China – a small percentage of users compared to today! Companies, such as Alibaba, Netease, and Tencent started at this time. As a result, all these companies would become the largest online platforms in the world.
Then, in the 2000s, the infamous ‘Great Firewall of China’ imposed itself onto the Chinese internet. In effect, blocking users from accessing popular Western websites such as YouTube and Google. Since then, domestic versions of these platforms were starting to launch. Notable examples include Sina Weibo, China’s answer to Twitter, and WeChat, a messaging app like Facebook.
By the late 2010s, more than half of China’s population was using the internet, mostly on their mobile phones. To make the internet more available to the other half, mobile apps were being developed at an exponential rate. These apps eventually surpassed their Western counterparts in function and ease of use.
China’s Online Culture
Today, China’s internet culture continues to evolve at breakneck speeds. Now, with over 1 billion Chinese online users and an increase of 48% of users from rural areas. In fact, Chinese internet users have their own moniker, ‘netizens’! As affordable mobile devices and high-speed data became commonplace, China witnessed a change in the types of online users. In 2000, college-educated users made up 60% of the total. However, in 2020, this dropped to 10%. With more young people taking over the online space, China’s online culture and consumer base are constantly changing.
Today, China is now leading the forefront in e-commerce. A large predictor of this is the number of tech innovations that have come from the country. For example, the distribution of QR codes has become so widespread that they are now an integral part of daily life in China. This is due to its simplicity and ease of use. Unique QR codes are shared online and offline for users to access content. People receive or send payments using QR codes. And finally, the government uses them to track people’s movements as part of the COVID-19 prevention effort.
Who Are China’s Online Consumers?
It is claimed that the typical online buyer in China is a 30-year-old or younger female with disposable income. Data continues proving this statement true. In 2020, the female buyer market in China exceeded $1.53 trillion. Women makeup 75% of total household purchases and even go so far as to buy 50% of male-targeted products! In 2020, there were 530 million female internet users, which related to the boost in buying from e-comm platforms. Coined the ‘she economy’ for good reason, these numbers show that women are the primary consumer base in China.
Archetypes in China
Many women who identify as being part of the she-economy may also identify with the ‘leftover woman’ archetype. Culturally, this derogatory label was used to refer to a career-focused, unmarried, woman in their late 20s. Brands have strategically responded to this stigma by launching ad campaigns that target this subset of online users. Furthermore, they encourage them to continue spending. Let’s take a look at some other notable Chinese consumer archetypes.
- White collar worker. These workers live a strenuous life that consists of long working hours, long commutes, and overtime. Now, white-collar workers in China are gradually becoming tired of this dull lifestyle.
- Fu’erdai. These privileged children are the inheritors of their family’s new wealth. Translated as ‘rich second generation’, fu’erdai’s love to flaunt an extravagant lifestyle, spending heavily on luxury goods.
- Sea turtles. This label refers to Chinese students who studied abroad and have now returned to work in China. Because of the influence of Western social media and pop culture when abroad these students return westernized. Consequently, sea turtles have a newly-developed bias towards using Western products that they grew accustomed to.
- Silver spenders. China’s senior citizens, which experts project will have significant purchasing power in the future. By 2050, one in three people in China will be over the age of 60!
- Tiger parents. Just like the animal, these parents are extremely fierce and strict towards their children. China’s school system is highly competitive. That is why 1/5 of Chinese families spend more than 20% of their household income ensuring their children’s education.
These Chinese consumer archetypes all have their own individual role to play in growing China’s e-comm market.
Who dominates China’s Online Marketplace?
Now you know that some of the biggest online platforms used in the West are either blocked or simply not popular with netizens. For example Facebook, Google, and Amazon. This sparked the growth of domestic platforms that lead China’s online ecosystem and have claimed all the financial rewards. Let’s take a look at some of the major tech titans that you may or may not have heard about.
China’s Key Players
- Alibaba. Founded by business magnate Jack Ma in 1999, the Hangzhou-based company operates platforms such as Alipay, Taobao, and Tmall. Both Taobao and Tmall are e-commerce platforms, for C2C and B2C respectively, that dominate the industry in China.
- Tencent. Known as Alibaba’s biggest rival, this company is more commonly known for operating WeChat, China’s most popular social media app. It is used for online payments, daily personal contact, and B2B marketing. Recently, Tencent has established itself as a major player in the gaming industry. Taking notable game publishers such as Tencent Games and Riot Games under its wing.
- Baidu. This popular search engine is China’s answer to Google. Founded in 2000, Baidu remains the leading and most reliable search engine used by netizens daily. As a result, Baidu can really help companies expand their brand reach if their websites place high in a users’ Search Engine Results Page (SERP). That is why it is important for brands to increase their Search Engine Optimization (SEO).
- ByteDance. A newcomer to China’s online ecosystem is ByteDance. Founded in 2012 it is known worldwide for developing TikTok (Douyin in Chinese). TikTok is one of the most popular short-video social media apps in the world. Unlike TikTok, Douyin allows the integration of different formats of ads inside the app. Companies selling their products to young adults pay close attention to advertising on this app.
While these platforms serve different purposes, many are interrelated and work in tandem to help brands boost their e-comm sales. E-commerce is integrated into every Chinese social platform. Furthermore, ecosystems such as WeChat give companies various ways to connect with their customers. For more detailed information on China’s tech titans, head over to our Learn page for more articles, or contact Gab China.
Doing business in China successfully isn’t a walk in the park. It requires thorough preparation, resources, strategic positioning, and a deep understanding of the cultural differences. In closing, here are some things you should consider before plunging into China’s e-commerce market.
- Localization. Ensuring the message and spirit of your brand translates to Chinese consumers is important for success. To that end, you may have to invest resources in localizing your content into Chinese. Such as your website, logo, and brand name.
- Collaboration. Two is better than one. Partner with Gab China to help you position your brand on major e-comm platforms. Then join with the right Key Opinion Leader (KOL) to promote your brand. Finally, increase your SEO on Baidu.
Contact us now for a complimentary consultation so we can get you started.