Blog / News

China’s rising dragon: E-commerce

in Retail and Ecommerce

With the world’s largest manufacturing base and a burgeoning middle class, China’s rise to the top in e-commerce is inevitable. U.S. dominance of the e-commerce market is close to being dislodged by China whose online shoppers (currently 145 million) are increasing in number at an astonishing rate. It is expected that Chinese online consumers will outnumber and outspend their American counterparts by 2014. The expansion of China into the world’s most valuable e-commerce market will significantly alter the way companies online operate in China.

Some companies have already upped their marketing presence in China. Online retailing giant Amazon has launched an intensive advertising campaign across the country to promote its new, shortened web address for Chinese shoppers. Posters across China display a computer mouse clicking on the web address “z.cn”. The rebranded name of the American company is part of an aggressive strategy to win a leading share in the world’s next leading e-commerce market.

A recent report by Boston Consulting Group (BCG) estimated that a further 30 million Chinese are shopping online for the first time every year. Their spending will reach $1,000 a year, per person, by 2015 matching the amount being spent by American online consumers. The Chinese government has been effective in providing high speed Internet access to large swathes of its population in areas previously unsupported by telecommunications lines.

{During the last decade, poor domestic postal services and mis-trusted payment methods stifled growth in China’s e-commerce market from gaining momentum. Innovation in the payment system came in 2004 when the Alibaba Group launched Alipay, an escrow method in which consumers verify whether they are happy with the goods received before releasing payment to the supplier. Demand for fast, reliable postal services soon took off from B2C and C2C retail sites such as Taobao (Chinese equivalent of eBay). Today, Alipay is the largest online payment system in the world by value of transactions and the cost of postage in China is a fraction of the cost in the U.S. This has paved the way for online business-to-customer (B2C) companies to be successful; analysts predict this market in China will be worth $102.3 billion by 2013.

Like Amazon, many companies will be aiming to grab a healthy share of China’s e-commerce market. Vast opportunities exist, though competition is fierce and local companies have dominated due to their cultural understanding of Chinese consumer tastes. One of the biggest problems faced by Amazon was localization of its global strategy for China. Now that they are focusing upon Chinese requirements, Amazon is being seen as one of the big potential winners in China’s lucrative e-commerce market.



Language Connect delivers fast, accurate language translation services 24 hours a day