If the flash of Cyber Monday promotions has you wondering if your business needs a larger e-commerce strategy beyond North America, you may wish to start looking to China. Based on this year’s sales coming out of China’s November 11 Singles Day, China has been figuratively crowned king of the e-commerce market. With online revenue at almost six billion dollars generated on that day alone, Chinese consumers set the bar as the ones to watch.
Increased Broadband Capacity
China has been developing its mobile and fixed line broadband capacity. Faster internet access coupled with growing disposable incomes has more and more Chinese consumers shopping with a click of their fingers. The country has grown to have an online population of 130 million residential broadband users – equal to the expected number of Americans logging on Cyber Monday for a bit of shopping. But China’s broadband penetration rate is only around 30 percent – something expected to accelerate over the next five years. And while Cyber Monday is forecasted to generate about USD 2 billion in sales this year, special “holidays” in China, like Singles Day, encourages on line retailing to happen at levels not seen in any developed market. The Chinese consumers easily blow the much promoted US e-tailing records out of the water. More than 400 million users logged on to China’s e-commerce sites this year. Revenue in 2013 alone has the potential to amount to $280 billion. By 2015, this estimate increases to over $443 billion. Source: http://asia.cnet.com/blogs/a-guide-to-chinas-top-10-e-commerce-sites-62215025.htm
Western Retailers Waking Up
With this level of activity, savvy Western retailers are waking up to the Chinese e-consumer. Companies selling clothing, cars, luxury cosmetic and perfumes and even raw food suppliers look at these e-commerce portals seriously as a way to participate. It represents a potentially easier way to reach the Chinese consumer, rather than setting up brick-and-mortar stores, where labour and construction costs, among other hurdles, could be prohibitive for many.
Canadians Shouldn’t Be Left Behind
Canadian companies, too, should look outside their North American context and move beyond Amazon and eBay. For small and medium sized Canadian companies looking to diversify, check out the Chinese ecommerce sites like TMall.com and 360Buy.com as just two leading examples of the world of Chinese retailing online.
What To Watch For
With an estimated 50 million products available through China’s various websites, there is still a strong need to understand buyer motivation and fight to catch the eye of the Chinese shopper. Retailers should join forces with service providers that can help build an effective web presence in order to sell their products. Savvy marketing is essential so it’s important to have an understanding of the role the Chinese buyer’s social circle plays in purchasing decisions. Simply duplicating western online strategies and having market access through an online portal is not enough. Companies also need to pay close attention to their intellectual property, along with product distribution and how payment is enforced. How to deal with after-sales service and warranties also needs consideration.
A Close Eye
Canadian companies need to keep a close eye on China’s expanding e-commerce world and seriously consider how they can increase their own sales by tapping into this market. More information about the business environment and key industries in China can be found in this EDC China Country Overview HERE