The size of the market
- According to official figures from the China Internet Network Information Center (CNNIC), by the end of December 2013 the country had 618m internet users, up by 53.58m year-on-year.
- This equates to a penetration rate of 45.8%, which increased by 3.7% on the previous year.
- China’s online population, at 618m, is twelve-times that of the UK and double that of the US. There are now 302m “e-shoppers” in China.
Chinese internet population (blue bars) and penetration (red line)
- The number of mobile internet users had reached 500m, showing annual growth of some 19.1%.
- By the end of December 2013, 247m Chinese were using the mobile web to watch or download videos, an increase of 112m people year-on-year.
- China’s ecommerce was worth 9.9 trillion Yuan overall in 2013, up 21.3% year-on-year. Online shopping topped 1.85 trillion Yuan, jumping 42.0% YoY.
- Mobile shopping surged to 167.64bn Yuan at an annual growth rate of 165.4%.
- The growth in ecommerce will be fuelled by China’s burgeoning middle class, which will account for as much as 70% of the population by 2030.
- Six out of every ten dollars spent online in Asia comes from China.
Shopping online everyday
- A global survey carried out by PWC found that more than half (53%) of Chinese respondents said they shop online using a PC every week.
- A further 8% said they shop online using a PC everyday, compared to 3% on a tablet and 4% on smartphone.
- Overall 14% of Chinese respondents said they shop online everyday, compared to a global average of 5%.
- Other findings from the study show that 77% of Chinese consumers shop on mobile phones and 66% shop on tablets.
- However it should be noted that only 900 Chinese consumers took part in the survey.
Third-party online payments
- Unlike Western markets, credit card payments are not the dominant payment method.
- In 2004 Alibaba launched Alipay, an online payment escrow service and the rise of third party payment has been an enabler to a booming ecommerce market.
- According to data from iResearch, the Chinese third-party online payment market was worth 5372.98bn Yuan ($870.33bn) in 2013, a YoY increase of 46.8%.
- Alipay hoovered up almost half of this market, accounting for 48.7% of third-party online transactions. Tenpay came second with 19.4%.
China third-party online payments marketshare 2013
- Merchants pay a fee to these third-party payment providers, on average less than 1% of the purchase price.
- Alipay’s escrow service holds a payment in a dedicated account until the customer confirms that the purchased goods have been delivered as advertised.
- Tenpay mainly operates in the B2B market and in consumer use of Tencent’s various entertainment services.
- WeChat Payment uses Tenpay’s payment infrastructure and can be used to purchase movie tickets, pay utility bills, re-charge phones and to pay for a variety of other services.
Future growth
- The Chinese ecommerce market is predicted to continue its rapid rate of growth over the next few years.
- According to data from iResearch, Chinese ecommerce GMV rose to 9.9 trillion Yuan in 2013 at a decelerating year-on-year growth rate of 21.3%.
- It is predicted to continue growing at a steady rate up to 21.6 trillion Yuan in 2017.
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