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.