E-commerce Opens up the Chinese Market

By July 23, 2012
Femme devant un ordinateur

With the use of credit cards and new technologies becoming widespread throughout the middle class in China, e-commerce is likely to help brands open up retail business there.

Economic development in China is bringing with it the emergence of a middle class that is showing increasing interest in the new technologies, which is set to create a boom in online retail sales, according to a recently-published study from Mintel, a global supplier of consumer, product and media intelligence. The new Chinese middle class are highly ‘connected’, 88% of those surveyed claiming ownership of a desktop computer, while fully 96% possess some kind of computer. In addition some 97% have a smartphone, which should benefit m-commerce. Overseas businesses understand the significance of these
figures very well. DDMA, a market research and consulting company specialising in the alcohol and beverage sector in China, recently published a report which revealed that online sales now represent one of the best openings for traders wishing to enter the market. While communication technologies are of course not in themselves sufficient to create an e-commerce market, one of the last obstacles to the expansion of e-commerce - the means of payment - is being removed. Paul French, Mintel’s Chief China Market Strategist, explains that "the e-commerce sector was faced with two major hurdles, trust that the goods were genuine and not fakes and low credit card ownership.” The second hurdle has now been overcome: today over half (52%) of China’s middle class have a credit card.

Fondness for technology

As to the first barrier, "Major online e-tailers have begun working with brands to eradicate fakes from their platforms," reveals Paul French. This is a key success factor for e-consumption. In addition the Chinese middle class’s interest in technology is demonstrated by their purchasing habits. Fully 90% of this group own a digital or video camera, 83% a HD TV, and 70% a DVD player. Around one in four (26%) Chinese middle class consumers owns a 3D TV. So they already own all the necessary equipment and also show no signs of stopping buying. Some 39% of those surveyed had bought an audiovisual item (TV, PC, or games console) during the three previous months, while 42% of them had purchased a white goods item
(refrigerator, washing machine, etc) during the same period. And still 53% said they intended to purchase some audiovisual equipment in the coming three months, and 43% were planning to buy a white goods item within the same period.

Luxury and travel

The Mintel study also points to the fondness of the Chinese middle class for luxury goods, with just 5% of those polled saying they did not intend to buy any luxury item over the next year. The rest intend to invest in luxury clothes (67%), clothes and footwear (60%), jewellery and watches (58%) and electronics (45%). Similarly just 6% said they had not purchased any luxury items while travelling outside of China. In fact Chinese people spend a considerable amount of money when travelling, and have developed a particular liking for Australia, 40% travelling there for their holidays last year, ahead of Europe (37%) where France leads the way (25%), followed closely by the United Kingdom (22%), the third major destination region being the United States (32%). However, Chinese middle class consumption hasn’t stopped these people from saving: 77% of those surveyed had added to their savings in the previous three months.

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