Did you know there is now a cost-effective way for traditional retail market entry in China? You can now easily sell your products online to consumers in China without a physical presence. Since the cost of doing business in China has escalated, and the structural inefficiencies and competition are a tremendous challenge, online shopping offers many merchants a more effective alternative to enter and develop sales in the Chinese consumer market.
While traditional consumer retail sales are waning in China, online shopping by Chinese consumers increased 66 percent in 2011. There are currently over 195 million Chinese consumers shopping online, which is the equivalent of the population in Brazil, the fifth most populated nation in the world. In 2011, Chinese consumers spent $125 billion (US) online. This is equivalent to the total GDP of New Zealand.
Yihaodian is a Chinese ecommerce giant much like Wal-Mart, which has a 51 percent stake in Yahaodian. This is the fastest growing B2C website in China and was selected as the fastest growing company in the Asia Pacific region in the 2011 Deloitte Technology Fast 500 Asia Pacific Report. This report suggests how companies can now sell directly to the Chinese consumer through Yihaodian without having a presence in China.
The report, issued from China, stated, “We’ve seen Asia Pacific’s most dynamic and highest-growth companies’ power through the global financial crisis, with leaders actually increasing their revenue growth rate, despite the world’s economic woes and the dislocations in Asia Pacific, as the region shifts away from traditional Western export markets to more intra-regional and domestic demand model. This is a truly impressive achievement for the region’s tech sector, and we’re proud that the Technology Fast 500 Asia Pacific Ranking remains a benchmark of their performance.” To give you an example of the relative size of the online market in China, the report indicates:
- In the past month (February 2012), 5.7 million consumers in Shanghai bought at least one item online. This is the equivalent of the population of Denmark.
- The equivalent population of Las Vegas, Nevada, bought cosmetics online in Beijing in the past month.
- The equivalent population of Rotterdam, Holland, bought at least one item of fashion clothing online in Guangzhou in the past month.
- The equivalent population of Oslo, Norway, bought general household goods online in Wuhan, China in the past month.
The report also tells you the following:
- Official inflation figures do not tell the full story of rising costs in China. This report tells you the six key areas that are driving the steep increase in the cost of market entry, sales and marketing costs in China. This rapid increase in basic business operational costs is undermining the viability of traditional market entry and sales models for many consumer products.
- Twelve key reasons why consumers are turning to online shopping in China.
- The socio-economic and demographic profiles of online shoppers in China and how these differ from the general population. Why these consumers represent the target group for most consumer goods companies in China.
- What services that progressive companies such as Yihaodian are developing to allow companies to either enter the market with an online sales strategy, or to further develop their sales in China with an effective online sales strategy with minimal investment.
- The relative size of the online market for thirteen selected product categories across the key urban markets of Shanghai, Beijing, Guangzhou, Chengdu and Wuhan. These thirteen product categories are:
- Books
- Children’s Items
- Computer Equipment
- Consumer Electronics
- Cosmetics
- Daily Foods, Snacks, Confectionary
- Discount Coupons
- Fashion Accessories
- Fashion Clothing
- General Household Goods
- Leisure Travel and Vacations
- Mobile Phones
- Sports Goods”
The report by Data Driven Marketing Asia (DDMA) is based on four key market and data intelligence sources, listed below:
- Interviews with 9,057 consumers conducted in January and February 2012 across the key urban markets of Shanghai, Beijing, Guangzhou, Chengdu and Wuhan.
- Twenty-two qualitative focus groups with online shoppers in Shanghai.
- An interview with the co-founder and chairman of the largest B2C website in China, Yihaodian (named the fastest growing company in the Asia Pacific region in the Deloitte Asia Pacific Report).
- A wide variety of trade and industry sources within China.
This report can be purchased from DDMA for $150 (US).
