By Xiaolei Gu
Apr. 19 – To further expound the important role that online shopping is playing with regards to China’s expanding consumption levels, popular shopping website Taobao and China’s largest market research firm CTR jointly released the “Report on China’s Online Shopping Trends 2012 (中国消费风向标报告2012).” The report identifies and extrapolates on online shopping trends in China based on CTR’s continuous single-source survey CNRS-TGI, Kantar Worldpanel, and data collected from Taobao – a facilitator of B2C and C2C retail business run by Chinese internet giant Alibaba Group.
The report attempts to present a clearer picture of China’s rapidly growing online market, which saw an 83.5 percent increase in the number of online shoppers in 2011. The data illustrates a rise in the number of so-called “heavy” and “medium” online shoppers, as well as the surprising rise of the “grey market” made up of elderly shoppers. Geographically, cities and provinces in Central China and West China are enjoying the fastest growth in the number of online shoppers, compared to slower growth rates now being seen in the more developed coastal areas. In terms of shopping medium, mobile online shopping is gradually gaining steam in China following a surge in sales of smartphones and the growing use of 3G mobile networks.
From 2009 to 2011, the percentage of consumers going to supermarkets and malls to satisfy their shopping needs remains unchanged and the trend is steady. However, in contrast, the percentage of consumers shopping online saw a period-on-period increase of 6 percent in the first half of 2011.
According to the report, 64 percent of Chinese citizens used the Internet and 20 percent of Chinese citizens shopped online in 2011. That’s to say, roughly one out of three netizens in China shopped online in 2011.
By sector, the sale of apparel led online shopping growth with an increase of 89 percent, which corresponds with an overall 24.2 percent increase in sales volume of apparel reported by the National Statistic Bureau. Besides, sales of jewelries, household goods, groceries and travel services are growing on a large scale.
The rise of online shopping in central and western China
Although central and western China face a smaller online market the more developed eastern regions, it is this area that is experiencing the fastest growth.
According to Taobao data, the average growth rate in the number of online shoppers in China is 83.5 percent. Provinces in central and western China, including Henan, Xinjiang, and Anhui, are enjoying a growth rate of 105 percent.
However, consumers in Beijing and Shanghai still contribute most to the online market, with one out of two netizens in those areas shopping online. Meanwhile, second-tier cities such as Tianjin, Shenzhen, Chongqing and Shenyang are ranked just below Beijing and Shanghai in terms of the percentage of online shoppers among netizens.
The rise of “heavy” and “medium” online shoppers
The report indicates another interesting trend in online shopping in China – the structure of online expenditures. According to the statistics, the number of “heavy” online shoppers who spent more than RMB10,000 on Taobao in 2011 increased by 82.8 percent compared to 2010. Meanwhile, the amount of “medium” online shoppers spending between RMB1,000 and RMB10,000 on Taobao increased by 64.7 percent year-on-year. In contrast, the number of “light” shoppers who spend less than RMB1,000 only experienced a 34 percent jump.
However, while online expenditures are largely on the rise, the increase in income of online shoppers is lagging behind. In the first half of 2011, the average increase in income of online shoppers in China was 5 percent, while the increase in online expenditures hit 9 percent.
A potential “grey market” for online businesses
Most online shoppers in China are aged between 25 and 45 years old with those over 60 years old ranked at the bottom of the list. However, the report reveals that a “grey market” targeting the elderly in China might bring huge profits to online businesses.
Data from the report shows that both the amount of turnover in goods for the elderly and the total number of people buying things for the elderly online saw an increase of more than 200 percent in the year 2011. The most popular products in the “grey market” are leather apparel, casual pants, and sneakers. Last year, the number of consumers purchasing these select items online for the elderly increased by nearly 500 percent.
Those making purchases for the elderly online are not necessarily old people, with young people making up a good percentage of the total. More surprisingly, the report revealed a 369 percent increase in the number of people aged below 23 purchasing for the elderly.
Mobile shopping gains steam
Thanks to China’s growing wealth and advances in modern technology, consumers in the country are using mobile phones to access Internet services with greater frequency, bringing about inevitable changes in spending habits.
In January 2011, the total number of users that logged onto Taobao through mobile services reached 46.26 million. As of March 21, 2012, this number reached 100 million, and the total number of Taobao mobile service users is expected to reach 200 million by the end of 2012.
According to statistics from IDG News, the gross merchandise value from mobile purchases reached RMB11.8 billion (US$1.86 billion) in 2011, up more than six times the RMB1.8 billion generated in the previous year. Taobao further projects a total gain of RMB50 billion from mobile purchases in 2012.
The Greater Pearl River Delta: Business Guide to South China (Fourth Edition)
In this newly-released edition of our regional business guide to South China, we offer business-minded individuals an up-to-date reference source for all of the key issues concerning setting up and successfully operating a business in South China.
The Yangtze River Delta: Business Guide to the Shanghai Region (Fourth Edition)
This guide takes a practical, city-focused approach, walking you through the economy of important cities in the region with a level of specificity available through few other English sources. Its pages overview the region from a business standpoint, examine the economy of the region’s provinces and prominent cities in depth, and introduce the basics of establishing a business in the region.
Report: China’s 2020 Consumer Demographics
China’s Provincial Retail Statistics for 2011
Consumption Trends and Targeting China’s Female Consumers
FICE Franchising in China: A Flourishing Business Model
Top 50 Chinese Cities by Investment Potential
China’s Wine Market Shows Great Potential
Previous Article « China’s Qualification Requirements for Legal Representatives and other Key Positions
Next Article Suzhou Subway Set to Open on April 28 »
Dezan Shira & Associates´ brochure offers a comprehensive overview of the services provided by the firm. With its team of lawyers, tax experts, auditors and...
Doing Business in China 2022 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates in...
With the scope and penalties of China’s social credit system being further clarified in 2021, legal and regulatory compliance has become more important than...
As a legitimate tool for reasonable tax planning and cost saving, tax incentives play an important role. Companies also use tax incentives as a useful...
A firm understanding of China’s laws and regulations related to human resources and payroll management is absolutely necessary for foreign businesses in...
Over the last few months, China has been quickly expanding the pilot program on electronic special value-added tax (VAT) fapiao (hereafter special VAT...
Dezan Shira & Associates helps
businesses establish, maintain,
and grow their operations.
Comments are closed.
Stay Ahead of the curve in Emerging Asia. Our subscription service offers regular regulatory updates,
including the most recent legal, tax and accounting changes that affect your business.