Chinese Online Commerce
March 31, 07
By Ken Gassman
Reliable statistics about China’s online community are difficult to obtain. E-marketer, a global e-research firm, estimates that China has about 127 million people online, far below government estimates of 150 to 200 million. That represents less than 10 percent of the population.
In terms of sheer numbers, China ranks among the top five Internet markets in the world. In terms of its buying power, it ranks near the bottom. E-marketer estimates that retail e-commerce in China totaled about $700 million in 2006. This compares with nearly $110 billion in the U.S.
Several factors make online commerce daunting in China, including:
w Per capita nominal income in China is just $1,700 versus the U.S.'S $42,000 annually.
w The savings rate in China is nearly 40 percent, a number that is unlikely to change significantly near term. Until the government is able to create reliable social programs, and until they can change the saving culture, it is unlikely that the Chinese will engage in recreational shopping to the degree that Americans do.
w Credit card usage is still in its infancy in China. Thus, payment for goods purchased online is still onerous.
w Package shipping services are unreliable. Theft and corruption permeate China’s distribution system.
While China's online market may be difficult to tap, the Chinese have enthusiastically embraced the Internet. Chinese is the second most popular language amongst Internet users, as the table illustrates.
| Internet Users by Language 86.3 8.5% 128.4 67.2% 64.0 6.3% 392.1 16.3% 56.9 5.6% 96.0 59.2% Source: Internet World Stats | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
China: Asia-Pacific’s Biggest Markets
Based on research by E-marketer, the number of Internet users in China dwarfs every other country in the Asia-Pacific region, as the table below illustrates.
| Internet Users - Asia Pacific | |||||||||||||||||||||||||||||||||||
Chinese Internet Shoppers: A Desirable Demographic
China’s Internet users represent a desirable demographic target audience. They are largely urban, young, educated, and wealthy by Chinese standards. They spend much time online, and they can spread the news about a product or service quickly because they are heavy users of online forums and bulletin boards. They are also likely to have broadband access.
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Jewelry: Popular for Online Shopping
Online Chinese shoppers were surveyed by the China Internet Network Information Center (CINIC) as to what categories of products they purchased online. Clothing and accessories was the most popular category, followed by jewelry and cosmetics. In the CINIC survey, roughly 30 percent of all Internet shoppers had purchased jewelry and cosmetics.
China’s Online Shoppers Aren’t Frequent Shoppers
While Americans may be recreational shoppers, Chinese consumers are not yet at that stage. The survey by CINIC reveals that about 25 percent of all online shoppers make purchases once a month, while 15 percent buy once a week. The other 60 percent buy less than once a month. About 15 to 20 percent of all online shoppers purchase goods only once or twice a year.
China’s Internet Usage to Grow
By the end of the decade, the number of Chinese using the Internet is expected to grow by about 45 percent to almost 184 million people, far ahead of today’s roughly 127 million users.