Is e-commerce the propelling force to drive spending in China?

Is e-commerce the propelling force to drive spending in China?

According to findings of HKTDC  Hong Kong Trade and Development Corporation Researc and other specialised research institutions , e-commerce market in China was worth CNY 754.2 billion (USD 123.23 billion) in the first half of 2013, or up 47.3 % against the same period of 2012. It is estimated that the figure could settle at CNY 1.7 trillion by the end of the ongoing year by 2015 it should exceed CNY 3 trillion according to the State Council

The act 2012 per capita online shopping spending in China was CNY 5665.30 or up 35 % as against 2011.

IResearch consulting firm states that revenue growth form online shopping has slowed in 2013 because online shopping is shifting from a period of rapid growth to maturity. The company sees the potential of consumption has to be seen in the expansion of the online shopper base, mostly in the western provinces, as well as in third and fourth tier cities in central and eastern China, if unleashed alongside the popularity of mobile internet going forward.

According to China Internet Network Information Centre the national internet penetration rate is around 40 %, translating in the fact that half of the Chinese population still lacks internet access. The world average was 24.7 % in 2009. Thus it is unlikely that traditional shopping will be replaced by online shopping in this decade.

China’s online boom started in 1999 with B2 portal Alibaba, but shoppers really became aware in 2003 when Alibaba founder Jack Ma dev eloped Taobao as competitor to eBay. At the end of 2012, Taobao had sales of more than CNY 1.1 trillion and a market share of 95.1 %!

The reverse side of Taobao’s medal is that it tops the list of consumer complaints about products in the first half of 2013. In addition they complain that Taobao’s response rate was the lowest in the market. Other complaints included bad customer service and misleading promotions according to research by a specialised Chinese agency.

Other hindrances might be late deliveries, damaged and lost parcels, slow cash-on-delivery processes and weak product return policies. China lacks also a comprehensive domestic logistics enterprise to handle complicated shipments.

The researcher add that above all, China’s notorious copycat image will continue to undermine pricing in the virtual shopping space unless policymakers make a substantial effort to create a complete regulatory framework on intellectual property insight.

On the other hand there are good news from the Chinese internal tourist front. The total number of peop0le arriving at major tourist sites in China over the first two days of the “National Day” holiday is up 18.8 %, slightly down from a 21 % growth during the holiday week of last year, but compares favourably with an 8.8 % rise in 2011 and just 6.5 % in 2010. On the first day of the holiday week on October 1, 2013, Chinese railroads carried 10.3 million passengers (+13.2 %). The strong tourist data cheers investors, because it signals that Chinese consumers are very much alive and kicking. In addition, retail sales in the first eight months of 2013 increased 12.8 % as compared to the same period of 2012. Economist believe that consumption is severely undercounted in official estimates, because many purchases in China are made in cash and off the books. A recent report from Standard Charered Bank  cited work by professors at two universities in Shanghai,k who estimated that in 2009 household consumpiton was close to 50 % of the economy, whereas the NBS (National Bureau of Statistics) estimated only 35.3 %.

The full report on e-commerce is available from the following first link.

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