Conquering the China market: data, figures, facts and statistics

Decision-making aids in data, figures, facts and statistics as PDF for free download, see below.

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China is not only the world’s largest market from e-commerce to social commerce, it is also a major unknown in the western world. Especially in the B2B sector, the manufacturing industry has received massive support from the Chinese government. In 2019, 2/3 of the e-commerce transactions in China alone came via the B2B market.

Chinese e-commerce market data monitoring report

The potential of the Chinese market is also a challenge for foreign companies. There is no blanket answer or solution.

I line with this topics:

• Conquering the U.S. market: data, figures, facts and statistics
• Conquering the U.K. market: data, figures, facts and statistics

E-commerce in China

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The emergence of China’s e-commerce market inaugurated a new era of the country’s economy. In 2019, the added value of the digital economy accounted for more than one-third of the country’s GDP. Furthermore, China’s e-commerce sales surpassed the combined total of Europe and the United States. Today, China has the largest digital buyer population in the world, amounting to more than 710 million people.

B2B e-commerce in China
As a result of the fast-developing digitalization of all aspects of modern life, an increasing number of businesses in China have moved online. Owing to its massive manufacturing industry and government support, China is placed at the forefront in terms of B2B (business-to-business) e-commerce adoption, followed by Japan and South Korea. In 2019, B2B e-commerce contributed two-thirds of the total e-commerce transaction value in China. For nearly a decade, China’s B2B market was ruled by the e-commerce conglomerate Alibaba. Founded in 1999, the five billion U.S. dollar company is currently the largest public company in China.

B2C and C2C e-commerce in China
China’s online retail sales expanded rapidly over the past decade and retained a year-on-year growth of 27.3 percent, above the average growth rate worldwide. In 2019, the country’s share of online retail sales reached a new high, with more than 20 percent of the total retail made online.

Thanks to a rapid adoption of the internet across China, the penetration rate of online shopping reached almost 80 percent. Along with the ever-increasing use and distribution of mobile devices, this also means that shopping on smartphones or tablets has become a new norm for Chinese internet users.

Apart from technology upgrades, the rise of small-town and rural residents‘ purchasing power has also reshuffled the online retail landscape in China. Pinduoduo, a 2015-founded online group discounter, surpassed JD.com and became the second-largest online retail platform in China.

Cross-border e-commerce in China

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Ever since China joined the World Trade Organization at the beginning of the 21st century, nothing worried Chinese cross-border traders more than the ongoing trade war with the United States. However, it did not slow down China’s booming international merchandise trade. In 2019, China’s imports and exports surged to new hights. For a decade, China has remained one of the leading exporting and importing countries in cross-border trades globally. Today, China’s cross-border trade is also thriving on online trading platforms.

Cross-border exports
As of 2019, China had nearly twenty thousand cross-border e-commerce enterprises, and most of them were small and medium-sized enterprises. In that year, the gross merchandise value generated by international online trade accounted for almost 40 percent of the total import-export value in China. Driven by the development of logistics and digital payments, many Chinese e-commerce companies set up strategies to acquire more overseas markets. Aliexpress, the subsidiary of China’s online retailing giant Alibaba, defeated eBay to become the second favorite website among cross-border online shoppers.

After the coronavirus outbreak in 2020, selling on online cross-border marketplaces like Aliexpress and wish.com became a way for many Chinese manufacturers to tackle their economic predicament. To stimulate the growth of cross-border e-commerce, China planned to establish 46 new pilot zones, on top of the 59 existing cross-border e-commerce pilot zones. Enterprises located in these pilot zones were supported through tax deductions on exporting.

Cross-border imports
The rising middle-class in China demanded high-quality products, yet they don’t want to risk buying counterfeits. Therefore, cross-border e-commerce platforms became their ideal option for shopping for foreign goods. Around three-quarters of the cross-border e-commerce users in China shopped via cross-border e-commerce websites. Tmall Global and Kaola.com were the most popular cross-border online shopping websites among Chinese consumers. Overall, cross-border e-commerce imports have soared in the past decade with the trade volume increasing nearly tenfold. From snacks to vehicles, Chinese consumers shop a wide variety of international goods online.

Social commerce in China

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From how you think to how you shop, social media is reshaping people’s daily lives in many ways. China owns the largest social media population worldwide, nearly 580 million more than India, which ranks at second place. The gap will grow even wider in 2025. On average, internet users in China spent more than two hours a day browsing social media.

The rising tide of social commerce
The prevalence of e-commerce and social media hatched social commerce, where goods were promoted, listed, and sold. Unlike traditional e-commerce platforms, consumers are encouraged to interact with others and create their unique content in the process of shopping. Using social network platforms as a way to bridge merchants, influencers, and potential consumers, social commerce will potentially lead the future of China’s e-commerce.

China saw sheer growth in its social commerce in the past five years. The number of social commerce users reached 713 million in 2019, while its market size was estimated to surpass two trillion yuan. The social commerce industry created around 48 million jobs in China in 2019, and the number would continue to grow.

Social commerce platforms
The phenomenal success of Pinduoduo marked a new era of social commerce in China. Founded in 2015, the online group-buying discounter made its way to the top 20 most valuable companies globally in 2020. The success of Pinduoduo came from its unique „team purchase“ model. Users could unlock a better price by inviting their friends and family to join the purchase.

While the majority of Pinduoduo’s users were based in third and fourth-tier cities in China, young females from the first and second-tier cities were obsessed with Xiaohongshu. With 300 million users, the shop-and-share platform allows its users to post content and interact with others.

Social commerce is not only the battlefield of unicorns. Traditional e-commerce giants Alibaba and JD.com also joined the competition to blaze a new trail in the saturated e-commerce market. Taobao, the biggest B2C online shopping platform under Alibaba, launched its live commerce channel to attract users, while JD.com published Jingxi, a Pinduoduo-like group purchase WeChat mini program.

Social networks in China

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China is the world’s largest social network market with highly engaged and mobile-savvy users. Its market composition varies considerably from the rest of the world. Due to the “Great Firewall” of China, as the Chinese government’s internet censorship project is commonly called, Facebook, Twitter, YouTube and other leading international social media players, are all blocked in the country. However, the Chinese social media landscape is not incomparable with its western counterparts. China’s mediascape in terms of social networking almost mirrors that of the rest of the world except that each of these sites is a domestically engineered platform.

Who are the social media giants in China?
Compared to a few major players dominating the western market, China has a more dynamic, diverse, and competitive social media landscape, despite under speech censorship, with platforms rising and falling on a faster timescale. Thanks to its versatile functionality, Tencent’s WeChat has remained as the most popular social networking space. It is a super version of Facebook with ride-hailing, food delivery, mobile payment, and other services all in one app. Owing to its huge userbase, marketing and e-commerce have been thriving on WeChat. When it comes to microblogging, Chinese users have their local version of Twitter – Sina Weibo, with 140 to two thousand Chinese characters allowing in one post. It has been used extensively as a space for free-speech with a significant share of online users. Other prominent Chinese social media platforms include: Youku Tudou (equivalent of YouTube), Douyin (aka TikTok), Baidu Tieba (a search engine forum), Zhihu (the Quora of China), Red (a cross-border e-commerce community). Meitu (the Chinese alternative to Instagram), and Meituan-Dianping (the Chinese Yelp and Groupon).

What are the significant trends?
Many Chinese social networking sites have copied the successful recipe from WeChat and developed their all-rounded entertainment ecosystems with extra services like e-commerce, streaming, and gaming. Furthermore, the adoption of artificial intelligence has been rising. Facial recognition, hyper-personalization, and augmented reality will be used more often in social media platforms. In terms of content format, apart from short videos, live streaming is the next hype in Chinese social media. Huya, YY Live, and Douyu Live are the early beneficiaries in this market trend in rural China, where fewer entertainment options are available for young people.

Advertising in China

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Advertising is a billion business in China. As the second-largest market in the global advertising after the United States, China was expected to generate over 16 billion U.S dollars of ad spending between 2018 and 2021. While traditional printing and broadcasting advertising channels have been generally shrinking, outdoor and internet ads have been experiencing exponential growth. The expansion is mainly driven by rapid technological advancement and a mobile-savvy population in the country.

Traditional advertising
Advertisers in China has reduced ad spending on traditional media in recent years. This decline is particularly distinct in newspaper advertising. Between 2013 and 2019, newspaper ad revenue fell from 42.5 billion yuan to below seven billion yuan. Magazine advertising is also on the wane. In comparison, traditional broadcast advertising still maintains a considerable market share. Television has been the most favorable advertising medium, especially among food and beverage brands.

OOH advertising
Out-of-home (OOH) advertising, particularly subway ads, is an effective offline-to-online (O2O) marketing medium. The metro advertisements in China often include QR codes, which direct consumers to the brand’s Wechat page. Another common advertising format in subways in China: zoetrope, a digital imaging system installed in metro tunnels. Passengers can see a series of moving images inside the train on the window, which looks like a 15-second video. With these technology changes, OOH ad spending would very likely surpass 70 billion yuan in China by 2021.

Online advertising
In a country with the largest online community in the world, the internet has gained a higher market share in the Chinese ad market. E-commerce, search engines, and social media advertising have been thriving. In 2019, advertisers spent about 65 billion U.S dollars on mobile ads in China. WeChat, the most popular app in the country, plays a major role in brand promotion. Its Mini Programs provide advanced features to consumers, such as e-commerce and task management. With its significant market penetration and conversion rates, WeChat would probably remain as the most important channel for online advertising in the next few years. However, it is worth noting that ad frauds are more prevalent in China than other countries. In 2019, almost 32 percent of the online ad traffic in China was fake or invalid. Industry reports have shown that over 80 percent of the global fraudulent inventory came from China, costing a loss of 18.7 billion U.S. dollars for advertisers in 2019.

Retail in China

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In 2019, China accounted for approximately 21 percent of the global retail market, the second largest share after the United States. According to the forecasts in mid-2019, China could surpass the U.S. as the world’s largest retailer as early as 2021.

In 2018, the Chinese retail revenue amounted to around 12.5 trillion yuan while the contribution of merchandise trade to the country’s GDP was around 34 percent. Slowing exports and an increase in volume of domestic markets indicate a strategy shift of the Chinese economy towards satisfying domestic demand. As rural and urban households have witnessed a steady growth of disposable incomes, the spending power of the Chinese population has also increased dramatically and the Chinese market has matured into one of the largest and still growing consumer markets worldwide. Foreign and domestic retailers both vie strongly for the attention of the Chinese consumer. Retail sales of consumer goods in China grew by nine percent on average annually in the past five years. Around 16 percent of the retail sales of fast moving consumer goods in China were attributed to the online shopping segment as of 2019. Online consumption of consumer goods has increased significantly in the past decade.

Amid the recent China-U.S. trade war and related economic uncertainties, however, some retail sectors and product categories were less successful than others. For example, car sales in China dropped in 2018 for the first time since 1992 and continued decreasing the following year. Automotive industry being the major driving force in retail sector in China, this slowdown is undoubtedly affecting the overall development of the retail market. On the other hand, other large retail categories such as electronics and home appliances, FMCG, apparel, and pharmaceuticals all showed a continuous growth in recent years.

The Chinese retail sales market is highly competitive and diversified, with the 100 leading retail companies taking up a market share of relatively low 6.3 percent in 2018. One could even observe a negative trend, as market shares of the leading retail chains were receding over the past few years. With a sales volume of about 336.8 billion yuan in 2018, Suning Commerce Group ranked first among the leading retail chain operators in China, followed by Gome Electrical Appliances and China Resource Vanguard. In terms of convenience store sector, Sinopec Group dominated the market as of 2018. Convenient stores are among the fastest growing retail channels for consumer goods, especially grocery shopping in China.

Nevertheless, according to China’s leading online retailer Alibaba, the future of retail is not about the choice of channels, but about consumer experience. The wave of the so-called new retail is transforming retail strategy in China at a high-speed pace through digitalization, data collection, product history tracking functions, improved home delivery, sensory marketing and a number of other innovative components. O2O (online to offline) marketing is being replaced by OMO (online merge offline) combining the best of both online and offline shopping experiences.

Singles‘ Day in China

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The Singles’ Day sales have been China’s largest online shopping event since its launch in 2009. In 2019, around 660 million online shoppers participated in this mega shopping carnival, roughly double the United States’ population. Chinese e-marketers recorded a gross merchandise value of 600 billion yuan in 24 hours, almost equal to eBay’s annual GMV. The shopping festival is spectacular, and the icing on the cake is Tmall’s All-Star Gala on November 10, the night before the event starts. From home and abroad, celebrities were invited to this satellite show, including Taylor Swift, David Beckham, and Mariah Carey. The four-and-half hour countdown show opened the curtain for a 24-hour non-stop shopping event.

Singles’ Day in China started in the 1990s as an unofficial celebration among young singles on November 11, or 11.11. The number “1” resembles a “bare stick,” a slang term for bachelors in China. In 2009, China’s e-commerce company Alibaba Group launched its first Singles’ Day sale, which saw unprecedented success. Nowadays, Alibaba’s Singles’ Day trade value has grown almost 400-fold in the past ten years, with over one billion orders placed on that day on its e-commerce platforms. In 2019, Singles’ Day sales were no longer a solo act of Alibaba. Now, most of China’s major online retailers participate in this phenomenal autumn shopping event. In that year, Alibaba’s main competitor JD.com and Pinduoduo, recorded 223 billion and 97 billion active users on Singles’ Day.

Year on year, Singles’ Day sales attract an increasing number of online shoppers worldwide, especially in Southeast Asia. Nearly one-third of Indonesian online shoppers purchased items on Singles’ Day, according to a survey in 2018. In Singapore, more than 80 percent of the online shoppers showed interest in participating in the Singles’ Day sales. In Europe, consumers spent billions of British Pounds on Singles’ Day as well.

Search engines in China

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The number of search engine users in the world’s second-largest economy surpassed 750 million, which means that nine in every ten netizens in China had used online search services. As of 2018, the revenue of search engine business totaled 131.6 billion yuan and was projected at 203.7 billion yuan by 2021. As a continuous impetus to the search engine industry, the advertising segment recorded a steady increment in market volume.

Search giant Google and its domestic competitor Baidu were among the pioneers back in the 2000s, when the Chinese first accessed the internet at internet cafes. To place their search engines prominently on computers, many early web companies made deals with internet cafe operators. Baidu was keen to use this strategy to increase its visibility. Many first-time internet users thus became more acquainted with Baidu than its foreign rival Google. Baidu also employed tactics that Google usually shunned. Apart from traditional offline advertising, Baidu offered access to popular but unlicensed music mp3 files. These tactics successfully boosted its popularity in China. In comparison, Google appeared to be not so aggressive to win the game. Because of the disputes over censorship regulations in 2010, the global search market leader closed its internet services in mainland China. Users are now being redirected to its Hong Kong-based search engine Google.com.hk.

With a better understanding of the Chinese characters, consumer behavior, and advertiser preference, Baidu gradually climbed to the top of the ladder. In recent years, the search engine has been investing heavily in developing artificial intelligence (AI) technologies, such as autonomous driving, voice assistant and smart speaker, bringing a robust revenue growth to the company. Although Baidu still has to improve its search ranking quality, it is quite unlikely for other market players to shake its dominating status.

In 2018, an investigative journalism website reported that Google was building on a new, censored Chinese search engine. After a backlash from its employee, government officials, and human rights advocates, the company suspended the development of „Dragonfly“. However, it is still unclear whether the search giant has plans to make a comeback in China.