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

Decision-making aids in the form of data, figures, facts and statistics as a free PDF download, see below.

IMPORTANT: This post does not mention all available documents. These may be added gradually at a later date.

China is not only the world's largest market for everything from e-commerce to social commerce, it is also largely unknown to the Western world. Particularly in the B2B sector, the manufacturing industry has received massive support from the Chinese government. In 2019 alone, two-thirds of all e-commerce transactions in China were in the B2B market.

Report on the monitoring of the Chinese e-commerce market

The potential of the Chinese market also presents a challenge for foreign companies. There is no one-size-fits-all answer or solution.

A good complement to this:

• Conquering the US market: data, figures, facts and statistics
• Conquering the UK market: data, figures, facts and statistics

E-commerce in China

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The rise of China's e-commerce market ushered in a new era for the Chinese economy. In 2019, the value added of the digital economy accounted for more than a third of the country's GDP. Furthermore, China's e-commerce revenue surpassed the combined total of Europe and the United States. Today, China boasts the world's largest digital consumer population, exceeding 710 million people.

B2B E-Commerce in China:
As a result of the rapidly developing digitalization of all aspects of modern life, more and more companies in China have gone online. Thanks to its massive manufacturing industry and government support, China is at the forefront of the adoption of e-commerce for business-to-business (B2B) transactions, followed by Japan and South Korea. In 2019, B2B e-commerce accounted for two-thirds of the total value of e-commerce transactions in China. For almost a decade, China's B2B market was dominated by the e-commerce conglomerate Alibaba. Founded in 1999, the company, with a revenue of five billion US dollars, is currently the largest publicly traded company in China.

B2C and C2C e-commerce in China:
China's online retail sales have risen rapidly over the past decade, recording year-on-year growth of 27.3 percent, exceeding the global average growth rate. In 2019, the country's share of online retail sales reached a new high, with more than 20 percent of total retail sales conducted online.

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

Beyond technological upgrades, the rise in purchasing power among small-town and rural residents has also reshaped the online retail landscape in China. Pinduoduo, an online group discounter founded in 2015, overtook JD.com to become the second-largest online retail platform in China.

Cross-border e-commerce in China

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Since China joined the World Trade Organization at the beginning of the 21st century, nothing has worried Chinese trade with foreign countries more than the ongoing trade war with the United States. However, this has not slowed China's booming international trade in goods. In 2019, China's imports and exports reached new record highs. For a decade, China remained one of the world's leading exporters and importers in cross-border trade. Today, China's cross-border trade is also flourishing on online trading platforms.

Cross-border exports:
In 2019, there were nearly 20,000 cross-border e-commerce companies in China, most of them small and medium-sized enterprises. That year, the gross merchandise value generated by international online trade accounted for almost 40 percent of China's total import-export value. Fueled by developments in logistics and digital payments, many Chinese e-commerce companies developed strategies to tap into more overseas markets. AliExpress, a subsidiary of the Chinese online retail giant Alibaba, overtook eBay to become the second most popular website among cross-border online shoppers.

Following the outbreak of the coronavirus in 2020, selling on cross-border online marketplaces such as AliExpress and Wish.com became a way for many Chinese manufacturers to overcome their economic hardship. To encourage the growth of cross-border e-commerce, China planned to establish 46 new pilot zones in addition to the 59 existing ones. Companies located in these pilot zones were supported through export tax breaks.

Cross-border imports:
China's burgeoning middle class demanded high-quality products but didn't want to risk buying counterfeit goods. Therefore, cross-border e-commerce platforms became their ideal option for purchasing foreign goods. Around three-quarters of cross-border e-commerce users in China shopped through cross-border e-commerce websites. Tmall Global and Kaola.com were the most popular websites for cross-border online shopping among Chinese consumers. Overall, cross-border e-commerce imports have exploded over the past decade, with trade volume increasing almost tenfold. From snacks to vehicles, Chinese consumers are buying a wide variety of international goods online.

Social trade in China

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From the way we think to the way we shop, social media shapes people's daily lives in many ways. China has the world's largest social media population, almost 580 million more than India, which ranks second. The gap is projected to widen further by 2025. On average, internet users in China spent more than two hours a day browsing social media.

The Rising Wave of Social Commerce:
The dominance of e-commerce and social media has given rise to social commerce, where goods are advertised, listed, and sold. Unlike traditional e-commerce platforms, it encourages consumers to interact with others and create their own content while shopping. By leveraging social media platforms as a bridge between merchants, influencers, and potential consumers, social commerce has the potential to lead the future of e-commerce in China.

China has experienced tremendous growth in social commerce over the past five years. The number of social commerce users reached 713 million in 2019, while the market size was estimated at over two trillion yuan. The social commerce industry created approximately 48 million jobs in China in 2019, and this number is expected to continue rising.

Social Trading Platforms:
The phenomenal success of Pinduoduo marked a new era of social trading in China. Founded in 2015, the online discount retailer for group purchases made it into the top 20 most valuable companies worldwide in 2020. Pinduoduo's success was based on its unique "group buying" model. Users could get a better price by inviting their friends and family to buy with them.

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

Social commerce isn't just the fiercely competitive market of "unicorns." Traditional e-commerce giants Alibaba and JD.com have also joined the fray, seeking to forge a new path in the saturated e-commerce market. Taobao, Alibaba's largest B2C online shopping platform, launched its live commerce channel to attract users, while JD.com released Jingxi, a Pinduoduo-like group-buying WeChat mini-program.

Social networks in China

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China is the world's largest market for social networks, with highly engaged and mobile-savvy users. Its market composition differs significantly from the rest of the world. Due to China's "Great Firewall," as the Chinese government's internet censorship project is commonly known, Facebook, Twitter, YouTube, and other leading international social media players are blocked in the country. However, the Chinese social media landscape is not unlike its Western counterparts. China's social media landscape closely mirrors that of the rest of the world, with the exception that each of these sites is a domestically developed platform.

Who are the social media giants in China?
Compared to the few major players that dominate the Western market, China, despite language censorship, has a more dynamic, diverse, and competitive social media landscape, with platforms rising and falling at a faster pace. Thanks to its versatile functionality, Tencent's WeChat remains the most popular social networking space. It's a super version of Facebook, offering ride-hailing, food delivery, mobile payments, and other services all in one app. Marketing and e-commerce thrive on WeChat thanks to its massive user base. When it comes to microblogging, Chinese users have their own local version of Twitter—Sina Weibo, with 140 to 2,000 Chinese characters per post. It has been widely used by a significant portion of online users as a space for free expression. Other prominent Chinese social media platforms include: Youku Tudou (the equivalent of YouTube), Douyin (aka TikTok), Baidu Tieba (a search engine forum), Zhihu (China's Quora), Red (a cross-border e-commerce community), Meitu (the Chinese alternative to Instagram), and Meituan-Dianping (the Chinese Yelp and Groupon).

What are the key trends?
Many Chinese social networking sites have copied WeChat's recipe for success, developing their multifaceted entertainment ecosystems with additional services such as e-commerce, streaming, and gaming. Furthermore, the use of artificial intelligence is on the rise. Facial recognition, hyper-personalization, and augmented reality will become more prevalent on social media platforms. Regarding content formats, alongside short videos, live streaming is the next big thing in Chinese social media. Huya, YY Live, and Douyu Live are among the first to capitalize on this market trend in rural China, where young people have fewer entertainment options.

Advertising in China

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Advertising in China is a multi-billion dollar industry. As the world's second-largest advertising market after the United States, China is expected to generate over US$16 billion in advertising spending between 2018 and 2021. While traditional advertising channels like print and broadcast are generally shrinking, outdoor and internet advertising are experiencing exponential growth. This expansion is primarily driven by rapid technological advancements and the country's increasingly mobile population.

Traditional advertising:
Advertisers in China have reduced their advertising spending on traditional media in recent years. This decline is particularly pronounced in newspaper advertising. Between 2013 and 2019, newspaper advertising revenue fell from 42.5 billion yuan to under seven billion yuan. Magazine advertising is also declining. In comparison, traditional broadcast advertising still holds a significant market share. Television is the cheapest advertising medium, especially for food and beverage brands.

advertising
, particularly subway advertising, is an effective offline-to-online (O2O) marketing medium. Subway advertising in China often includes QR codes that direct consumers to the brand's WeChat page. Another common advertising format on Chinese subways is Zoetrope, a digital imaging system installed in subway tunnels. Passengers can see a series of moving images projected onto the window inside the train, resembling a 15-second video. With these technological advancements, OOH advertising spending in China is very likely to exceed 70 billion yuan by 2021.

Online Advertising:
In a country with the world's largest online community, the internet has gained a larger share of the Chinese advertising market. E-commerce, search engines, and social media advertising are thriving. In 2019, advertisers in China spent approximately $65 billion on mobile advertising. WeChat, the country's most popular app, plays a key role in brand promotion. Its mini-programs offer consumers advanced features such as e-commerce and task management. With its significant market penetration and conversion rate, WeChat is likely to remain the most important channel for online advertising for years to come. However, it's worth noting that ad fraud is more prevalent in China than in other countries. In 2019, nearly 32 percent of online advertising traffic in China was fake or invalid. Industry reports indicate that over 80 percent of the world's fraudulent inventory originated in China, costing advertisers $18.7 billion 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 forecasts from mid-2019, China could overtake the US as the world's largest retailer as early as 2021.

In 2018, Chinese retail sales totaled approximately 12.5 trillion yuan, while merchandise trade contributed about 34 percent to the country's GDP. The slowdown in exports and the growth of domestic markets indicate a strategic shift in the Chinese economy toward satisfying domestic demand. As rural and urban households have experienced steady growth in disposable income, the purchasing 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 in the world. Foreign and domestic retailers are both fiercely competing for the attention of Chinese consumers. Retail sales of consumer goods in China have grown by an average of nine percent annually over the past five years. Around 16 percent of 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 over the past decade.

Amid the recent trade war between China and the US and the associated economic uncertainties, some retail sectors and product categories have fared less well than others. For example, car sales in China declined in 2018 for the first time since 1992, and this trend continued into the following year. As the automotive industry is the primary driver of the retail sector in China, this slowdown undoubtedly impacts the overall performance of the retail market. On the other hand, other major retail categories, such as electronics and household appliances, FMCG, apparel, and pharmaceuticals, have experienced sustained growth in recent years.

The Chinese retail market is highly competitive and diversified, with the top 100 retailers achieving a relatively small market share of 6.3 percent in 2018. A negative trend has even been observed, as the market shares of leading retail chains have declined in recent years. With a sales volume of approximately 336.8 billion yuan in 2018, Suning Commerce Group ranked first among China's leading retail chains, followed by Gome Electrical Appliances and China Resource Vanguard. In the convenience store sector, Sinopec Group dominated the market from 2018 onwards. Convenience stores are among the fastest-growing retail channels for consumer goods, particularly for grocery shopping in China.

Nevertheless, according to China's leading online retailer Alibaba, the future of retail lies not in the choice of channels, but in the consumer experience. The wave of so-called new retail is rapidly transforming retail strategy in China through digitization, data collection, product history tracking capabilities, improved home delivery, sensory marketing, and a range of other innovative components. O2O (online to offline) marketing is being replaced by OMO (online merge offline) marketing, which combines the best of both online and offline shopping experiences.

Singles' Day in China

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Singles' Day has been China's biggest online shopping event since its inception in 2009. In 2019, some 660 million online shoppers participated in this mega shopping frenzy, roughly equivalent to twice the population of the United States. Chinese e-marketers recorded a gross merchandise volume (GMV) of 600 billion yuan within 24 hours, nearly matching eBay's annual GMV. The shopping festival is spectacular, and the highlight is Tmall's All-Star Gala on November 10, the evening before the event kicks off. This satellite show featured celebrities from China and abroad, including Taylor Swift, David Beckham, and Mariah Carey. The four-and-a-half-hour countdown show opened the curtain on a 24-hour non-stop shopping event.

Singles' Day in China began in the 1990s as an unofficial celebration for young singles on November 11, or 11.11. The number "1" resembles a "naked stick," a slang term for bachelors in China. In 2009, China's e-commerce giant Alibaba Group launched its first Singles' Day sale, which was an unprecedented success. Today, the trading value of Alibaba's Singles' Day has increased almost 400-fold in the past decade, with over one billion orders placed on the company's e-commerce platforms on that day. By 2019, Singles' Day sales were no longer solely an Alibaba initiative. Now, most of China's major online retailers participate in this phenomenal fall shopping event. That year, JD.com and Pinduoduo, Alibaba's main competitors, recorded 223 billion and 97 billion active users respectively on Singles' Day.

Year after year, Singles' Day sales attract a growing number of online shoppers worldwide, particularly in Southeast Asia. According to a 2018 survey, almost a third of Indonesian online shoppers made purchases on Singles' Day. In Singapore, more than 80 percent of online shoppers expressed interest in participating in Singles' Day sales. Consumers in Europe also spent billions of British pounds on Singles' Day.

Search engines in China

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The number of search engine users in the world's second-largest economy exceeded 750 million, meaning that nine out of ten netizens in China had used online search services. In 2018, search engine revenues reached 131.6 billion yuan and were projected to reach 203.7 billion yuan by 2021. Providing continuous impetus for the search engine industry, the advertising segment saw steady growth in market volume.

Search engine giant Google and its domestic rival Baidu were among the pioneers in the 2000s, when the Chinese first accessed the internet in internet cafes. To prominently feature their search engines on computers, many early web companies partnered with internet cafe owners. Baidu was keen to leverage this strategy to increase its visibility. As a result, many first-time internet users became more familiar with Baidu than with its foreign rival, Google. Baidu also employed tactics that Google typically avoided. Beyond traditional offline advertising, Baidu offered access to popular, but unlicensed, MP3 music files. These tactics successfully boosted its popularity in China. In comparison, Google didn't appear as aggressive in its pursuit of dominance. Due to disputes over censorship regulations in 2010, the global search engine leader shut down its internet services in mainland China. Users are now redirected to its Hong Kong-based search engine, Google.com.hk.

With a better understanding of Chinese characters, consumer behavior, and advertiser preferences, Baidu gradually climbed to the top of the rankings. In recent years, the search engine has invested heavily in the development of artificial intelligence (AI) technologies, such as autonomous driving, voice assistants, and smart speakers, resulting in robust revenue growth. Although Baidu still needs to improve the quality of its search rankings, it is quite unlikely that other market players will challenge its dominance.

In 2018, an investigative journalism website reported that Google was developing a new, censored Chinese search engine. Following a backlash from its employees, government officials, and human rights advocates, the company suspended development of “Dragonfly.” However, it remains unclear whether the search giant has any plans for a comeback in China.