China Leads the World in CCTV Annual E-Commerce Report

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China’s National TV network CCTV 2 Finance Channel and the National Academy of Economic Strategy under the Chinese Academy of Social Sciences released their China Annual E-Commerce Report. How has Chinese e-commerce changed in the past year, and what are the highlights? What are the trends in global e-commerce?

Broke records again, and continues to accelerate

Online retail sales have been growing rapidly in China since 2006. At the time, online shopping was a new thing driven by the novelty of buying goods without leaving the home. After 2013, online retail growth began to fall below 50 percent. In 2015, the growth rate fell below 40 percent for the first time. A year later it was down to 26.2 percent.

2017 is different. Online retail sales are once again accelerating, having risen to 34.2 percent in the first nine months. It is significantly higher than the growth rate in in 2015 and 2016. It may simply be due to shoppers finally finding it more enjoyable to shop online than to go out to the store.

From October 2016 to September 2017, China’s online retail sales reached nearly 6.6 trillion yuan, up by 38 percent compared with the previous period. It is the highest retail sales so far. Online retail sales of physical goods were nearly 5.08 trillion yuan, and some 1.49 trillion yuan of that was clothing. The proportion of total retail sales of social goods reached 13.6 percent, a year-on-year increase of 3 percentage points.

Now comes the important statistics. The online service retail sales definitely contribute a lot! In 2015, China’s online service retail sales growth rate reached 42.4% in 2015, 51.4% in 2016 and jumped to 78.5% in the first nine months in 2017. Online service retail sales accounted for 24.52% of all retail sales. The sharing economy, O2O and other business model innovations continue to grow, which can be called as the booster of our online sales growth.

Of course, the credit cannot go to service sales alone. The penetration rate of online shopping in China is also an important factor. As of June 2017, the number of Internet users in China reached 751 million, with Internet penetration rate reaching 54.3 percent. The number of online shoppers in China reached 514 million, with an annual growth rate of 10.2 percent, a penetration rate of 68.5 percent.

Rural e-commerce has developed a lot

In 2017, the development of rural e-commerce in China is the highlight of this year’s report. What breakthroughs have there been in online sales of agricultural products during the past year, and how does e-commerce play a role in poverty alleviation?

In the last five years, the number of China’s rural Internet users has grown, and Internet penetration has increased year by year. As of June 2017, China’s rural Internet users accounted for 26.7 percent of the total rural population, reaching 201 million. By the end of 2016, there were 8.32 million online stores with more than 20 million employees. In the first nine months of 2017, total retail sales in rural areas was 836.14 billion yuan, accounting for 17.14 percent of all national retail sales. Year-on-year growth was 38.3 percent, some 5.6 percent higher than that of the city.

Rural e-commerce development has had a remarkable effect on poverty alleviation. In the first nine months the year, 81.81 billion yuan of online retail sales were realized in 832 poverty-stricken counties, accounting for less than 10 percent of the total. But the year-on-year growth rate was 53.1 percent, almost 15 percent higher than the overall growth rate.

By the end of 2016, Alibaba’s Thousand Counties Plan included about 500 counties and 22,000 villages. JD.com had established service centers in 1,700 counties. Suning also constructed 1,770 directly-managed stores and more than 10,000 authorized service stations in 1,000 counties. In addition, express delivery enterprises have expanded to the countryside. At present, the coverage rate of express delivery at the village level exceeds 80 percent, which meets the demand of the express service of 590 million rural residents.

The prospect of rural e-commerce is attracting migrant workers to start their own businesses in their hometowns. Across the country, the number of migrant workers in rural areas has decreased by about 12 million. In rural areas with e-commerce, the proportion of migrant workers is 11.1 percent, but in areas without e-commerce, the proportion is 20.4 percent. The average number of migrant workers in villages with e-commerce is 133 fewer than those without e-commerce.

International E-commerce Driving Foreign Trade

In recent years, Chinese e-commerce has continued to expand abroad. Many overseas commodities have also entered the Chinese market through e-commerce channels. The development of cross-border e-commerce is another highlight of the past year. How is Chinese e-commerce succeeding in “going out”? The answers are in the China Annual E-Commerce Report.

According to the Ministry of Commerce, in the first half of 2017, international e-commerce transactions in China totaled 3.6 trillion yuan, up by 30.7 percent year on year. The transaction volume of international e-commerce was 2.75 trillion yuan. Imports accounted for 862.4 billion yuan. Cross-border e-commerce has become a driving force for China’s foreign trade growth. From 2013 to 2016, China’s cross-border e-commerce retail exports had an average annual growth rate of nearly 60 percent.

Beyond the high-speed growth, where is China’s e-commerce “going”? China’s e-commerce goes around the world. AliExpress services 230 countries around the world. The United States, the European Union and ASEAN are among the top three exporters of e-commerce goods into China. In the export channel, Amazon occupies the dominant position. In 2016, Chinese companies exported more than 300 billion yuan of goods through Amazon.

What about the popularity of Chinese e-commerce platform abroad? In Russia, China’s AliExpress has become the most visited e-commerce site. China already accounts for half of Russia’s e-commerce imports. Among the top four e-commerce platforms of Southeast Asia, all but Amazon receive investment from China.

Chinese E-commerce Leads the World

What are the characteristics of e-commerce development in major countries? We can learn from some interesting data.

There is no doubt China is the most powerful country in terms of e-commerce development. Chinese e-commerce has a scale that accounts for 40 percent of the global market. In 2016, China’s online shopping scale (excluding service) reached $750 billion, higher than the US (ranking second with $312.1 billion), the UK (ranking third with $150 billion) and Japan (ranking fourth with $90 billion) combined.

Chinese shopping occurs on an incredible scale. But do China’s Internet users favor shopping the most? Not quite. In 2016, the UK shoppers spent $3,456.22 per capita. The second top online shoppers were the French, who spent $1,925. French shoppers tend to purchase clothing on line, fitting the country’s image as the capital of fashion.

Is it young people who favor shopping the most? Germans give a negative answer.
In Germany, middle-aged and old people are the main online shoppers. According to the survey, in Germany, online shopping occurs mainly in the 24-54 age group, while the proportion of shoppers older than 55 accounts for 34.2 percent of all online shopping. Although Germans love online shopping, they do not love mobile payments. Only 7 percent of Germans have tried mobile payments.

Which country has the highest proportion of online shoppers? The answer is South Korea. There are 35 million online shoppers in South Korea, whose total population is 50.62 million. So, the proportion is 69.1 percent. That all netizens are citizens is an unusual feature of South Korea. According to eMarketer, a market research firm, the number of smartphone users in South Korea will be 72.2 percent of the total population in 2017. In the Korean daily necessities market, online shopping accounts for 16.6 percent of all sales, ranking first among major countries and regions.

The business development of American online commerce is more balanced. The integration of e-commerce platforms, offline retail enterprises’ e-commerce platforms and brand business has been developing well. International e-commerce is also very popular. More than half of US e-commerce merchants accept orders from abroad, and 39 percent of US consumers buy products from China. The high cost of express delivery is a challenge for US e-commerce companies, costing anything from $5 to $30.

This article originally appeared in CCTV 2 Finance and was translated by Pandaily.
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