China’s online retail market will reach gazillions, says Mintel. OK, so that’s not an actual number. But it should be. In fact, the analysts have said overseas online sales in China will climb to RMB 1.3 trillion (£148 billion) by 2021.
What does this mean? It means China’s spending power is bigger than we all feared, bigger than China itself and possibly bigger than the solar system.
Since 2011, the market has expanded almost 12 times, from RMB 53 billion (£42 billion) to RMB 626 billion (£72 billion). Growth is expected to slow to a mere 15% a year until 2021.
These are interesting stats, reflecting China’s status as the knock-off capital of the world. Want a phone charger guaranteed to incinerate your home overnight? Call China. Always thought you couldn’t afford that Chanel handbag? China has the answer.
It’s a trend made popular by younger middle-class Chinese – those who’ve travelled overseas and experienced the world for themselves. In China, the practice of purchasing products from overseas is called ‘haitao’.
Matthew Crabbe, director of research for Asia-Pacific for Mintel, explained: “While the haitao market has seen rapid growth over recent years, and should maintain strong growth for the foreseeable future, it is likely to peak soon as a proportion of online retail in China.
“This does not stop the haitao route to Chinese consumers from offering significant potential market opportunities to foreign brands, but it does mean that haitao is likely to be more relevant to brands looking at initial market entry. Retailers and brands should therefore play to their different country specialities when attempting to differentiate from their competitors.”
So there’s big money to be made from selling to the Chinese. What else are they looking for?
According to Mintel, the order of priority for Chinese buyers when shopping overseas is: proof of quality (68%), ability to use third-party payment (44%), detailed product information (36%) and customer service in Chinese (25%). Hmm, good luck with that.
Nearly 40% of purchasers said they wanted a better choice of payment options when shopping on overseas websites, while 35% were less confident about foreign websites’ returns policies than they were of domestic online stores.
But, hey, at least they’re not buying a Nintendo Polystation, Mike trainers or Dolce & Banana.
Crabbe continued: “When selling foreign products online to Chinese consumers, brands and retailers really need to create a sense of excitement and entertainment about the whole process if they are to stand out in an increasingly competitive market. Simply offering a new product is no longer enough.”