Understanding The Chinese Consumer Is Key To Online Sales
The consumer market in China holds more potential for untold revenues and profit for foreign business entities than any other retail market in the world. Of course the sheer size of the Chinese population is the first obvious reason for making what isn’t necessarily such of an astute observation about the potential to make money selling to China. Forget the fact that China has nearly 1.5 billion people, which in and of itself is quite remarkable. However, there are parts of China that are indeed densely populated, but are probably not fertile territory for doing business. On the other hand, consider this; there are nearly 390 million Internet users in China, which is twice the number of both the U.S. and Japan combined. Now that is a statistic that should get hearts racing in boardrooms around the world. But it’s not just the size of the market alone that makes the Chinese population a prime target for businesses large and small, it’s also the fact that Chinese consumers’ increasing levels of disposable income and pent-up demand is the kind of financial ‘Perfect Storm’ that warrants its own chapter in an Eco 101 textbook.
The e-commerce market in China, which many Chinese mega-conglomerates have already penetrated with all the capital they can muster, is the fastest growing in the world and already tops some $40 billion per year. Given the rate at which Chinese citizens are now embracing the world of online shopping, that figure is likely to double and triple in just a few short years, if that long. The number of Chinese citizens expected to be Internet savvy is estimated to grow to 650 million in the next five years with the percentage of those that actually shop online predicted to rise from 9% to 19% by the end of 2012 alone. You can do the math but don’t take too long because while you’re trying to figure it out, you’d be better off simply taking a deep breath and then figuring out the best way to make inroads into this market.
Understanding your client is the key to any retail or service oriented business and this goes double for dealing with consumers in a country like China, which is something of a mystery to all but the most experienced foreign business person. The Chinese e-commerce consumer is unlike that of most other countries around the world so rules that might apply to one country might not work in China. First of all it is important to appreciate the fact that the Internet represents a source of transparency that the Chinese citizen is only recently becoming used to and accustomed to insofar as shopping. Therefore, foreign businesses should realize that the Chinese consumer is a savvy shopper, using the Internet first to get as much information as possible regarding price and quality before making a purchase. This is especially true of the Chinese younger generation and young professionals. These two groups are said to make up to 40% of their purchases online. They are also the most likely consumers in China to pay for their purchases electronically.
With such a large segment of the Chinese e-commerce consumer using electronic payments for their purchases, foreign retailers would do well to embrace the credit cards and online payment systems used most by the Chinese consumer. While Visa, MasterCard and American Express have all invested considerable capital in moving their companies into China, many Chinese citizens are only now beginning to embrace the notion of having and using a credit card and the far more popular method of electronic payment is UnionPay. Foreign retailers would be wise to work with other companies and systems that are already familiar to the neophyte Chinese credit and debit card market in order to gain market share for their products.
The Chinese consumer market is growing faster than anyone could ever have predicted but along with a government that has a history of changing the rules in the middle of the game, foreign businesses would do well to first understand the nature of their client and their client’s country and social and economic traditions before counting their profits.
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