Ten China Commercial Highlights 2016 series: “Internet Plus” initiative drives e-commerce expansion; mobile commerce and rural e-commerce high on the agenda
Ten China Commercial Highlights 2016 series:
“Internet Plus” initiative drives e-commerce expansion; mobile commerce and rural
e-commerce high on the agenda
1
Fung Business Intel l igence Centre
“Internet Plus” initiative drives e-commerce expansion; mobile commerce and rural e-commerce high on the agenda
91.2 billion yuan, an increase of 60% yoy. Mobile shopping
also reached a record high, with 95 million people
purchasing items on mobile phones. Total mobile GMV
accounted for 68.7% of the total, reaching 62.0 billion
yuan.
The mobile revolution in China provides huge opportunities
for Internet players as well as mobile app developers.
Many traditional retailers are now deploying various O2O
strategies to provide a better shopping experience for
customers. One recent O2O trend is the application of
mobile shopping apps in brick-and-mortar stores. One
example is the “Miaojie” app created by Alibaba in May
2015. Equipped with location-based beacon technology,
the app allows retail operators to deliver location-specific
information, such as current deals and coupons and other
personalised services. The app also supports in-store
mobile payments. Another case is the “Feifan” app
developed jointly by Wanda Group, Baidu and Tencent in
July 2015. Customers can use the “Feifan” app at selected
Wanda shopping malls and department stores. The app
integrates data on merchants and consumers, allowing
retailers to analyse the information and carry out
personalised target marketing campaigns.
Rural e-commerce takes the lead As China’s urban e-commerce market nears saturation
after years of explosive growth, the rural e-commerce
market is becoming the new growth engine for online
sales. In June 2015, the number of Internet users in rural
areas rose to 186 million, accounting for 27.9% of the total
Internet population. The number of online shoppers in rural
areas reached 77.14 million, a 40.6% yoy increase against
the 16.9% yoy growth in urban areas, according to the
China Internet Network Information Center. Thanks to the
rise of affordable smartphones, mobile penetration in rural
areas has been increasing rapidly. Within the rural online
population, 81.9% are able to access the Internet via
mobile devices, reflecting high growth potential for
m-commerce development. Indeed, the government is
optimistic about such digital developments in rural areas.
In November 2015, the General Office of the State Council
released its Opinions on Promoting Rural E-commerce.
The State Council estimates that the transaction value of
China’s e-commerce sector continues to attract the
world’s attention with its explosive growth and
transformative effect on the commercial
landscape. China has the world’s largest number of
Internet users and online shoppers, contributing
significantly to the phenomenal growth of the sector. As of
June 2015, China had 668 million Internet users, and 56%
of the Internet population shopped online. E-commerce is
now a major driver of growth in the “new normal” economy,
since many traditional industries have now embraced this
digital channel.
The announcement of the “Internet Plus” strategy by
Premier Li Keqiang in his March 2015 Government Work
Report further supports the growth of the sector. Our
experts expect the online sector will grow even faster in
2016, further driving the growth of e-commerce. They
identify two major forces that will shape the e-commerce
landscape in the coming year.
The continuing mobile revolution Chinese online shoppers are increasingly using mobile
devices to make purchases. The increasing penetration of
smartphones and growing prevalence of mobile payments
have made mobile shopping particularly popular. Data
from iResearch showed that the transaction value of the
online retail market amounted to 872.5 billion yuan in
2Q15, up 39.6% year-on-year (yoy) and accounting for
12.3% of the country’s total retail sales. Within the online
sector, the transaction value via mobile devices reached
443.5 billion yuan, up 133.5% yoy, growing at a rate faster
than the overall online retail market. According to the
National Bureau of Statistics, mobile commerce
(m-commerce) has been gaining market share at the
expense of PC-based transactions. In 2Q15, purchases on
mobile devices exceeded those generated on PCs for the
first time, accounting for 50.8% of online sales. Bain &
Company predicts that the share of m-commerce in online
retail transaction value will increase from 55% in 2015 to
70% in 2020.
Singles’ Day sales figures in 2015 also showed the growing
trend towards m-commerce. Alibaba’s total gross
merchandise value (GMV) on Singles’ Day amounted to
2
Ten Highl ights of China’s Commercial Sector 2016
there is also an intention to establish new rural business models, nurture and develop rural e-commerce entities and develop a modern distribution and service network for rural products and services.
Realising the ample growth potential of the rural
e-commerce market, a number of leading retailers and
e-commerce players are adopting “going rural” strategies.
For instance, Suning Commerce Group has signed various
strategic partnerships with local governments to introduce
rural e-commerce initiatives. The company plans to open
1,500 service centres and 12,000 franchise depots in
lower-tier cities by the end of 2015, and employ 30,000
staff in the villages. On 25 September, 2015, Suning and
the State Council Leading Group Office of Poverty
Alleviation and Development signed a strategic
cooperation agreement to step up its poverty relief drive in
rural e-commerce. Leading e-commercial players such as
Alibaba and JD.com have also made substantial
investments in rural areas to expand their e-commerce
distribution networks.
The mobile revolution in China provides huge opportunities for Internet players as well as mobile app developers. Many traditional retailers are now deploying various O2O strategies to provide a better shopping experience for customers.
What the experts sayOur experts believe that the “Internet Plus” initiative will continue to drive e-commerce development and domestic
consumption in the coming year.
Recent measures have already contributed to this trend. In 2014 the government introduced a number of policies to place
greater emphasis on e-commerce when facilitating the upgrade and transformation of traditional retailers; in May and
September respectively these included the Opinions on Intensively Developing the E-commerce and Accelerating the
Cultivation of New Economic Power promulgated by the State Council and the Opinions on Promoting Online-Offline
Interaction to Expedite the Innovation Development, Transformation and Upgrade of Commercial Circulation announced by
the General Office of the State Council. They show the extent to which the government supports the development of
e-commerce. More such measures are expected in 2016.
While it is important for enterprises to implement their digital strategies, they must also strengthen their core competencies. At
the same time, enterprises need to leverage big data analytic tools to provide targeted products and services that consumers
wish to purchase. This is especially important in today’s consumer-centric environment.
rural e-commerce will hit 460 billion yuan in 2016,
narrowing the gap with urban e-commerce.
In its support for rural e-commerce development, the
government introduced a number of policies to boost the
growth of the market in 2015. They included the following
measures:
• In October 2015, an executive meeting of the State Council presided over by Premier Li Keqiang decided to earmark 140 billion yuan to upgrade the rural telecom infrastructure, and improve e-commerce in less-developed rural areas. Broadband coverage is expected to cover 98% of China’s villages by 2020.
• In September 2015, the Ministry of Agriculture, the National Development Reform Commission and the Ministry of Commerce (MOFCOM) announced an action plan to speed up e-commerce development for the farming and agriculture sector, and to establish sound e-commerce infrastructure and policies in rural areas.
• In August 2015, the MOFCOM and another 18 departments released the Circular on Promoting Rural E-commerce Development. The Circular aims to speed up rural infrastructure construction, improve government policies and deepen rural distribution system reform;
@ Copyright 2016 Fung Business Intelligence Centre, Secretariat of the Expert Committee of the China General Chamber of
Commerce (ECCGCC) and the China Business Herald Research Institute. All rights reserved.
Though Fung Business Intelligence Centre, the Secretariat of the ECCGCC and the China Business Herald Research Institute
endeavor to ensure the information discussed in this material is accurate and updated, no legal liability can be attached as to
the contents hereof. Reproduction or redistribution of this material without Fung Business Intelligence Centre’s or the Secretariat
of the ECCGCC’s or the China Business Herald Research Institute’s prior written consent is prohibited.
Fung Business Intelligence Centre, Member of the Fung Group
Authors
Teresa Lam and Lucia Leung (Asia Distribution and Retail, Fung Business Intelligence Centre)
Contributors
Christy Li and Tracy Chan (Asia Distribution and Retail, Fung Business Intelligence Centre)
Administrator
Yu Di (Secretariat of the Expert Committee of the China General Chamber of Commerce)
For more information
Secretariat of the Expert Committee of the China General Chamber of Commerce
25 Yuetan North Street, Beijing, China; Postcode: 100834
Phone: (010) 6606 2250 Fax: (010) 6606 2250
Email: [email protected] http://www.chinabt.net
Fung Business Intelligence Centre
10/F, LiFung Tower, 888 Cheung Sha Wan Road, Kowloon, Hong Kong
Phone: (852) 2300 2470 Fax: (852) 2635 1598
Email: [email protected] https://www.fbicgroup.com/
China Business Herald Research Institute
No. 1, Baoguosi, Xi Cheng District, Beijing; Postcode: 100053
Phone: (101) 6304 4753 Fax: (101) 8312 8832
Email: [email protected] http://www.zgswcn.com