Trans-Pacific View

China’s Digital Economy: E-Commerce Consumption Trends

Insights from Winston Wenyuan Ma.

China’s Digital Economy: E-Commerce Consumption Trends
Credit: World Economic Forum / Benedikt von Loebell

Trans-Pacific View author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy.  This conversation with Winston Wenyuan Ma – managing director at the China Investment Corporation (CIC) and author of China’s Mobile Economy: Opportunities in the Largest and Fastest Consumption Boom (John Wiley & Sons, December 2016)– is the 119th in “The Trans-Pacific View Insight Series.”

What are the key components of China’s mobile economy?

China’s mobile economy starts with its unrivaled internet user base. It has more than 750 million internet users, and with 95 percent of users going mobile with smartphones, China also boasts the largest mobile user market – 700 million, more than the entire population of Europe.

Furthermore, Chinese tech companies – Alibaba, Tencent, Huawei, ZTE, just to name a few – have already proven their mettle by catching up to global rivals in the smartphone and fourth-generation (4G) technology development process.

At the core of the mobile economy is the digitally-connected middle class (300 million, the size of the U.S. population). This new generation of Chinese customers are online from the start. They are quick adopters of new technology and digital media. They are turning into mobile shoppers at a fast pace, so they are extremely comfortable with the e-retailing ecosystem.

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Describe the importance of “seamless integration” – a central theme in your book, China’s Mobile Economy.

In today’s hyper-connected world, a consumer’s buying journey spans across offline and online. The merchants must make sure they serve the consumers using all possible channels, because consumers are getting smarter everyday with the increasing penetration of smart devices and can easily handle all channels.

The omni-channel model promises unprecedented choice, convenience, and simplicity to the consumers; but with hyper-connectivity, manufacturers and vendors are also facing exploding complexity, as they have to make significant investments into big data technology.

That means a large collection of commerce data not only on consumers’ retailing patterns but also their overall spending habits, as well as their social network and behavior. To win over repeat customers, merchants have to deliver customers a distinguishable and personalized shopping experience, by understanding not just what customers want and need, but also where they want it and how they want to experience it.

Explain the impact of China’s digital economy on global e-commerce consumption.

Every November 11th (known as “Singles’ Day”), billions of Chinese, at home or abroad, passionately participate in the 24-hour online shopping extravaganza. For the 2017’s Single’s Day, total trade volume of the day was more than $20 billion, making it the world’s largest online shopping day, beating Black Friday and Cyber Monday combined.

Further, if we look at the case of Uber in China, what is really interesting is the fact that Uber’s service took off in China much faster than it did in the U.S. Uber’s top three most popular cities worldwide — Guangzhou, Hangzhou, and Chengdu — were all in China. The important reason is that Chinese users are ready adopters of mobile devices and social network technologies.

The implication is profound for global e-commerce: China is not only the largest market for mobile applications, but probably also the best lab to test them, because new mobile applications probably can receive market feedback and achieve meaningful scale more quickly in China than in developed markets.

How is China’s mobile internet economy transforming Chinese lifestyles?

In a profound way, the mobile internet has improved people’s lifestyle, not only in large cities, but also in remote areas. For example, mobile payment is more popular – to the surprise of many – in China’s underdeveloped western regions. Among all the provinces, Tibet led the country in mobile payment adoption. Obviously, for less-populated areas without much commercial infrastructure, mobile e-commerce is a good solution.

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Compare and contrast China’s digital economy developments to those worldwide.

For many people in China, especially in rural areas, a consumer’s first internet experience is often mobile instead of PC – the moment he or she starts using a smartphone. As a result, from the application side, China’s market has evolved in a very different way from the Western world, moving more aggressively into mobile.

Chinese users can book movie tickets, order wedding services, and manage financial investments from their smartphones. By contrast, those activities are not as widespread on mobile devices in other markets. For example, as seen in the mobile payment field, the lack of a developed credit card system in China means that mobile payment is the “first” and “only” non-cash payment experience for many users.