Chinese Mobile Economy: The Place to Be
Before entering the Chinese market, it is essential to gain some insight on the trends that are currently shaping the country’s economy, namely Mobile economy.
If e-commerce is weighting more and more in most of developed and developing countries’ economies, nothing compares to China.
Apart from being the country where E-Commerce represents the major contributor of total retail sales, China’s case is also peculiar in the device its netizens use: their phone.
ASI Solutions thus aims in this article at offering you an overview of China’s Mobile E-Commerce. The latter not only being a huge contributor to the economy, but also shaping the way Chinese consumers buy and behave. We are strong of a 10-year experience at accompanying foreign companies in their internationalization process, more specifically in China where our head office is located.
If a company is aiming at entering Chinese market successfully, it is essential to understand the peculiarities of consumption on-site and the trends that will be shaping it in the future.
In general, Chinese e-commerce is huge. Last November, on Chinese Singles’ Day or 11.11 (the country’s biggest online sales event), Taobao and Tmall generated more than USD 30.4 billion of sales, which is more than Black Friday and Cyber Monday combined.
According to QuestMobile’s report, China’s mobile economy grew by over 20% during the first half of 2018, and in 2017 general mobile internet usage exceeded desktop internet usage. Mobile payment is also much more popular in China than in the West. Smartphones has become an essential tool in China, from chatting with your friends, to ordering food, buying goods, renting a bike, or calling a cab. The interconnectedness of all services available makes it even easier for Chinese consumers to navigate and share their latest fancy without having to leave their phone, or even switch App. The degree to which Chinese people have integrated the use of smartphone in their daily life has been fostered by several elements inherent to their "psyche" as well as by exogenous elements.
As such, taking advantage of this evolution of Chinese people consuming behavior represents a great opportunity for foreign brands eager to expand their scope of distribution.
The case of Taobao villages: a proof of the importance e-commerce is having in the country
Taobao (Alibaba’s C2C - and less importantly B2C - e-commerce platform) created the label « Taobao villages » which applies to villages in which over 10% of households run online stores and whose e-commerce revenues exceed 10 million RMB per year. More than 1,000 Taobao villages exist in China.
Chinese government is nourishing this trend, especially considering the « Internet Plus » strategy it initiated. This plan aims at boosting Chinese economy by « diminishing its reliance on manufacturing and export in favor of a knowledge-based economy driven by services and the tech sector » (Kalin Hristov « Internet plus policy: A study on how China can achieve economic growth through the internet of things », Emerald Insight, 11 March 2017), in accordance with Made in China 2020.
Apart from the government advocating and actually acting in favor e-commerce, characteristics specific to Chinese population explain the importance mobile economy:
- While there is a general preference for e-commerce among Chinese people, general public is more open to integrate mobile usage into one’s daily life as it more practical for one to do so. This is particularly true in China where it actually improves people’s lifestyle by reducing the gap between the buyers and vendors. Actually, mobile payment is more popular in China’s underdeveloped regions, where the lack of commercial infrastructures offers a fertile ground for e-commerce. For people living in these regions, mobile economy is an opportunity to access products that were not that easily available before.
- China has the technology to foster mobile consumption, and innovation is booming. It is then interesting to note that competition is then very vivid.
- The large population fosters network effect: when an App or a given consuming behavior becomes popular, it spreads rapidly.
- Chinese netizens are globally younger than in the West (average being below 30 years old). This population is more prone to use mobile economy.
- E-consumption is also driven by Chinese people’s taste for entertainment. As we will explore in more depth later on, live stream is one of the best example of this tendency.
How to Sell: Mobile Entertainment
Producing entertainment content is now key for brands and platforms that want to make it China. This is particularly true for mobile e-commerce, many companies even producing dedicated content to attract and interact with consumers. Online literature, video streaming, TV programs (such as Alibaba’s 24h live stream for 11.11 event) and games are examples of the content they create. Short videos are especially popular. For this reason, successful firms are getting closer and closer to also being media companies.
The Good Offer Should be Based on Innovation
As stated before, China has now become a pool for innovation, this tendency has been fueled by government’s incentives as part of Made In China 2020 program. The competition is now fierce, and your offer should be customer focused, predict people’s needs accurately while providing cheaper goods and/or services (cutting the middleman now being a huge tendency).
Selective App Usage: Making Sure to Launch an App that Will Stay on Your Customers’ Phone
The QuestMobile’s report we mentioned earlier also shows that people tend to reduce the number of Apps installed on their phone (down to 35 on average). If you are planning on launching yours, focusing on concepts should not be central anymore. User experience should be emphasized i.e. making sure the design works well for the user and improving the performance of the App itself.
Entering Chinese e-commerce field can represent a great growth opportunity for a well-prepared company, especially if the latter is focusing on mobile e-commerce.
Taking advantage of the booming of China’s mobile e-commerce as a foreign brands means understanding Chinese consumption’s specificities. As mentioned, entertainment content is now essential for brands eager to build brand-awareness and engage effectively with potential customers and those who already purchased your product/service as to build a loyal customer-base. On the other hand, marketing and communication are only part of the strategy and one should pay attention to not take Chinese market for granted. Innovating and being attentive to customers’ experience is key.
At ASI Solutions, we help you exporting your brand and product in simplicity. From origin to destination, we take care of every step on your behalf as to make your internationalization a success.