E-commerce drives up consumption, transforming businesses, social networks and more
Published: Sep 03, 2023 08:30 PM
Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

China continues to be a major driving force behind the global growth of  e-commerce, as the country's mass millennial and Generation Z consumers with their ever growing purchase power have embraced online shopping and social commerce (social media-enabled consumption). Their preference for e-commerce and livestream shopping has helped transform the traditional retail landscape, which has also accelerated market demand for advances in mobile technology and digital solutions. 

GlobalData, a leading data and analytics organization based in London, last week reported that China is set to retain its dominant position in global e-commerce evolution. Led by an anticipated 9.9 percent yearly growth, Chinese e-commerce market scale is expected to surge to 15.2 trillion yuan ($2.2 trillion) in 2023, followed by the US' $1.8 trillion, the UK's 288 billion and Japan's $232 billion. 

By all metrics, the unprecedented progress in Chinese people's retail experience - from embracing the country's sprawling brick-and-mortar or outdoor free markets at weekend holidays to browse mobile screens, compare and check prices, click and settle payments, and just wait for door deliveries - is a sea change, saving tens of hundreds of hours for leisure, entertainment or get-togethers with family and friends. 

At the same time, the ever-accelerating digitalization across industrial and agricultural production, logistics and service sectors, reinforced with ubiquitous social media networking, has enabled Chinese people to enjoy a modern lifestyle, which is lifting convenience and efficiency, enabling them to enjoy a highly interactive and enormously rejuvenating life.

Simplicity, speed, security and incentives from major consumer portals are some of the key factors driving online shopping worldwide.

According to GlobalData's e-commerce analytics, e-commerce sales in China expanded at annualized 11.2 percent between 2018 and 2022, the highest growth rate among the major economies. China's e-commerce market is expected to record another five years of rapid growth between 2023 and 2027, at annualized 11.6 percent growth rate, to reach 23.5 trillion yuan annual sales by 2027. The organization attributed the country's exponential e-commerce expansion to China's advanced network infrastructure construction and proliferation of instant payment tools. 

China's e-commerce market has evolved significantly during the past 10 years, supported by the rapid adoption of 4G and 5G smartphones, growing high-speed mobile network penetration, increasing number of online shoppers, and availability of distinctive, efficient payment solutions. Online shopping festivals like "Singles Day" also help drive this trend.

In essence, it is Chinese government's determination at resolutely ramping up telecom and information infrastructure investment, while in tandem integrating 1.4 billion people with one of the most advanced internet networks in the world, that created the foundation for current e-commerce blossom in the country.

The entrepreneurship and perseverance of Chinese high-tech companies have also complimented the government's efforts at non-stop digitalization. For instance, Huawei and ZTE's 5G top-caliber networking technology has assisted the country to roll out the world's largest superfast mobile network, despite ruthless crackdown from the US government since 2018. Tencent's WeChat Pay and Alibaba Group's Alipay solutions are being used by hundreds of millions of Chinese consumers every day. By all standards, this magnitude of innovations will generate significant productivity gains for the country. 

China's rapid e-commerce development has given rise to a dynamic technology sector, thriving businesses, social networks and enriching people's social and cultural life. The Web and other digital tech evolutions like big data and AI will continue to penetrate and upgrade many Chinese businesses, meaning more profound changes are yet to come.

Livestream shopping has become a new phenomenon in China, which allows consumers to view and buy products via online video streams hosted on e-commerce platforms. In addition, social commerce is now growing in popularity based on the efforts of giant messaging platforms such as WeChat mini-apps and Douyin Flagship Stores.

E-commerce is an ever-evolving industry, and staying ahead of the trend is the key to success. For example, as Generation Z consumers demand high-quality and personalized products and services, online suppliers are seeking to cater to their needs by providing tailored shopping experiences, through building strong production and sourcing networks, as well as research capabilities. China has some 230 million Generation Z consumers, accounting for 17 percent of its total population, a group who spent nearly five trillion yuan a year, according to media reports.  

Subscription-based e-commerce services have been on the rise during the past several years, and this trend is expected to continue in 2023 and 2024. Consumers turn to subscription services for convenience, value and personalized product and service recommendations. 

Internet and e-commerce are fundamentally altering the fabric of daily life in China. The rapid digital transformation has led to marked productivity growth and streams of new innovations, as business adoption of the internet and improved big data and AI-assisted solutions reaches critical mass. 

"The next wave of digital development promises to have an even deeper impact on China's economy - contributing not only to faster GDP expansion but also to growth that is increasingly based on productivity, innovation and consumption", according to McKinsey in a recent research report, adding the internet and e-commerce enhances information transparency that can improve investment decisions and make the allocation of capital more efficient. 

Depending on the speed and extent of industry adoption, the Internet and e-commerce could add 0.3 to 1.0 percentage points to China's GDP growth rate from 2013 to 2025, which is able to fuel some 7 to 22 percent of the incremental GDP growth expected through 2025, the McKinsey report noted.

The author is an editor with the Global Times.