The Middle Kingdom already claims more than 50% of all online retail stores worldwide and already has the largest e-commerce market in the world. And there are no signs that this trend could slow down. Last year, Chinese internet retail saw its biggest global growth since 2016, and this was largely driven by its high-traffic social media sector and by some of the world’s biggest tech companies. All of these factors are making a huge contribution to the second-largest global economy.
At a time when the rest of the world is desperately trying to regain its economic and social course after the outbreak of the Covid 19 pandemic, e-commerce is playing an increasingly important role in the economic life of individual countries. In this article, we will look at the various reasons and factors behind China’s mind-boggling Internet retail boom, and assess whether and how this trend is likely to continue.
The Chinese domestic market
The outbreak of the Covid 19 pandemic has helped the online market soar to new heights. In particular, Amazon and Zoom shares shot up considerably by mid-2020 due to changes in consumer habits. What was striking here was that the Chinese e-commerce market could already show a turnover of 869 billion US dollars in 2019. But how was this sector of the economy able to generate additional growth even during the pandemic?
The main reason can certainly be seen in the fact that online commerce has been deeply rooted in Chinese society for quite some time. Even before the pandemic, the country’s online stores had already been dealing with large flows of customers, especially in the megacities. Companies like “AliBaba” were already generating annual sales of a staggering $38 billion in 2019, six times more than its biggest competitor “Amazon Prime.” But even more remarkable is the fact that China imposes significant restrictions on general Internet commerce: Users cannot spend money in online casinos, for example, and many world-renowned yet Western social media platforms, such as Facebook, are even banned in China.
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Big growth on the lan
Another factor in the steady growth is the ever-increasing number of Internet users outside the major cities. In the world’s most populous country, nearly 40% of residents live in rural areas. And the majority of this rural population did not have the technical and organizational prerequisites to shop online a few years ago. But with improved technical infrastructures, the rural population is becoming more aware of the benefits of online shopping. The country’s logistics network is also being steadily expanded, allowing companies like AliBaba to ship their products to rural areas significantly faster than ever before. However, this also means that local stores and shopping centers in the country’s small villages simply cannot keep up with the offerings and prices of the online giants. This also causes the huge demand for the different online services.
China’s view of international markets
But China’s huge appetite for commercial growth is not limited to its own domestic economy. Beijing is not only banking on the rapid growth of online retail within its own borders, but is also contributing significantly to the growth of e-commerce in a wide range of developing countries. Initiatives such as the Africa-China Tech Alliance have already seen major Chinese companies invest billions of dollars in various African countries in anticipation of long-term economic and online growth on the continent.
But Africa is not the only target of Chinese ventures. In the meantime, several Latin American countries have also concluded important trade agreements with the centrally administered country, all of which function in a very similar manner, but nevertheless tend to be based on infrastructure tasks and technology-based trade. With the ever-worsening economic-political situation due to the pandemic effects in Central and South American countries, foreign investment is more important than ever to their governments.
These international projects follow a spiral-shaped progression. Chinese companies provide emerging markets with funding, and the resulting profit then flows into new technologies that further support the growth of e-commerce in China, among others. Therefore, these projects are not only boosting Beijing’s recent economic activity, but also helping to put this IT economic sector on an even firmer footing in the coming years.
The pandemic effect
While Chinese business practices and the country’s social and cultural missions have been focused on the online world for some time, it would be negligent to ignore the catastrophic impact of the Covid 19 pandemic on China’s retail sector. Forced to be the first country in the world to impose the first drastic curfews on its residents at the beginning of 2020, China, as in (almost) all other countries, is still feeling the economic impact even now after the openings, most notably reflected in the dramatic drop in direct in-store purchases.These changing consumer habits are a fact of life all over the world. But they have become particularly conspicuous in China. Among other things, the fear of the virus and its effects, which is justified among many people, has led to people cooking at home rather than eating out, clothes are no longer examined in boutiques but ordered online and tried on at home, and interpersonal meetings have also shifted to the digital space, since all bars and clubs are closed, as we know. And even if shoppers decide to visit a store after all, the visits in question are generally shorter, which then also means that less money is spent than before the pandemic.
More choice on the internet = falling prices
Despite the depressing facts for retail stores and their operators, this trend could turn out to be good news for consumers in the long run, because there are many more choices online: And instead of having only two or three neighborhood supermarkets to choose from, consumers will have dozens of virtual world options at their disposal. Greater choice means that companies will be lowering prices and using special promotions and discounts to retain customers so that they can compete in the competitive environment of Internet retailing. In any case, the important thing for all consumers must be the high quality, service and compliance with guarantees in favor of customers. Only in this way will online retailers be able to retain their customers in the long run.
And all companies that have not yet managed to open their own online sales channels will have to do so very soon in order to be able to offer their goods and services in the digital realm as well. This is the only viable option for almost all areas of direct trade in order to become fit for the coming years. China’s e-commerce sector clearly shows us the current extensive changes in economic life.
Categories: News
Source: thpttranhungdao.edu.vn/en/
