China ButtonChina’s economy is expected to grow 6.8 per cent this year (source IMF) and 6.3 per cent in 2016, quite a contrast with the growth figures realised in recent years. The following table shows the most important economic and demographic data over the past years and a forecast for 2015.

 

 

 

2013

2014

2015 (e)

AveragePopulation (million)

1357.4

1364.3

1371.4

Households (million)

444

448

452

Male/Female %

51.9/48.1

51.2/48.8

51.2/48.8

Population 16 – 65 years

73.8%

73.4%

73.1%

Urban Residents %

53.7%

64.8%

69.0%

GDP Growth

7.7%

7.3%

6.8%

GDP p/c PPP  USD

12,188

13,224

14,190

Disposable Income p/c USD

3,112

3,361

3,615

Average Annual Inflation

2.8%

2.0%

1.5%

 Notes:

  1. (e) = IORMA Estimates
  2. p/c = per capita

 

Retail

China’s retail market has developed significantly in a short period of time, and is now the world’s second largest after the USA. In 2007, retail sales of consumer goods were 9.4trn RMB. In 2014, seven years later, this figure has almost tripled to reach over 26trn RMB and for 2015 a growth of more than 10% is expected to reach RMB 29trn. This staggering increase was and is fuelled by rising wages, disposable income and urbanisation contributing to consumers demanding more quality products and services. While this creates further opportunities for major retailers, it also presents many challenges as the market becomes increasingly saturated and competitive.

 

Online Shopping

China is rapidly underway to become the world biggest online market. At the moment an estimated 660 million people have access to the internet. By the end of 2014 the country’s total number of mobile Internet users jumped by 57 million to 557 million, according to  China Internet Watch. e-Commerce including B2C and C2C together are set to reach 3.9bn RMB (USD 619bn) at the end of 2015 of which 2.0trn (USD 315bn) B2C, a growxth of 57% (in local currency) compared to 2014 and reaching a share of 51% in online retail  shopping, for the first time exceeding C2C sales. To compare; US B2C online retail is forecast to reach USD 338bn this year, a growth of 14%. The following chart shows the developmen of Chinese retail and online retail (US dollars):

      2013

       2014

      2015

Total Retail Sales USD

2913mn

3205mn

4143mn

Percentage Growth (in N/C)

13%

12%

10.5%

B2C online retail sales

124.3

205.0

315.7

Growth

86%

65%

57%

Share in total Retail

4.2%

6.0%

8.3%

Notes:

  1. N/C = National Currency

 

Heading towards an omni world

It is expected that this and and coming years China’s retail industry will further integrate their online and offline efforts. It will be just a matter of time for traditional shopping malls and flagship stores, that they provide the whole range of their products through e-commerce platforms and mobile applications. Following similar trends in Europe and the USA mobile is likely to enable in-store pickups to better take advantage of the merits of both online and physical retail.

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Aad Weening
Aad Weening, Director, IORMA

 

See The Aad Weening blog here

 

 

 

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