China is key to e-commerce growth.

As the trade war with China continues to play out — which, at times, is soaked with operatic overtones — it’s unclear how or when it will end. Economists and analysts who take a long view of the Asia-Pacific region, however, find a host of opportunities not only in China, but in India, Japan and South Korea, too.

For U.S. and European fashion and retail brands, the Asia-Pacific region is poised to emerge not only as a dominant source of e-commerce activity but as a region that will strongly influence global commerce. Researchers at Euromonitor International said in a recent report, “Digitalization in Asia: How One Region Is Shaping Worldwide Trends,” that the Asia-Pacific region is worth watching due to its sheer size and projected growth.

“The ‘Asian Century’ will usher in more digital consumers,” authors of the report said. “Asia-Pacific is the global leader of Internet users today. As of 2018, 51 percent of the Internet users globally reside in Asia-Pacific, which is expected to rise to 53 percent by 2030. This is due to an investment in digital infrastructure, competition-enabling regulations and the rapid spread of mobile technology. The region will contribute the most Internet users globally over the 2018 to 2030 time period, adding 1.6 billion [users].”

And there are sales being generated, too. “This rise in connectivity is leading to an increase in digitally influenced commerce,” said Michelle Evans, lead editor and author of the report. “Asia-Pacific is the leading region for digital commerce, accounting for 41 percent spend globally in 2018. The region posted the fastest-growth rate over the 2013 to 2018 time period, with it nearly doubling any other nation.”

It’s not going to be a cakewalk for brands looking to leverage this growth, though. Success will depend upon understanding the consumer mind-set and the socioeconomic nuances between countries. Dusting off the playbook from 10 years ago is not going to cut it. Having a viable localization strategy will be key and should include understanding shopping behavior as well as the local regulatory environment.

For example, in China the deployment and early adoption of mobile devices laid the foundation of the current e-commerce landscape. “Like other emerging markets, China turned to mobile devices to establish digital connectivity, due to the cheaper network investment and falling product prices,” Evans said. “The existing retail landscape was weak and inefficient, thus opening the door to online competitors. Third-party payment apps, such as Alipay from Alibaba’s affiliate Ant Financial, emerged to provide a safe way to transact online and propelled this shift. Chinese consumers embraced smartphones, using these new gadgets to interact with brands as well as to conduct commerce.”

And that also included use of QR codes, which, after a lull, is making a comeback. In China, the codes were first used en mass on train tickets around 2010. And in a case study by Euromonitor’s Dorrit Chen, the analyst noted that QR codes “play an essential role in China’s digital consumer environment.” And the consumer adoption of the codes helped usher in the cashless movement.

“Chinese consumers can purchase everything through this code, from restaurants to retailers to bike sharing to vending machines,” Chen said. “A QR code payment system provides convenience. For smaller vendors without a POS device, consumers scan the printed QR codes to transfer money to vendors’ e-wallets. For larger vendors, consumers press the ‘pay’ button to get their code scanned by a merchant’s QR code.”

Chen said use of QR codes is redefining digital commerce. For brands and retailers eyeing China, understanding how and why it is used is critical, especially if companies are interested in creating more personalized service.

Chen noted that QR codes are “widely adopted in restaurants, where consumers scan the unique QR code on their table to place the order. At the same time, restaurant staff receive the virtual order and deliver the food to the table.”

“Furthermore, the QR code can be used to explore stories behind objects,” Chen explained. “Exhibitions usually place a QR code near the object, allowing visitors to activate voice introductions and background stories. In retailing, the QR code is also leveraged for checking the source and authenticity. Moreover, QR code is imperative in customer relationship management tools as merchants use them to develop point-to-point connections with their consumers. Merchants encourage consumers to scan the QR code of their official WeChat accounts to gather consumer data and send more direct and personalized information.”

By contrast, in Japan, consumers have a completely different perspective on digital commerce. “Japanese consumers are highly concerned about the potential risk in online activities,” said Euromonitor analyst Yuri Gorai. “In fact, only 8 percent of Japanese online respondents answered that they were willing to share personal information online, which was the lowest in 40 responding countries, according to Euromonitor International’s 2019 Lifestyles Survey. This hesitation toward sharing information online is especially true with mobile users.”

Gorai said many Japanese consumers conduct mobile activities “on trains but are uncomfortable entering their credit card information in fear other riders may see their personal information. Additionally, many are reluctant to store payment information on mobile devices.”

There are similar behavioral differences in other countries across the region as well. Meanwhile, the revenue potential, as a whole, is hard to ignore. Evans said in the report that 31 percent of the world’s disposable income came from the Asia-Pacific region last year. “By 2030, this region is expected to add an additional $12 trillion in disposable income, which will account for 39 percent of the global increment,” she said.

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