KPMG’s “China’s Connected Consumers 2016” report, released this month, collates data from an online survey of 2,560 Chinese consumers who have made an online purchase over the past 12 months.
More than 90 percent of these respondents made at least one online purchase using a smartphone in the past year. This figure far surpasses other markets, such as the U.S. (74 percent) and the U.K. (74.6 percent) as well as the Asian average of 84 percent. In fact, half of the Chinese consumers surveyed purchased a product online at least two to three times per month this past year, dwarfing the global average of 27.9 percent.
China’s rise of m-commerce unsurprisingly coincides with a surge in mobile users, with total users exceeding 1.3 billion at the end of 2015, according to data from China’s Ministry of Industry and Information Technology.
Market research company eMarketer estimates m-commerce sales accounted for almost half of all China’s e-commerce sales in 2015. This year, the company expects retail mobile commerce sales in China to grow by 51.4 percent, accounting for 55.5 percent of retail e-commerce sales in the country in 2016.
By 2019, eMarketer expects mobile users in China to spend nearly $1.5 trillion on m-commerce.
This year’s Singles Day festival on Nov. 11 saw Chinese e-commerce giant Alibaba sell nearly $18 billion worth of products and services over a 24-hour period, with more than 80 percent of those transaction made using a mobile phone.
According to KPMG’s research, the most popular product categories for online shoppers in China were food/groceries (56.7 percent), women’s apparel (56.7 percent) and electronics/computers/ peripherals (51.2 percent). Over the next 12 months, KPMG expects the same three categories to top shopping lists across the country.
In terms of prompting purchasing behavior, the number of Chinese consumers who bought a product after seeing it on an online shop increased from 19 percent in 2015, to 42.6 percent this year. Meanwhile, 31.1 percent of consumers were triggered by something they saw in a physical shop, up from 24 percent last year, emphasizing the need for brands to have a cohesive online-to-offline, or O2O, strategy for the China market.
According to data from China’s National Bureau of Statistics, consumption contributed 66.4 percent of China’s GDP in 2015, up 15.4 percent from 2014. At the same time, Beijing’s 13th Five-Year Plan, officially launched earlier this year, includes provisions to provide better goods, boost online shopping and stimulate the service sector. According to KPMG, this government-backed effort to encourage domestic consumption will lead to e-commerce becoming a new engine for growth.
“Some people say e-commerce doesn’t contribute to economic growth because people stop going to malls and buy cheaper goods online. On the contrary, e-commerce is making a lot of positive contributions to the economy,” said Jessie Qian, head of consumer markets at KPMG China.
“E-commerce is bringing goods to consumers in a more convenient and cost-effective way, and is a very meaningful channel to increase domestic consumption. Three or four years ago, some companies in China might not have been 100 percent sure about the value of e-commerce. But now, FMCG manufacturers and retailers view it as essential, and we see a lot of our clients putting very high growth targets into e-commerce.”
Further evidence of the continuing rise of the Chinese consumer can be found in an Economist Intelligence Unit report — “The Chinese Consumer in 2030” — also released earlier this month.
According to EIU research across China’s 31 provinces and 287 of the country’s largest cities, private consumption will grow in real terms by 5.5 percent a year on average between 2016 and 2030 — boosting its share of the overall economy to nearly 50 percent.
Accompanying this continued rise in private consumption will be the march of consumers into higher income brackets, with EIU expecting to see nearly 35 percent of China’s population, or around 480 million consumers, to meet their definitions of upper middle-income and high-income by 2030.
This represents a sharp increase from the 10 percent, or 132 million, Chinese consumers occupying these brackets at present.
“The emergence of this large population, with a personal disposable income of at least $10,000, will alter the consumer landscape in China,” the report reads in part.
Also forecasted is a more dispersed map of high-income consumers. Rather than being concentrated in first-tier cities along the eastern seaboard, the EIU report expects major interior cities, such as Changsha, Chengdu, Chongqing and Wuhan to see sizable leaps, with each having at least two million high-income consumers by 2030.