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Why China is the largest and most dynamic ecommerce market in the world

Why China is the largest
and most dynamic ecommerce
market in the world

Raymond Cui

Head of Marketplaces at Worldline Digital Commerce

China represents a huge opportunity for western businesses. With a unique system of ecommerce and payments that makes it incredibly dynamic. As a country it has the economic power to decide upon its own norms instead of adopting those from elsewhere, and while adapting to these norms may be challenging it is ultimately worth it.

The new China is an ecommerce and digital payments powerhouse, with mobile payments continually breaking records, ecommerce becoming the dominant force in retail sales and 986 million mobile internet users.

At Worldline we’ve seen the opportunity that China represents, as we have been active in the country for over a decade and have developed solutions for companies looking to enter this marketplace. My own background includes time spent at some of the biggest payments companies in China and so I know the payments ecosystem well. In this blog I’ll share my insider knowledge and best practices for approaching this ever-changing market. 

Raymond Cui, Head of Marketplaces at Worldline Digital Commerce

Another digital world

China has developed its own payment processors, payment apps, ecommerce sites and social media that, to a Western audience, will seem like an alternate world. Some major Western apps like Facebook are actively blocked in China, leading to local versions like WeChat, Q-Zone and Sina (TikTok, being a Beijing-owned company, is available there and has 600 million daily users).

China also has some innovations that don’t have Western equivalents. Alipay is a hugely popular eWallet with one billion users, making it far larger than Apple Pay (441 million users) or Google Pay (227 million users), and is part of the huge ecommerce ecosystem of its parent company Alibaba, which provides everything from online shopping to eSports to cloud computing and artificial intelligence. 

WeChat is in some ways a very similar app to WhatsApp, but with the crucial difference that it provides services like gaming, shopping and interpersonal payments. It can be used as a wallet to pay stores, taxis, even street vendors, and over 900 million people use it each month. For WeChat, it is important to support official pages and mini programs, essentially apps within WeChat that allow businesses to access unique features such as user location, scanning offline QR codes on magazines and billboards, and the ability to conduct marketing directly to the full WeChat userbase. This is vital as official pages and mini programs represent almost all of WeChat's flow. WeChat’s popularity means that many Chinese consumers must be using both Alipay and WeChat, further complicating the payments landscape.

A major player in physical debit and credit cards, and the infrastructure behind them, is UnionPay, the world’s largest card payment organization. It is a crucial part of the payment mix alongside Alipay and WeChat Pay, and a standard choice at checkouts both on and offline.

China is also home to the largest videogaming market on the planet, with 620 million regular players. Again, Chinese consumers aren’t generally interested in many US games – titles like Fantasy Westward Journey, which has 310 million players, and Crossfire, with 660 million, are bigger than their Western equivalents by orders of magnitude but little known outside of their native country.

‘Live shopping’ has also emerged as a major force in ecommerce that has no real equivalent in the west yet. Think of a combination of influencer marketing and TV shopping channels such as the Home Shopping Network – a major influencer (known in China as KOLs, or ‘key opinion leaders’) with tens of millions of followers will stream themselves trying on cosmetics or clothing which viewers can buy directly from the stream itself. 

By 2023, the number of PC gamers in China is predicted to be larger than the population of the United States.

Doing business like a local

Accessing a country that has 25% of the world’s internet users would be a boon to any digital business but treating them the same as you would US or European consumers is not a winning strategy. Neither is creating an ideal Chinese consumer – a huge country with nearly 20% of the world’s population is going to display regional and demographic differences that need to be considered. You will need to understand what is unique about China, which includes:

  • China is digital first: ecommerce represents 35% of total sales in China, the highest percentage of any country. Although digital sales haven’t eclipsed brick and mortar stores yet, it will, and you should consider China to be a country where digital comes first.
  • China is mobile first: All that digital commerce takes place primarily on mobile phones, making mobile optimization absolutely crucial for accessing this marketplace.
  • Three companies dominate the digital ecosystem: Alibaba, Tencent and Baidu, collectively known as BAT, are the major players in the local digital ecosystem, much like the FANG (Facebook, Alphabet, Netflix, Google) companies are in the US and Europe. International sites won’t perform well unless they are optimized for Chinese search engines.
  • Consumers need to be able to find you: With so much on offer from local companies there is no reason for Chinese consumers to search for badly optimized, badly translated foreign websites – unless you are fully localized you will lose out.

As one of the few countries to have grown its economy during 2020, and as an incredibly diverse digital market with staggering opportunity for digital commerce, China is unrivalled as a place in which businesses can grow. China represents such a huge opportunity for western businesses, so our team has spent years researching the market and building local relationships.

To meet the need of international ecommerce businesses looking to enter or expand into China we launched a full suite of Chinese payment methods in late 2018, providing our customers with access to key payment apps and eWallets. Our mobile first philosophy supports WeChat official pages and mini programs and on top of that our hosted checkout pages have built-in support for traditional and simplified Chinese. We also have a team of local experts in our Shanghai office who can help streamline your payments operations.

To learn more, visit our comprehensive overview of China’s payments ecosystem here.

Shanghai is China’s financial capital and is on its way to becoming a leading fintech hub.