Chinese e-commerce market, the world’s largest, is estimated to register a strong growth of 17.2% in 2021, as consumers increasingly shift from offline to online. Against this backdrop, e-commerce value is expected to grow at a strong CAGR of 11.6% between 2021 and 2025 to reach CNY21.4 trillion (US$3.3 trillion) in 2025, says GlobalData, a leading data and analytics company.
Chinese e-commerce evolved rapidly during the last five years, supported by high Internet and smartphone penetration, increasing consumer confidence in online shopping, emergence of e-commerce platforms, and the availability of various alternative payment solutions such as Alipay and WeChat Pay.
According to GlobalData’s E-Commerce Analytics, e-commerce sales in China grew at a CAGR of 17.7% between 2017 and 2021 to reach the value of CNY13.8 trillion (US$2.1 trillion) in 2021.
Ravi Sharma, Banking and Payments Lead Analyst at GlobalData, comments: “The COVID-19 pandemic has further driven e-commerce activities in the country, as concerned consumers are increasingly using online channel for their purchases to avoid getting exposed to disease vectors, a trend that is expected to continue even beyond the pandemic.”
Although COVID-19 crisis has led to a slump in overall consumer spending, it has resulted in growth in e-commerce purchases.
While sectors such as travel and accommodation, and restaurants services were affected due to lockdown and travel restrictions, a strong growth is seen for online purchases of physical goods.
Alternative payment solutions were the major beneficiary of rising e-commerce purchases. Alternative payment solutions including Alipay and WeChat Pay (including Tenpay) collectively account for 57.6% of total e-commerce value, according to GlobalData’s 2021 Financial Services Consumer Survey.
While Alipay benefits as a primary payment tool on all the e-commerce platforms owned by the Alibaba group, WeChat Pay, which is offered by WeChat messaging app, leverages its massive 1.2 billion social media user bases to push online payments. As Chinese consumers continue to embrace e-commerce, these payment solutions will be greatly benefited.
Mr Sharma concludes: “Chinese e-commerce market has been on a rise during the last five years. A significant rise in consumer preference for online channels during the pandemic coupled with proliferation of online payment tools and emergence of new e-commerce formats will further drive e-commerce growth in China.”