Global Tax Insights
China – The Epicenter of E-CommerceOctober 25, 2016
Despite China’s slowing growth and uneasy transition to a service-driven economy, the country’s immense e-commerce industry is stronger than ever.
The e-commerce industry in China is showing vast potential for continued growth. In 2015, online retails sales topped $622 billion, a 33% increase from the year before. By 2020, it is forecasted to overtake the U.S., UK, France and Japan combined – with an estimated 750 million online shoppers. Mobile technologies will play an important role in growth, in addition to cross-border e-commerce.
Main Industry Players
The e-commerce industry in China is dominated by three large players:
Tmall: Tmall is an online mall selling general merchandise owned by the Alibaba Group, controlling 57.7% of the market. With an estimated number of 407 million users, it is a suitably large international brand with demonstrated potential to achieve a large volume of sales and high revenue.
JD: JD is a hypermarket that focuses on selling home appliances and consumer electronics, generally favoring 3C product brands. JD controls 25.1% of the market with 132 million users.
Yihaodian: Owned by Walmart Inc., Yihaodian is the third biggest online mall in China with a market occupancy of 1.5% and 100 million users. Yihaodian focuses on the sale of food and beverages.
Chinese consumers often shop online as a means to ensure the authenticity of the products they buy, and are increasingly willing to pay a premium to invest in trustworthy foreign brands. There is huge potential for U.S investors to penetrate the market as foreign brands increasingly throw their hat into the ring.