The latest China crackdown on ostensibly Internet porn, or more likely websites with ‘questionable content’, has put the spotlight once again on the Chinese government’s growing concern over the online activities of the country’s over 50 million bloggers and significant 290 million Internet users, which is nearly equivalent to the entire U.S. population.
Chinese netizens were in part busy indulging in the pleasures of e-commerce as online trade volume in China increased 20% from a year ago to RMB 1.95 trillion (US$285 billion) in 2008, with the B2C/C2C segment comprising 30% of total volume. The burgeoning e-business sector in China is forecast to reach RMB 2.51 trillion (US$367 billion) in 2009 and growing rapidly to RMB 3.22 trillion (US$471 bln) in 2010, according to market research firm IDC.
The number of users trading on e-business platforms grew from 4 million in 2004 to 50 million last year and IDC expects the figure to reach 100 million by 2012 – a modest estimate as the languishing economy is likely to drive more people to set up an online shopfront due to the lower startup costs involved .
The transaction volume of the dominant B2C and C2C platform in China – Taobao.com, subsidiary of e-commerce leader Alibaba Group, more than doubled from RMB 43.3 billion in 2007 to achieve its 2008 target of RMB 100 billion (US$14.6 bln) set earlier last year. Started in 2003, Taobao commands about 80% share of China’s online consumer market and has 85 million registered users to date.
Founder Jack Ma has set an audacious goal for Taobao to surpass Walmart global sales in 10 years’ time. Wal-Mart’s global turnover was RMB 3.5 trillion (US$512 billion) in 2007 and its China stores contributed about RMB 21.3 billion. In the meantime, Taobao has easily eclipsed eBay in China by being better attuned to local culture and aims to overtake Amazon worldwide 5 years later.
From the “The Taobao Effect“, China Business Feature:
At Taobao, seven cosmetics products or ten phone recharge cards can be sold in the blink of an eye; about 63 items of men’s wear and 190 articles of women’s wear are sold every minute; an average of 1,028 mobile phones and 1,042 laptop computers will be sold during dinner time; and 180,000 small household appliances and 260,000 maternity and infant products are sold every day.
In addition, Taobao caters to consumers who cannot complete the transaction online by deploying more than 15,000 alternative payment points and kiosk stores in retail outlets across China including 4000 locations in Beijing alone. The Zhejiang-based etailer estimates that online shopping currently accounts for only 1% of China’s total retail sales but will likely grow to 5-8% by 2012.
Graphic – ChinaDaily
Online shopping in China generated RMB 126.3 billion a year and the total amount spent online grew 125% in 2008. iResearch predicts that China’s online expenditure will reach RMB 569 billion (US$83 bln) a year by 2012.
The thriving influence of Taobao’s vast network has prompted Hainan Airlines, China’s 4th largest airline group, to be the first carrier to open an online store with Taobao in December.
Taobao’s daily transaction volume peaked at RMB 500 million (US$73 million) on December 22, compared with peak volume of less than RMB 250 million a year ago. More than 50,000 airticket bookings were made on Taobao during the Christmas week, which means the site ranks second only to Nasdaq-listed online travel site Ctrip.
Taobao’s transaction volume of its global online shopping channel has registered a three-digit increase each year ever since its launch in 2006. Last month, the average daily amount spent on the channel was 10 million yuan (US$1.46 million), almost four times WalMart China’s average daily intake in 2006.
Purchases from U.S. retailers rank fourth on the global shopping channel by volume but rank first in amount spent per deal.
