Shoppers embrace online purchasing
Chinese consumers are increasingly buying their daily necessities via on-demand e-commerce platforms
Zhang Yunfan, a 32-year-old fashion magazine editor living in Tongzhou district, Beijing, has been frequently trawling mobile apps and filling her e-shopping carts with a range of products, such as fresh vegetables, fruits, beverages, seafood, cooking oil and other groceries since the outbreak of the COVID-19 pandemic.
“I choose their quick delivery service so the items I ordered online will appear within an hour,” Zhang said, adding that all the items look and taste authentic, and seem worth the prices she pays for them.
Like Zhang, hundreds of millions of Chinese consumers are willing to vouch for the efficiency and reliability of the emerging online services sector. The country’s middle- and high-income shoppers now demand increasingly diversified and personalized products and services via online marketplaces, said industry insiders.
China’s consumer market is expected to maintain growth momentum this year, fueled by rising per capita disposable incomes of Chinese residents and the convenient and efficient e-commerce channels, showcasing strong resilience and vitality, analysts said.
They noted that online shopping has injected new impetus into China’s consumption and supported people’s livelihoods during the pandemic. They expected more supportive measures to further perk up consumers’ confidence, given that the country’s economy faces new downward pressure, rising challenges from a new wave of COVID-19 infections in some major cities, and a complicated external environment.
Consumption has become a major driving force for boosting the stable recovery of the national economy. Data from the National Bureau of Statistics showed final consumption expenditure contributed 65.4 percent of China’s economic growth in 2021, or 5.3 percentage points of the nation’s 8.1 percent GDP growth.
As the contactless economy boomed amid the pandemic, Chinese consumers are increasingly embracing on-demand consumption and switching to online purchasing, with e-commerce platforms that deliver daily necessities witnessing a significant increase in business.
Market consultancy iResearch said the gross merchandise value of the on-demand retail market is expected to amount to 900 billion yuan ($141.5 billion) in 2024, and the compound annual growth rate of the local onlineto-offline retail sector will reach 62 percent between 2020 and 2024.
According to a report issued by JD Super, the online supermarket arm of Chinese e-commerce giant JD, the top five cities that use Shop Now, a onehour delivery service jointly launched by Chinese e-commerce giant JD and leading on-demand delivery and retail platform Dada Group, are Beijing, Shenzhen, Guangzhou, Chengdu and Shanghai.
Beer, snacks, paper towels and baby formula are among the most commonly purchased products. Consumers under the age of 35 account for 55 percent of total users, while shoppers aged over 46 take up 24 percent, and prefer to buy daily necessities such as soybean oil, the report noted.
Meanwhile, online shopper numbers of female users born after 2000 rose more than six-fold in 2021, and they are keen to purchase high-quality nutritional products such as premium milk through Shop Now services.
At present, JD Super with Shop Now services has covered more than 34,000 physical stores, providing immediate consumption services to consumers in nearly 400 cities across the nation.
Convenience becomes a key factor to consider when people make consumption decisions, and the ondemand consumption segment is poised to be a vital growth driver and the next battlefield for e-commerce platforms, said Lu Zhenwang, CEO of Wanqing Consultancy in Shanghai.
“Consumption plays a fundamental role in China’s economic development and is the main driving force boosting economic growth,” said Wang Yun, a researcher with the Academy of Macroeconomic Research.
The growth rate of domestic consumption slowed down in March as the country experienced a resurgence of COVID-19, with some cities and provinces seeing a rapidly rising number of infections, Wang noted, adding that the consumer market is expected to witness a recovery in growth from May as the COVID-19 pandemic will increasingly come under better control.
Wang said online shopping is conducive to boosting the dual-circulation development paradigm, which takes the domestic market as the mainstay while domestic and foreign markets complement each other, unleashing consumption potential and fostering high-quality economic growth.
She estimated that total retail sales of consumer goods, a vital consumption indicator, are expected to grow 6 to 7 percent this calendar year, given that a complex, grim and uncertain external environment and the pandemic might weigh on consumers’ purchasing willingness.
China will promote the sustained recovery of consumption, boost personal incomes through multiple channels and improve the income distribution system to increase people’s spending power, according to this year’s Government Work Report.
In the next step, the government will bolster the in-depth integration of online and offline consumption, and foster new consumption formats and models, the report said.
“China boasts a sizable consumption market, with tremendous development potential and resilience.
Against the backdrop of unilateralism and trade protectionism coupled with the pandemic, the country’s consumer market continued to expand buoyed by scientific pandemic prevention and control measures,” said Zhao Ping, deputy head of the Beijingbased Academy of China Council for the Promotion of International Trade, underlining the importance of maintaining stable growth of consumption to stabilize the economy.
Data from the NBS showed that China’s retail sales of consumer goods, a vital consumption indicator, reached 44.08 trillion yuan in 2021, up 12.5 percent year-on-year.
China will adopt policy measures to boost consumption as part of efforts to keep economic fundamentals stable to ensure and improve people’s livelihoods, according to a decision made at the State Council’s executive meeting chaired by Premier Li Keqiang on April 13.
Relief policies for hard-hit sectors such as catering, retail, tourism, civil aviation, roads, waterways and railway transportation will be promptly and fully delivered, and local authorities are encouraged to intensify support and assistance for these sectors to stabilize more market entities in consumer services.
“Financial institutions should enhance support for the consumption of big-ticket items. Meanwhile, such consumption should be made more available in rural areas to help improve people’s lives,” Li said.
Liu Xiangdong, a researcher with the China Center for International Economic Exchanges, said consumption, as a significant pillar of economic development, is expected to maintain growth this year despite challenges brought by the COVID-19 pandemic.
Liu said a series of measures such as giving out shopping coupons should be taken to further unleash consumption potential. More supportive policies should be formulated to boost employment, increase residents’ incomes and enhance their purchasing power, Liu said.
Noting that consumption has served as a ballast stone for stable economic growth, Wen Bin, chief analyst at China Minsheng Bank, said the consumption upgrade will help guide enterprises to optimize production structure and drive transformation and upgrading in traditional industries.
More efforts should be made to cultivate new consumption growth points, such as supporting the purchase of new energy vehicles, and encouraging local governments to promote spending on green and smart home appliances in rural areas, as well as invigorating consumption in townships and rural areas, Wen said.
Mo Daiqing, a senior analyst at the Internet Economy Institute, a domestic consultancy, emphasized the importance of the online retail segment in sustaining and boosting consumption, thus helping enhance the resilience of the real economy.
“More consumers are keen on online purchases since the COVID-19 outbreak, and their pent-up consumption demand will be gradually released with the pandemic increasingly brought under better control in China,” Mo said.
Chinese retailers should recognize and adapt to the post-pandemic “new retail”, where the physical and digital worlds seamlessly merge into one where consumers can choose to live, work, travel, eat and play wherever and however they want, both online and offline, according to a report from global accounting firm PricewaterhouseCoopers (PwC).
Jennifer Ye, consumer markets leader for PwC for the Chinese mainland, said the pandemic and “stay-at-home economy” have spurred rapid growth in online shopping and digital enablement, propelling the integration of the online and offline consumption scenarios in China, with the personalized, high-end and trendy brands and products favored by Chinese shoppers.
With the transformation and upgrading of China’s manufacturing industry and consumption upgrades, the guochao — a trend representing the rise of homegrown brands that weave Chinese cultural elements into their design or branding — is gaining popularity among young Chinese consumers, Ye said, adding that the post-1995s generation has emerged as mainstream consumers.
More efforts should be made to further cut taxes and fees to help small and medium-sized firms tide over difficulties, expand incomes of middleand low-income earners as well as improve the business environment for market entities to shore up consumption, she added.