china retail sector – marketing in china with baidu | china search | ntent

Guide to China’s Retail Sector

China’s Retail Sector

The World’s Largest Online Economy

China already has the largest online population in the world at 618 million users. Astonishingly, that’s only 46% of their population, so their capacity for growth is enormous.

0

100

200

300

400

500

600

700 618

245

121 101

79 53

20 46

79

10.2

80 39

84 89

Online Population MMs

% of Population online

They’re Becoming More Affluent

The middle classes are expanding beyond the largest cities more rapidly & in greater numbers than any market has ever witnessed. The number of Middle and Affluent Consumer HOUSEHOLDS in China will be the same as the US by 2020.

1

13

34

61

57

36

12

53

69

66

39

23

Household annual disposable income (USD) thousands

Upper affluent >200 Lower affluent $16 - $31.5 Middle Class $9.5 - $16 Emerging Middle $6 - $9.5 Aspirant $4 - $6 Poor <$4

Households Millions Households Millions

Source BGS Consultants

Urban household disposable income 2020

Urban household disposable income 2010

Chinese Online Transactions Online transactions reached $301.9 billion USD in 2013. It is expected to surpass $651 billion USD in 2017.

$75.03

$127.69

$212.08

$301.11

$398.76

$491.54

$585.94

$673.83

75%

70%

66%

42%

32%

23% 19%

15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

$700.00

$800.00

2010 2011 2012 2013 2014e 2015e 2016e 2017e

Transactions USD Billions Growth Rate (%)

Source iResearch, “2013 eCommerce market core value analysis”

Online Retail as a % of Total Retail

The growth of online retail in China is advancing at a more rapid pace than any other country including the USA. In 2014, 9.8% of all retail transactions in China will take place online.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2012 2013 2014e

5.2% 5.8%

6.4% 6.3%

8.0%

9.8%

USA

China

Source: 100EC, “2013 China online retail market insight report”

Number of Chinese Online Shoppers There were over 300 millions online shoppers in China in 2013, which is nearly half of the total internet population. Year-on-year growth was at 48.9% during the same period.

242

302

42.9%

48.9%

39.0%

40.0%

41.0%

42.0%

43.0%

44.0%

45.0%

46.0%

47.0%

48.0%

49.0%

50.0%

0

50

100

150

200

250

300

350

2012 2013

Online Shoppers (Millions) % of Total Internet Users

Source: CNNIC, “China internet development status report”

Ecommerce Enterprises in China

Compared to 2012, the number of Ecommerce enterprises in China increased by 18%. In 2014, we expect there to be almost 35,000 Ecommerce enterprises.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2009 2010 2011 2012 2013 2014e

992

15,800

20,750

24,875

29,303

34,314

E-Commerce enterprises in China


China’s Ecommerce on Foreign sites

Overseas Ecommerce Transactions

Overseas Ecommerce transactions reached $12.5 billion USD in 2013. The projected growth rate is over 100% in 2014, reaching $25.3 billion USD by the end of the year.


$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

2009 2010 2011 2012 2013 2014e

$0.8 $2.0

$4.3

$7.9

$12.5

$25.3

China's Overseas e-commerce transactions (USD Billions)

Reasons for Overseas Shopping

The top 3 reasons for China online shoppers to purchase overseas are competitive prices, product quality, and the scarcity of products.


Product Quality

Product Scarcity

Competitive price

Recommended by friends

More variety

Better service

Security

Better logistics

Easy to "Click & Buy"

Ease of refund / return

Others

21.8%

21.2%

20.3%

8.2%

6.0%

5.7%

5.5%

3.8%

2.9%

2.7%

2.0%

Popular Products for Ecommerce

Due to the concerns in price and quality, fashion, personal care, and baby products are the most in-demand product categories for overseas Ecommerce.


5.8%

6.0%

7.3%

11.4%

37.8%

Books and Music

IT Products

Household Goods

Virtual Card

Fashion

Top 5 items purchased online by Chinese in China

7.7%

9.4%

12.6%

12.9%

16.0%

Digital Products

IT Products

Baby Products

Personal Care

Fashion

Top 5 items purchased online by Chinese on Overseas

sites

Chinese Shopper Age

The majority of online shoppers in China are aged between 25-30 regardless of whether they shop on China based or overseas Ecommerce sites.


1.10%

6.80%

10.90%

25.30%

39.70%

15.70%

0.60%

51 and above

41-50

36-40

31-35

25-30

19-24

Under 18

Chinese Shopper Affluence

Overseas shoppers tend to be more affluent than those who limit their Ecommerce to China based sites. Over 80% have a monthly income between $488 - $814 USD.


2.3%

4.0%

1.4%

15.6%

23.2%

25.3%

9.2%

3.4%

1.3%

2.3%

0.0% 20.0% 40.0%

Above $8,140

$3,256 - $8,140

$1,628 - $3,256

$1,303 - $1,628

$814 - $1,303

$488 - $814

$326 - $488

$163 - $326

Below $163

No Income

Chinese Shopper Location

Most of the online shoppers who purchase overseas are living in Tier 1 cities in China, like Beijing (12.2%), Shanghai (13.2%), Guangzhou (14.1%), etc.


14.1%

13.2%

12.2%

9.2%

7.2%

5.2%

4.0%

3.7%

Guangdong

Shanghai

Beijing

Jiangsu

Shandong

Zhejiang

Fujiang

Heibei However, recently a new trend has emerged that shows more and more online shoppers are coming from Tier 2 cities or below, accounting for nearly 30% of the total overseas online shoppers population.

Baidu is China’s Equivalent of Google… Baidu is the major search engine in China with over 556 million regular users. That’s the equivalent of all the Google users in Europe and Asia combined.

Population of China: 1.35 billion

Online Population: 618 million

Baidu’s Reach: 556 million

Introduction to China Search International

China Search International / NTENT

Overview We are not an agency. We do not charge any management fees.

In fact – the only charge our clients incur is a 2.5% processing fee to cover banking and foreign currency exchange fees.

CSI / NTENT are compensated for our efforts directly by Baidu.

The result is that we’re well-positioned to help clients launch on Baidu in the most cost effective and hassle-free way.

Some of our more well known clients

CSI / NTENT is Baidu’s International Partner. Our clients are predominantly international companies looking to capitalize on opportunities in China.

Our Free Services

CSI / NTENT’s role is to help International companies launch on Baidu.

•  Translation of all documents for submission to Baidu

•  Facilitation of the account opening process

•  Development of custom keyword lists as required

•  Translation and volume checking of keywords

•  Provision and / or translation of ad copy

•  Loading of keywords into the client’s Baidu account ready for launch

•  Bid Management API application on the client’s behalf

•  Full training on how to manage accounts on Baidu (use of the Baidu console)

•  Issuing of invoices in the client’s preferred currency and transferring of funds into the client’s Baidu account

•  Full training on how to manage accounts on Baidu (use of the Baidu console)

•  Provision of research decks on relevant sectors and updates in the Chinese market

•  Pitch Support (provision of keyword proposals, research, and recommendations)

Getting in Touch

Should you have additional questions, please don’t hesitate to get in touch:

Kevin J. Carney

VP, Agency Partnerships & Strategic Accounts

[email protected]

(646) 561-8643

www.baiduint.com

china retail sector – marketing in china with baidu | china search | ntent

Marketing

largest online population

online population mms

middle classes

emerging middle

number of middle

affluent consumer households

largest cities

chinas retail sector