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China’s online retail sales grow a third to $589 billion in 2015

January 27, 2016 02:53 PM
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China is already the world’s largest e-commerce market and it extended its lead in 2015.

Chinese retail websites sold 3.877 trillion yuan ($589.61 billion) worth of goods in 2015, an increase of 33.3% from a year earlier, according to data released this week by the National Bureau of Statistics in China. This estimate includes physical goods and virtual products such as electronic books.

Online sales of physical products in China grew 31.6% to 3.242 trillion yuan ($493.04 billion) in 2015 over 2014, while web sales of virtual products increased 42.4% to 634.9 billion yuan ($96.55 billion) from 2014, according to the National Bureau of Statistics.

China’s total retail sales, including restaurant receipts of 3.231 trillion yuan ($491.3 billion), grew 10.6% to 30.093 trillion yuan ($4.574 trillion) in 2015, according to the National Bureau of Statistics. Taking out restaurant sales, e-commerce accounted for about 12.1% of total retail sales.  

That puts China well ahead of the United States both in terms of total online sales and the web’s share of retail revenue. U.S. online retails sales totaled $305 billion in 2014, according to the U.S. Commerce Department, which will release 2015 figures Feb. 17. Internet Retailer estimates 2015 U.S. e-retail sales will total about $350 billion. The web accounted for 6.5% of U.S. retail sales in 2014, a figure that increased to 7.7% by the third quarter of 2015, the last period for which the Commerce Department reported e-retail sales.

China’s gross domestic product grew 6.9% in 2015, its slowest growth in 20 years but still well ahead the growth rate of other major economies. The personal income of Chinese consumers grew 7.4% last year over the year before.

The growing income of Chinese consumers combined with their skepticism about the quality of Chinese products has led many Chinese shoppers to turn to the web to find goods from overseas. That’s been made easier by the government in recent years adopting policies that facilitate the purchase of foreign products online in small quantities for personal use. For example, China has created 10 free trade zones where goods ordered from foreign websites are quickly cleared through customs.

The free trade zone in Ningbo, for example, processed 1.4 billion yuan ($212.9 million) worth of products purchased online by Chinese consumers through the first nine months of 2015, an increase of 350% from 2014.

Several global e-retailers have reported positive performance through their cross border e-commerce operation in China. Amazon Inc., No. 1 in the Internet Retailer 2015 Top 500 Guide, said the purchases from Chinese consumers on their non-Chines sites grew six times in 2015 over the prior year. Also, Japan-based Rakuten Inc., No. 20 in the Internet Retailer 2105 Asia 500, said its sales from Chinese consumers grew 101% on its global site in the third quarter of 2015 compared with a year earlier.  

For global e-retailer, traditional trading vs. cross border e-commerce

Barriers

Traditional trading

Cross border e-commerce

China business license

Must have

Not required

Product selling license

Must have

Not required

Duty Tax

High

Often cut in half

Sales tax

At least 17%

Zero

Hold inventory inside of China

Required

Not required: can ship items ordered into China or hold inventory in free trade zone

Speed of custom clearance

Slow

Fast, in an expedited procedure

Payment

Need to covert from Chinese currency

Directly received local currency, such as U.S. dollars. 

 

 

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