What Is The Future Development Of Online Shopping In China?

The Boston Consulting Group recently released a report to discuss the impact of digital technology in China. (Consulting)

The report examines the rapid growth of China's Internet and the difference between its usage and other major markets.

The findings of the report include: Chinese netizens are more online than American Internet users. They are more interested in entertainment and communication than users in other countries.

We have talked with David Michael, the senior partner of Boston consulting company Beijing representative office and the first author of the report, and asked him to give more insights on the trend of China's digital consumption.

As you mentioned in your report, many consumer multinationals have been operating on their "outdated imagination of Chinese consumer media and shopping behavior".

In this regard, have you seen any key misconceptions about people? Can you give an example?

There are many misconceptions, and it is a very serious problem considering the rapid change of Chinese consumer media and shopping behavior because of the Internet.

The first mistake is about where consumers spend their time, and where they should use marketing capital in order to reach them.

Chinese netizens spend nearly three hours a day surpassing the United States, almost the same as Japan.

If multinationals think that Chinese people are sitting at home watching TV, and then allocate marketing costs according to this idea, it is totally wrong.

A misunderstanding about this is how Chinese consumers are affected and how to get shopping advice.

For many products, Chinese consumers now do a lot of research on the Internet before buying them.

This means that other media forms are relatively unimportant, and the role of retail stores is relatively unimportant.

First class companies are now focusing on what the most important bloggers are and what impact the social network has on consumer behavior in China.

The third misunderstanding is the importance of Internet channels.

The eyeglasses store is a good example.

There are about 30000 entity optical shops in China, and on the Internet there are only about 11000 optical shops in Taobao.

The glasses on the Internet are usually much cheaper, the service level is higher, and they can also be delivered to the door free of charge.

In addition, there are more than 1 million mobile phones sold on Taobao every month.

Specific consumption behavior is also very important.

When a Beijing user buys a camera on Taobao, she has to choose Beijing merchants to prevent any after-sale problems. This is very important to her.

This has a very important meaning for any company wishing to participate in online marketing.

They need to consider which form of Internet channel should be developed.

Perhaps they hope to develop micro sites for specific cities and regions.

Another problem is that multinational companies are likely to lose control of their distribution channels in China.

While doing their wholesalers or distributors, Taobao merchants are also likely to operate sideline on Taobao, thus disrupting the pricing model established by a company in the real world.

How far will the government's intervention in the digital world limit the development of the industry?

Here, it is very important to broaden our horizons.

We are about to issue a report on the digital consumption of all major emerging market countries (Brazil, Russia, India, China and Indonesia, that is, "BRICI").

When you take a step back and compare China with the other markets, you will be surprised to find that China's Internet availability and Internet service pricing are much more advanced than any other BRICI market.

Compared with any other major emerging economies, the availability of broadband Internet and 3G is much higher in China, and the proportion of the contact population in the total population is much higher, and the price is also cheaper.

China's broadband or 3G or both have a population coverage ratio of over 90%, and its pricing is also far lower than that of Brazil, India or Indonesia.

In the real world, the most notable policy of the government is to vigorously promote Internet access, which is very cheap and basically touches all the population.

This policy also spawned a huge ecosystem of Internet participants.

Of the top 10 Internet Co listed in the world, three belong to Chinese companies.

No other emerging market has a comparable Internet ecosystem.

Therefore, despite the fact that what content can be released and how much foreign companies can participate in China's Internet, the government has set many restrictions on these issues. However, the status of the Internet in China's mainstream society far exceeds that of any other major emerging markets, which is largely a direct result of the government's push.

When we talked with Chinese netizens, they felt that the Internet was an environment conducive to diversity and self expression.

This is partly due to the fact that traditional media basically speak in one voice.

China's e-commerce is still largely based on cash pactions rather than online payments. What does this mean for its development?

This situation is an obstacle in the past, but Alipay and Alipay have been developed to provide an Internet bridge between bank accounts and online payments. This is a great change in the past two years. Tenpay

These payment systems can function as a debit card in the network environment. If you have a bank account, it is relatively easy to establish an account in it.

Therefore, credit cards have not been used in large quantities, and it is no longer a very important obstacle.

However, a considerable proportion of the population does not have these types of accounts, so we see that merchants have developed mixed models, such as cash on delivery or offline trading systems.

Because people do not have credit cards, online shopping platforms with online payment systems have gained a great competitive advantage.

For example, Alipay is the only truly useful payment system on Taobao. If you build Alipay account, then the barriers to Taobao shopping will be greatly reduced.

The price offered on the Internet is very meaningful.

Compared with offline world, online price is very competitive, and the choice of products is very broad.

This is a major change that many consumer companies fail to recognize.

Internet users in China are dominated by young people (under 35 years old). What's the potential impact on the future development of China's Internet?

There are several circumstances worth mentioning.

First, Internet users will continue to focus on entertainment and communication, because this is something that young users are interested in, especially as broadband prices are becoming cheaper and cheaper, and with the popularity of broadband becoming a trend, we will see more of this phenomenon focusing on entertainment.

Second, we expect that the biggest growth area of China's Internet will be young people in rural areas, because Internet penetration is very low in these areas, disposable income is rising, and the government is constantly taking actions to promote the development of the Internet.

Rural consumers will also become more and more important.

E-commerce and Internet banking are relatively limited in rural users, so one of the challenges is how to gradually increase their participation.

The last case is that as the young Internet users grow older, the influence of traditional media on older and middle-aged users will be smaller and smaller.

Foreign social networking sites are facing difficulties in China, while domestic social networking sites thrive.

What do you think is the reason?

This is because (domestic websites) have a much deeper understanding of social networks and segmentation consumer markets.

For example, when Renren has just been launched, it focuses very much on college students and takes measures against them.

The characteristics and functions of the website are very much in line with the expectations of college students, so a large number of students have gathered on this platform.

Kaixin is specifically targeted at young professionals in China.

So a large number of users have been locked on these platforms, so it is very difficult for competitors to come in.

Chinese function is also very important.

For most Chinese netizens, Chinese is very important, so it is very important for the website to have a very mature Chinese function and a series of very targeted functions.

Another difference is that the social network in the United States is often a place to contact old friends, while China's social network is used more for finding new friends, expanding communication circles and building connections.

I would also like to emphasize that China's social network is closely related to the desire of users to play online games and social games.

Kaixin has launched or promoted the "stealing vegetables" game.

It is not common for everyone to go online to steal food and contact with others in other countries' social networks.

In mobile phones for many kinds of activities, Chinese users are in the forefront of Japanese and American users.

What do you think is the reason?

This needs to be specific, because Chinese people are more active in texting, QQ chat, listening to music and playing games than in the US and Japan, but they lag behind the US and Japan in mobile Internet and mobile phone business.

China is still in the early stage of 3G, so the use of text messaging and other non voice communication methods is much used.

These things are highly permeable and cheaper than voice calls, so this is a gradual habit of saving money.

Using mobile phones as music storage devices and game platforms, China also uses more, because people do not necessarily own another game player or MP3 player.

As mobile phones become more and more powerful, we will see that China's mobile Internet will blowout in the future and become a huge growth area.

The penetration of mobile phones in China will continue to be higher than that of personal computers, and in the rural market, the role of computing devices will become more and more important in the future.

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