China is the largest e-commerce market globally, generating almost 50 percent of the world’s transactions. According to eMarketer, China’s online retail transactions reached more than 710 million digital buyers, and transactions reached $2.29 trillion in 2020, with forecasts to reach $3.56 trillion by 2024.  In 2021, China’s e-commerce market is predicted to be larger than the United States, the United Kingdom, Japan, Germany, and France combined. In addition, China’s e-commerce sales in 2021 is expected to be 52% of total retail sales, making it the first country in the world ever to have more online sales than traditional retail sales.

 Source: eMarketer

Domestic E-Commerce (His is a best prospect industry sector for this country.  Includes a market overview and trade data2C) and Cross-Border E-Commerce

Alibaba’s Taobao and Tmall, (50.8 percent of market share) and JD.com (15.9 percent) are the domestic platforms that dominate China’s e-commerce market. Pinduoduo (13.2 percent) has recently overtaken dozens of competitors to become the third-largest platform, using a new group purchasing model. Other platforms, including Suning, Gome, Vipshop, Yihaodian, Dangdang, Mogujie, and JuMei, comprise the remaining market share according to The eCommerce Guide.

Instead of establishing a presence in China to sell online, U.S. firms can choose to use cross-border e-commerce to sell products from abroad. Cross-border e-commerce transactions in China reached $261billion in 2020, according to the Global Times. U.S. firms can benefit from streamlined Chinese customs procedures through China’s over 100 cross-border e-commerce-integrated pilot zones. Those zones limit Chinese consumers to purchasing up to 5,000 RMB ($727)  per transaction and no more than 26,000 RMB ($3,782) per year.  U.S. firms must work with authorized partners to record Chinese customs transactions.

New Antitrust Regulations

In February 2021, China’s State Council introduced the “Antitrust Guidelines for the Platform Economy”. According to the Chinese Government, this action was taken in response to the rise of the digital economy and intended to stop monopolistic behaviors and promote the sustainable and healthy development of online commerce. In April 2021, Alibaba was fined $2.8 billion in fines due to the State Administration of Market Regulation (SAMR) finding the company to have abused its dominant market position.

Significant Shopping Holidays

“Singles Day” in China, November 11th, or 11/11, is the busiest online shopping day of the year. Brands offer discounts and can generate up to 80% of their annual revenue. In 2020, Singles Day spanned over 11 days in response to the pandemic and generated a record-breaking $130 billion according to the Chinese Ministry of Commerce.  

While Singles Day is the largest of the major shopping holidays in China, it is not the only one. Other major days that spur online shopping sprees and significant sales include Valentine’s Day, 6.18 Mid-Year Shopping Festival, and Chinese New Year.

Livestreaming E-commerce

Livestreaming is a very popular form of e-commerce in China where Key Opinion Leaders (KOLs) conduct live video broadcasts of themselves while they market different goods to their audiences. The pandemic has led to the rapid advancement and adoption of livestreaming.

According to China’s Ministry of Commerce, the total number of livestream broadcasts on key e-commerce platforms exceeded 24 million in 2020. According to an Ali Research Institute report, the overall scale of livestreaming e-commerce in 2020 reached $166.6 billion, and the growth rate is expected to be 90% in 2021. Livestream events attracted 617 million viewers in 2020, and 66.2% of them or 388 million viewers made purchases via livestream. The top five ivestreaming platforms for live shopping are Taobao (51% market share), JD.com, Douyin, Xiaohongshu (the Little Red Book or RED in English), and Kuaishou, with products ranging from jewelry and cosmetics to cars and real estate.

Individual KOL can be very effective in generating sales for a product. For example, TaoBao’s top livestreamer, Wei Ya sold $31 billion worth of goods on her livestream show in 2020, and her Singles Day 2020 Livestream attracted over 43 million viewers, according to SEO Agency China.

The greatest advantage of livestreaming e-commerce is its ability to reach a great number of people spread throughout China, especially those outside of major cities. By targeting livestreams to more rural and lower-tier cities, companies can increase brand awareness and expand their audience to all parts of China. U.S. companies interested in exploring social media avenues and working with digital marketing players should work with a local marketing partner to develop a marketing strategy and support its implementation.

Social Media Marketing

Social media is a crucial component of a good marketing strategy in China, particularly important for maximizing brand awareness and attracting consumers. In 2020, China’s more than 1 billion social media users made up one-third of total social media users worldwide.  WeChat is China’s most popular mobile social network app, followed by the Twitter-like Weibo, the messaging app QQ, and the short video app Douyin. Other platforms, like Xiaohongshu (the Little Red Book or RED in English), is specially designed to optimize the cross-section of e-commerce and social medial.

Social media platforms often use creative ways to facilitate e-commerce. For example, WeChat allows brands to access its 1.2 billion users through creative marketing or “’Mini Programs” that allow retailers to feature online stores with third-party payment functions and push messages to introduce new product lines or deliver promotions. In 2020, WeChat reportedly doubled its revenue to $250 billion from transactions through its “Mini Programs”. KOLs are also key in successful social media e-commerce campaigns as their endorsement via posts on these platforms can generate major sales traffic.

Intellectual Property Rights (eCommerce)

Protecting intellectual property rights on e-commerce platforms is a challenge for U.S. businesses. In 2018, China issued the E-Commerce Law, which, according to the Chinese government, is designed to address rampant online infringement of intellectual property (IP) rights. The law included requirements related to “notice-and-takedown” mechanisms for China’s e-commerce platforms. Notice-and-takedown mechanisms allow individuals to request that platforms delist or “takedown” links offering products that infringe on established IP rights. Similar to enforcement offline, companies must register their patent and trademark rights in China to be accepted by e-commerce platforms.

As different platforms have varying procedures for accepting takedown notices, companies must familiarize themselves with takedown procedures for various e-commerce platforms in China. Monitoring e-commerce platforms for infringing goods can be time-consuming, so firms often rely on local agents to monitor China’s large platforms. Nevertheless, because robust business-to-business and business-to-consumer sales occur on China’s e-commerce platforms, an effective IP enforcement strategy should have an online component.