E-commerce in China

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China is the world's largest market for e-commerce. Domestic e-commerce firms have the greatest share of China's market, with foreign companies having a comparatively small presence. The expansion of e-commerce in China has resulted in particular e-commerce patterns like the development of Taobao villages and livestreaming e-commerce.

Contents

E-commerce in China is regulated through a variety of means, particularly China's 2018 E-Commerce Law.

Expansion of E-commerce

In the early 2000s, China's e-commerce lagged behind that of other major economies. [1] : 2  Since 2013, China is the world's largest e-commerce market. [2] : 99  Its domestic e-commerce market was an estimated US$899 billion in 2016. [3] China accounted for 42.4% of worldwide retail e-commerce in that year, the most of any country. [4] : 110 In 2019, online retail sales were 21% of China's total retail sales. [1] : 4  As of late 2022, approximately 850 million Chinese individuals shop online and sectors related to e-commerce employ 69 million people in the country. [1] : 1  In 2023, nearly 50% of worldwide online sales took place from China. [1] : 2 

The rapid rise of e-commerce in China is facilitated by mobile payment systems such as Alipay and WeChat Pay. [5] These payment platforms help simplify the transaction process and ensure the security of transactions to win the trust of consumers. Therefore, the mobile payment system has completely changed the daily life of the Chinese people and the future business model. [5] The rise of e-commerce has in turn facilitated the rapid adoption of digital payment and mobile wallets. [1] : 2 

The expansion of e-commerce in China is an example of leapfrogging development. [1] : 4  Although China was a latecomer to e-Commerce in comparison to other major economies, it has now grown beyond them in both total market size and on a per capita basis. [1] : 4 

E-commerce patterns

Domestic companies like Alibaba, JD.com, and Pinduoduo have the largest share of China's e-commerce market. [2] : 99  Foreign companies like Amazon and EBay have not gained significant shares in the market. [2] : 99 

In 2015, the State Council promoted the Internet Plus initiative, a five-year plan to integrate traditional manufacturing and service industries with big data, cloud computing, and Internet of things technology. [2] : 44  The State Council provided support for Internet Plus through policy support in area including cross-border e-commerce and rural e-commerce. [2] : 44 

E-commerce in China is primarily platform based. [1] : 6  China's major e-commerce platforms do not sell their own products, but instead host tens of millions of third party sellers which are often small enterprises or microbusinesses. [1] : 4  The expansion of e-commerce in China has resulted in the development of Taobao Villages, clusters of e-commerce businesses operating in rural areas. [4] : 112  Because Taobao villages have increased the incomes or rural people and entrepreneurship in rural China, Taobao villages have become a component of rural revitalization strategies. [6] : 278 

The majority of e-commerce sales in China are non-branded products or lesser known brands. [1] : 4 

Livestreaming e-commerce in China was initiated by fashion e-commerce platform Mogujie in 2016. [7] In the same year, it was picked up and gradually made popular by Alibaba, who turned live commerce into a fixture in its annual Singles' Day shopping festivals. [8] Chinese e-commerce spending peaks every year during Singles' Day, which is the world's largest online shopping event. [1] : 1 

Regulatory framework

According to a 2024 book by Georgetown professor Lizhi Liu, the e-commerce boom in China "occurred because of weak government institutions, not despite them. Gaps in government institutions compelled e-commerce platforms to build powerful private institutions for contract enforcement, fraud detection, and dispute resolution. For a surprisingly long period, the authoritarian government acquiesced, endorsed, and even partnered with this private institutional building despite its disruptive nature." [1] [ page needed ] The lack of formal regulatory institutions led to significant development of private e-commerce institutions dealing with contract enforcement, anti-fraud, dispute resolution, and inexpensive loans. [1] : 6–7  Significant development to China's regulatory framework governing online transactions occurred after e-commerce had boomed. [1] : 3 

In 2004, China passed an Electronic Signature law which was based largely on the United Nations model. [2] : 99  The law encouraged the use of electronic signatures in e-commerce. [2] : 99 

China passed its E-Commerce Law in 2018 following five years of significant debate among numerous stakeholders. [2] : 99  Chinese policymakers encouraged wide participation in the legislative process, including seeking input from a wide variety of non-state actors including private tech businesses. [2] : 99  The E-Commerce Law, along with other regulatory provisions relevant to e-commerce, is part of the broader mandate of the State Administration for Market Regulation. [2] : 114 

The E-Commerce Law, along with the Consumer Protection Law, require e-commerce platforms to take proper action if they are aware or should be aware of fraudulent online behavior by merchants, including the sales of fraudulent goods. [2] : 207  If merchants are found to have sold counterfeit goods, the Consumer Protection Law imposes a penalty of three times their value to compensate consumers. [2] : 207  If platforms have prior knowledge of counterfeit goods being sold, then the E-Commerce Law makes them jointly liable with merchants engaged in sale of such goods. [2] : 231  These risks also prompted platforms to take a stricter view towards shanzhai products. [2] : 231 

In 2019, the city of Hangzhou established a pilot program artificial intelligence-based Internet Court to adjudicate disputes related to e-commerce and internet-related intellectual property claims. [9] : 124 

China prohibits the practice of review brushing, which is regarded under e-commerce laws and regulations as a form of false advertising. [2] : 197 

See also

Related Research Articles

E-commerce is the activity of electronically buying or selling products and services on online platforms or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.

<span class="mw-page-title-main">Internet in China</span>

China has been on the Internet intermittently since May 1989 and on a permanent basis since 20 April 1994, although with heavily censored access. In 2008, China became the country with the largest population on the Internet and, as of 2024, has remained so. As of December 2024, 1.09 billion use internet in China.

<span class="mw-page-title-main">Online shopping</span> Form of electronic commerce

Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.

<span class="mw-page-title-main">Amazon China</span> Chinese shopping website

Amazon China, formerly known as Joyo.com, is an online shopping website. Joyo.com was founded in early 2000 by the Chinese entrepreneur Lei Jun in Beijing, China. The company primarily sold books and other media goods, shipping to customers nationwide. Joyo.com was renamed to “Amazon China” when sold to Amazon Inc in 2004 for US$75 Million. Amazon China closed its domestic business in China in June 2019, offering only products from sellers located overseas.

<span class="mw-page-title-main">Alibaba Group</span> Chinese multinational technology company

Alibaba Group Holding Limited, branded as Alibaba, is a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology. Founded on 28 June 1999 in Hangzhou, Zhejiang, the company provides consumer-to-consumer (C2C), business-to-consumer (B2C), and business-to-business (B2B) sales services via Chinese and global marketplaces, as well as local consumer, digital media and entertainment, logistics, and cloud computing services. It owns and operates a diverse portfolio of companies around the world in numerous business sectors.

An online marketplace is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.

<span class="mw-page-title-main">Taobao</span> Chinese website for online shopping

Taobao is a Chinese online shopping platform. It is headquartered in Hangzhou and is owned by Alibaba. According to Alexa rank, it was the eighth most-visited website globally in 2021. Taobao.com was registered on April 21, 2003 by Alibaba Cloud Computing (Beijing) Co., Ltd.

<span class="mw-page-title-main">Alipay</span> Third-party mobile and online payment platform

Alipay is a third-party mobile and online payment platform, established in Hangzhou, China in February 2004 by Alibaba Group and its founder Jack Ma. In 2015, Alipay moved its headquarters to Pudong, Shanghai, although its parent company Ant Financial remains Hangzhou-based.

<span class="mw-page-title-main">Singles' Day</span> Unofficial Chinese holiday

Singles' Day or Double 11 is an unofficial Chinese holiday for people who are not in a relationship. The date, 11 November (11/11), was chosen because the numeral 1 resembles a bare stick, Chinese Internet slang for an unmarried man. The four '1's also refer to the demographic group of single people. Ironically, the holiday has become a popular date on which to celebrate relationships: more than 4,000 couples got married in Beijing on this date in 2011, far greater than the daily average of 700 marriages.

Tmall, formerly Taobao Mall, is a Chinese-language website for business-to-consumer (B2C) online retail, spun off from Taobao, operated in China by Alibaba Group. It is a platform for local Chinese and international businesses to sell brand-name goods to consumers in Greater China. It has over 500 million monthly active users, as of February 2018. In the last few years, it has opened its features to brands, not only for online sales but also for developing brand awareness. According to Alexa Rank, it is the third most visited website globally in 2021.

E-commerce or electric commerce in Southeast Asia is the buying and selling of products and services over the internet in the countries of Southeast Asia. These practices reached Southeast Asia during the dot-com mania in the 1990s. After the dot-com bust, local e-companies have seen promising growth in this sector.

Yihaodian is a Chinese online grocery business founded by Gang Yu and Junling Liu in July 2008. Yihaodian is a business-to-consumer (B2C) e-commerce website that provides people with a platform to shop groceries online. Yihaodian has “virtual stores” that exhibit images of stocked grocery shelves on walls and other surfaces in urban public areas in China, which passersby can scan codes under the images with a mobile device to purchase corresponding groceries online. The retail giant Walmart first invested in Yihaodian in 2011; in 2012, it announced additional investment so that Walmart controlled 51% of Yihaodian’s ownership. In July 2015, Walmart acquired 100% ownership of Yihaodian.

Online supermarkets in China are shopping websites that offer grocery buyers a complete shopping solution from a single online platform. The emphasis on these sites is to provide consumers all the products they would normally find on a supermarket shop floor, but delivered direct to the house or office door. Customers pay for goods with popular online payment systems such as Alipay, or by bank transfer, or cash on delivery.

<span class="mw-page-title-main">AliExpress</span> Online retail service based in China

AliExpress is an online retail service based in China and owned by the Alibaba Group. Launched in 2010, it is made up of small businesses in China and other locations, such as Singapore, that offer products to international online buyers. It is the most visited e-commerce website in Russia and was the 10th most popular website in Brazil. It facilitates small businesses to sell to customers all over the world. AliExpress has drawn comparison to eBay, as sellers are independent and use the platform to offer products to buyers. As of March 2024, the number of global users of the AliExpress mobile app reached 8.18 million, a 130% year-on-year increase, setting the highest record since statistics began in 2016.

<span class="mw-page-title-main">Lazada</span> Singaporean-Chinese multinational technology

Lazada Group is an international e-commerce company and one of the largest e-commerce operators in Southeast Asia, with over 10,000 third-party sellers as of November 2014, and 50 million annual active buyers as of September 2019.

The wanghong economy [internet celebrity economy] refers to the Chinese digital economy based on influencer marketing through social media platforms. Wanghong is the Chinese term for internet celebrity. Chinese wanghong celebrities attract the attention of internet users, which can translate into profit through e-commerce and online advertising.

BATX is an acronym standing for Baidu, Alibaba, Tencent, and Xiaomi, the four biggest tech firms in China, often compared to GAMMA in the United States. BATX were some of the first tech companies started in the 2000s during the rise of the Chinese technology revolution and quickly became widely used among Chinese netizens. Notably after 2015, some other tech companies like Huawei, DiDi, JD, DJI and ByteDance have also become some of the up-and-coming biggest tech giants in the industry.

<span class="mw-page-title-main">China Consumers Association</span>

China Consumers Association is a Chinese consumer association, founded in December 1984. The association consists of 3,279 of the local and grassroots level consumer organizations in China. It promotes a healthy environment for a communist market economy by safeguarding consumer rights and interests, monitoring the goods and services, and providing counselling on the consumer activities. CCA maintains cooperation with consumer organizations from its member countries across the world. The association has participated in over 60 international and regional seminars and has hosted the large-scale international conferences on themes such as Sustainable consumption and Global Food Safety. 

Livestreaming e-commerce in China was initiated by fashion e-commerce platform Mogujie in 2016. In the same year, it was picked up and gradually made popular by Alibaba, who turned live commerce into a fixture in its annual Singles' Day shopping festivals.

Taobao villages are rural Chinese villages where the local economy has developed to focus extensively on e-commerce via the Taobao online retail platform. Taobao villages have contributed to economic development and rural revitalization in China.

References

  1. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Liu, Lizhi (2024). From Click to Boom: The Political Economy of E-Commerce in China. Princeton University Press. ISBN   9780691254104.
  2. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Zhang, Angela Huyue (2024). High Wire: How China Regulates Big Tech and Governs Its Economy. Oxford University Press. ISBN   9780197682258.
  3. ↑ Millward, Steven (18 August 2016). "Asia's ecommerce spending to hit record $1 trillion this year – but most of that is China" . Tech in Asia . Archived from the original on 19 August 2016. Retrieved 4 May 2021.
  4. 1 2 Hu, Richard (2023). Reinventing the Chinese City. New York: Columbia University Press. ISBN   978-0-231-21101-7.
  5. 1 2 Liu, Rong; Wu, Jifei; Yu-Buck, Grace Fang (2021-01-01). "The influence of mobile QR code payment on payment pleasure: evidence from China". International Journal of Bank Marketing. 39 (2): 337–356. doi:10.1108/IJBM-11-2020-0574. ISSN   0265-2323.
  6. ↑ Yang, Saidi; Wang, Puqing; Zhou, Deyi (2021). "Transformation and Development of Taobao Village in China Based on "Zhijiang Mode"". Proceedings of the 2020 3rd International Seminar on Education Research and Social Science (ISERSS 2020). Paris, France: Atlantis Press. doi: 10.2991/assehr.k.210120.053 . ISBN   978-94-6239-316-5.
  7. ↑ Sun, Henan. "Chinese fashion e-retailer Mogu banks on live streaming to revive fortunes". KrASIA. 31 August 2019. Retrieved on 14 December 2021.
  8. ↑ Arora Arun, Glaser Daniel, Kim Aimee, Kluge Philipp, Kohli Sajal, and Sak Natalya. "It’s showtime! How live commerce is transforming the shopping experience". McKinsey & Company . 21 July 2021. Retrieved on 14 December 2021.
  9. ↑ Šimalčík, Matej (2023). "Rule by Law". In Kironska, Kristina; Turscanyi, Richard Q. (eds.). Contemporary China: a New Superpower?. Routledge. ISBN   978-1-03-239508-1.
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