eTALK China Insights: Chinese Digital Megatrends Series – Foundations of the Chinese E-Commerce System

Vast Digital Userbase

Vast Digital Userbase

Image Source: iResearch, CNNIC, MOFCOM, eMarketer and sampi.io

China has a scale advantage compared to the rest of the world – approx. one billion internet users across the nation.

This massive userbase acted as the building block for China becoming the largest e-commerce market.

This is all possible thanks to the virtuous cycle propagated by the fast growing mobile payment penetration in conjunction with the large internet userbase.

Pressure to Quickly Scale

Pressure to Quickly Scale

Image Source: Sekkeistuddio.com

China’s population is densely concentrated in just over 100 cities, each with over 1 million residents, all of which have ready-established logistic networks.

These conditions enable new businesses to quickly commercialize, but also set the bar low for competition, forcing new ventures to scale quickly or be left behind to die.

These conditions have resulted in powerful platform apps, that gained and held on to traction during every stage of development, retaining their lead over the competition, that let consumers transact seamlessly during every scenario.

Ecosystem and Innovation

Ecosystem and Innovation

Image Source: Sekkeistuddio.com

The first wave of tech giants to rise from the competition, BAT (Baidu, Tencent, Alibaba), has paved the way.

Now, China’s digital and e-commerce market has advanced to the 2nd and 3rd waves, with the rise of TMD (Toutiao – news feed, Meituan – China’s Groupon, Douyin – on-demand short video giant)

and PKB (Pingduoduo – social e-commerce platform, Kuaishou – livestreaming platform, Bilibili – mobile video-based entertainment).

Governmental Support

eTALK Governmental Intervention

Image Source: china-briefing.com

The State has played a pivotal role in the shaping of China’s e-commerce landscape.

Ample “white space” was given to the tech sector during the early stages:

1. Loose regulations with mobile payments

2. Lots of leeways for tech start-ups to experiment with

Only once the market is established, did the State step in to tighten regulations, break up monopolistic practices and protect consumer welfare – a means of sustainable development.

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