China’s “Sinking Markets”
Image Source: cscecos.com
Consumer behavior in China is different in the various regions.
With increasing Internet penetration, the markets in the tier 3 cities are gaining in importance.
While in China’s metropolises it is hard to imagine life without a smartphone, a new market is only just emerging in the more rural areas – the “sinking markets”.
New Internet User Segments
Image Source: cgtn.com
By the end of 2020, over 70% of the Chinese population was already connected to the Internet. In comparison, the global penetration rate is 59%. In the “sinking markets”, the share of mobile internet users rose to nearly 60% in 2020.
The number of potential online customers is therefore also increasing rapidly. Companies are taking advantage of this.
Sectors at Various Growth Stages
Image Source: cgtn.com
Within this new market, certain trends can be observed among different sectors.
With a penetration rate of more than 95% each, social media and mobile videos are close to full saturation.
The sectors e-commerce, ride-hailing or financial services show an enormous user growth besides a relatively low penetration rate.
New Strategies in E-Commerce
Image Source: bloomberg.com
New strategies such as special or heavily subsidized discounts are intended to reach these new user segments.
To attract more customers in China`s tier 2 and 3 cities, community group buying has been the focus of the Big Techs. It describes a group purchase and delivery of groceries in bulk to the community, e.g a neighborhood.
Livestreaming on Farms
Image Source: chinadaily.com
Many rural entrepreneurs also start making use of technological progress by themselves.
Through live streaming, for example, farmers can present their regional products to customers all over China or even become internet celebrities.
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