Technology

China Is About to Take America's Online-Shopping Crown


Sometime in early 2014, China will lay claim to leadership in yet another key global market: e-commerce.

Last year saw Chinese shoppers spend 1.3 trillion yuan ($213 billion) online, just slightly less than the $225 billion tally in the U.S. The Chinese online retailing market has grown at a scorching 71 percent compound annual growth rate since 2009, about five times as fast as its American counterpart, according to a forecast by Bain & Co.

If that trend holds, China will officially become the world’s No. 1 e-commerce market when 2013 industry statistics become available early next year. By 2015, Bain sees the Chinese market reaching $541 billion.

Bain pegs the digital penetration of China’s economy—or the value of online retail as a percentage of total retail—at 6 percent, higher than in the U.S., Japan, or Germany. Chinese shoppers love making online purchases on their phones and tablets, and smartphone use is also higher in China than the U.S. on a relative basis.

Some 8.6 percent of e-commerce transactions in China were done via mobile phones as of the end of this year’s second quarter. On Singles Day, a Chinese holiday in mid-November that’s a local twist on Valentine’s Day and the biggest online shopping day of the year, 15.3 percent of all transactions were conducted on mobile devices.

Singles Day has become an epic e-commerce event in China and is a far bigger revenue haul for Internet players than Cyber Monday in the U.S. Alibaba Group Holding, China’s largest e-commerce company, broke its one-day sales record by more than 80 percent on this year’s Singles Day, a milestone that comes ahead of an initial public offering expected sometime in 2014 that could be valued higher than Facebook (FB). Alibaba hasn’t yet announced a timetable for the offering.

Taobao and Tmall, Alibaba’s two main e-tailing platforms, topped 35 billion yuan ($5.75 billion) in the 24-hour period, surpassing last year’s sales of 19.1 billion yuan.

Bremner_190
Bremner is an assistant managing editor for Bloomberg Businessweek. Follow him at @bxbremner.

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