Since China joining the World Trade Organization (WTO) a decade ago, it has become one of the biggest competitor on the field of global trade, increasing exports by almost 600% between 2000 and 2008 and growing at annual rates averaging 10%. China has achieved these profits by leveraging its tremendous productive capacity, low labor, capital costs, and strong state support for export-driven growth. but, this recent years, China is also engaged to increase the complex playbook of strategies and trade policies, to advance its economic interests.

China’s Digital Treasure

The quick expansion of e-commerce will, meanwhile, bring a vastly greater variety of products and brands to consumers in small cities across China. The digital economy is a broader concept than e-commerce. It is the economy based on digital computing technologies.  Recently, the digital economy is shifting its role from supporting existing offline industries to moving new industries directly to online services and e-commerce. The digital economy and digital transformation of offline companies is expected to contribute 20% per annum until 2020 and creating an industry worth RMB 14 trillion (USD 2 trillion) a year by 2025. For example, at the beginning of 2015, Alibaba launched a credit scoring system that draws on the e-commerce platform’s data. The scoring system is used for consumers and small businesses, with a particular focus on those with little credit history and which may never even have applied for a bank loan or a credit card.


China consumer will keep growing

One report said that the Chinese consumption will grow 9% annually through 2020.  The rising incomes and optimism that incomes will continue to rise and gave to the consumer the feeling at its highest levels. The average consumers are spending more; the demographic trends and the expansion of e-commerce indicate that they will continue to spend more. The development of the Upper-Middle Class, during the past few decades, China’s consumer economy has been powered by the ascent of millions people from poverty to an emerging-middle class. And there are high concentrations of such households in more than 2,000 Chinese cities. On average, this market will reach 80% in 2020.

New china: impact of the Chinese Consumer

The Chinese people born in the 1980s, 1990s, and the first decade of this century is  known  as the “young generation” in opposition to  the “last generation,” consumers who were born in the 1950s, 1960s, and 1970s, are became the major driver in the consumer market. Consumption by young-generation Chinese consumers is growing at a 14% annual rate, twice the pace of consumers older than 35. The average of total consumption by the young generation is projected to increase from 45% to 53% by 2020. Young-generation Chinese spend more than their elders. They are known to be frugal.

The young generation is more motivated to spend and also tend to become sophisticated consumers than those older than 35. All this emerging consumer class will boost and transform the structure of China’s economy through the demand for different kinds of products purchased through different kinds of retail channels. Consumers will engage more with brands, young Chinese are increasingly open to local brands. And the first-time buyers of certain goods in emerging markets trust well-known international brands more than domestic ones. As consumers gain experience and become more knowledgeable about products.

Development of a New China Playbook

Despite a slowing economy, China is projected to remain one of the world’s fastest-growing consumer markets, reaching $6.5 trillion in annual private consumption by 2020. At the same time, rising affluence, a new generation of consumers, and the increasingly powerful role of e-commerce will transform China’s consumer economy. The China’s largest e-commerce company found that these three forces of change will deeply reshape China’s economy and consumer market over the next five years. Through 2020, 81% of consumption growth will come from households whose annual income is more than $24,000. Furthermore, consumers 35 or younger will account for 65% of growth. The types of products fueling China’s consumer boom will also change. Services will overtake goods as the chief engine, accounting for 51% of incremental growth over the next five years.

The Growing Role of E-Commerce in China

 One of the major changes in the Chinese consumer digital economy has been the explosion of electronic commerce. In 2010, online transactions accounted for only 3% of total private consumption. The number of Chinese online buyers tripled, with nearly 410 million. Online channels now account for 15% of private consumption. Over the next five years, e-commerce could become an even bigger retail chain in China. Private online consumption is expected to increase by 20% per year until 2020, compared with 6% annual growth in offline retail sales. This means that e-commerce would account for 42% of growth in private consumption. By then, China’s online consumer market will reach $ 1.6 trillion a year, accounting for 24% of private consumption.