China’s steady growth during the recession provided opportunity
The Chinese economy did not stop its bold step of growth during the global recession. During 2008 and 2009, the first two years of the global financial downturn, China saw GDP growth of 9.6% and 9.2% respectively, as is shown by a related market report in China. China did not slow down in 2010 and 2011 and GDP continued to rise. As a result, the disposable income levels of the Chinese consumers skyrocketed. An increase in consumer expenditure on clothing and footwear accompanied this vigorous economic growth, with 71% growth in Chinese consumers’ annual per capita spending on apparel since 2006, reaching 1,154 CNY in 2011.
Internet retailing and its boom in China
Internet users in China have been growing steadily in number, reaching 526 million in 2011, which is a 15% growth with respect to 2010. This can probably be attributed to the proactive approach taken by the government to develop the country’s internet capabilities, which plans to invest heavily in information and communications technology. At the same time, China ranks number one globally in total internet users, surpassing the U.S. in 2008 with twice as many users.
In 2010, internet retailing in China achieved current value growth of 296%. In 2011, the growth number is 100%, with sales reaching 159.7 billion CNY.
Young adults – market segment with the greatest potential
In 2011, apparel internet retailing industry registered the strongest current value growth of all categories – 168%, accounting for 2% of the total apparel retail value sales – a figure that was just 0.1% back in 2007, according to a recent market research study in China.
Chinese consumers born in the 1980s and 1990s are the most frequent online shoppers and online shopping has increasingly become a part of their lives and habit. Moreover, this trend is expected to continue. What attracts the younger consumers are the diverse choices, lower prices and convenient payment. Due to these factors, internet retailing is expected to account for a growing share of the apparel market every year.
Local providers – main force online in china
Currently, Chinese retailers dominate online apparel retailing in China, largely due to a first-mover advantage and better insight on the preferences of the local consumers.
Moonbasa, another B2C apparel site in China that started its online business at the end of 2008, achieved daily sales of 500,000 CNY within 3 months of its establishment and gained near 1 billion CNY in revenue in 2011, with a dynamic increase from sales of 100 CNY million to 300 million CNY from 2009 to 2010.
More companies going online in China
After seeing great potential and result from other internet retailers, traditional stores also wanted a share. A typical example is Belle International Holdings, a leading local brand in China that entered internet retailing in 2010 and showed great ambition to increase its share online.