Why you should be focussing on China
China is already the key target for many Tamebay readers as demonstrated by the results our Winter Survey. According to a new report by Goldman Sachs, the Chinese ecommerce landscape is still in it’s infancy and growth in the future will be phenomenal compared to the Western world.
The report reveals that nearly half of Chinese consumers’ incomes goes to clothes and food compared to about 10% of US consumer’s income. Spending on “Fun” (9.2% of income in China compared with 17.3% in the US) has the largest potential for growth as incomes increase.
Goldman break down China’s population into 1.4 million earning the equivalent of $500,000+ per year, 146 million middle class earning $11,733, a massive 236 million earning $5,858 and an even larger rural working population earning just $2,000 per year.
As more workers see thir income rise and become middle class (currently just 11% of the population), China will have a massive effect on the global economy. Online retailers need to be aware that their incomes will still be comparitively low and ensure that their pricing and service meet this groups needs.
The smaller but afflulent top earners are targets for top quality branded products and we already see a huge desire for goods shipped from the West, largely driven by the Chinese consumers concern over fake products. They want to be assured that they’re spending their money on genuine goods.
China’s explosive growth in shipping is an indication that e-commerce is already expanding—and has potential to grow even further. In 2006 just 1 billion ecommerce packages were delivered but that grew 10 fold to 10 billion in 2014 and this will accelerate rapidly over the coming years.
If you want to learn more about the Chinese economy and other emerging markets, sign up for the Fashion Without Borders and Retail Without Borders event to be held on the 23rd March in London. You’ll need to book a ticket, but the event is free for retailers to attend.