Special Report

China’s digital natives reshape retail

by Oliver Matthew & Ka Yu Cheung / Sep 7, 2018


The rise of ecommerce in China is well documented as secure trading platforms and the wide availability of ecommerce apps have successfully enticed consumers to shop online.

Internet retailing has grown from 4% in 2012 to 20% of China’s overall retail market in 2017, with mobile alone accounting for 80% of online retail in 2017, up from 5% in 2012. And this is just the start. Euromonitor predicts online retailing will account for 29% of total retail sales in 2022 with 85% of it will be mobile online retailing.

Marketing to mobile millennials
This growth is no surprise: mobile retailing comes naturally to China’s more than 309 million millennials, who are digital natives like their counterparts elsewhere in the world and are helping to transform the rules of engagement for online retail on a global scale.

And companies are realising that convincing Chinese millennials to make a buying decision is a unique challenge very unlike those involved in selling to the previous generation. For instance, Chinese millennials frequently change their preferences, influenced by key opinion leaders (KOLs) and peer recommendations when shopping. That said, millennial trends are a major source of growth for companies in a number of sectors.

Driven by their higher propensity to spend and upgrade, China is leading in consumer expenditure on personal care among the top-five Asian economies, with an expected market share of 56% in 2030, up from 8% share in 2000. While in the fashion segment, internet retailing has emerged as the largest channel, accounting for 28.9% of sales, ahead of retailers and department stores.

Millennials’ use of digital is also driving growth in the services sector. The rise of ridesharing has been particularly significant in China, potentially denting individual car ownership rates. Meanwhile, the ease of sharing experiences on digital media is also leading to rapid growth in expenditure on leisure activities such as travel.

As mobile-savvy and increasingly wealthy Chinese millennials start to reach their peak, they will continue to drive a sizable chunk of total consumption in China.