Digital Transformation and the consumer market in China

Starting as early as 2000, China has been building a very strong ecosystem of an e-commerce industry, which is driven now by the so-called BAT Stocks, Chinese tech giant Baidu Inc., Alibaba Group Holding Ltd, and Tencent Holdings Ltd. These BAT companies are already on the list of top Internet companies in the world by its market value, following right after Amazon, Google, and Facebook.

In China, there are more than 800 million Internet users, representing a huge advantage of a large home market for online business, a market bigger that is bigger than the EU and USA altogether. In addition to the natural growth of online trade, digital payments are equally becoming dominant in China.

Mobile payments are usually made through Alibaba’s “Alipay” or Tencent’s “Wechat Pay” payment systems. In China one does not need cash as your bank card is linked to Alipay and WeChat Pay, which makes it possible to do all payments within one App: top up your mobile phone, book hotels, tickets such as movies, shop online, transfer money within your messaging App, etc. A

Anything you wish to pay for, you only have to use your phone and a QR code.

Increasing digitalization forces companies to adopt their daily operations to the specifics of the Chinese market and requires companies to be agile, flexible, and quick enough to meet the needs of the market. A bright example of O2O's successful business model, which drives online sales through offline experience is Alibaba’s Hema Fresh, grocery stores with fresh premium products. The concept of the Hema chain is to drive consumers in proceeding payments through the Hema App and pay for the products with a QR code supported by Alibaba’s Alipay payment system.  

If you have been considering accelerating your sales in China, or you are already in the process of doing so, the first thing your organization will need to do is to transform all your operations and business model,  adapt to meet the demands of the Chinese consumer sector today. Without digital enablers and capacities, you would start your market competitiveness from an unfavorable angle.

To look at China’s supply chain innovation and e-commerce trends, please follow our next articles published on business cases on our site.