China’s rapid growth since the 1990s has not only given the country a more powerful negotiating position in international relations but also created a vastly growing and rapidly changing middle class. With this change, consumers have seen an exponential growth of disposable income which has translated into increased consumption.
Brick-and-mortar shops are, however, dwindling in number as a large share of consumption in China is carried out online. Contributing factors to China’s recent e-commerce success include increased cross-border shopping, government support for e-commerce, increased land prices, the social media boom and aggressive discounting.
In 2015, China accounted for more than 40 percent of global e-commerce retail sales and the numbers keep on getting bigger in 2016 with over RMB 120 billion spent on Alibaba alone on ‘Singles Day’, which falls on November 11. With more and more shoppers using mobile phones and tablets, 2015 saw a total number of 468 million digital shoppers in China.
As can be expected, this presents a new opportunity but also a new challenge for foreign e-commerce sites, as being understood and accepted by consumers linguistically and culturally is imperative to gaining customer trust and generating consumer interest.
Many aspects of online shopping differ across the world, including payment methods. In contrast to Western markets dominated by multinational operators such as Amazon and eBay, domestic players such as JD and Taobao are on top in China.
Whereas Westerners typically pay using credit cards, Chinese shoppers opt for online wallets 33% of the time. Such payments are usually made through Alipay, similar to Paypal, or Wechat payment, a function which links your debit card to your phone and asks for authorization through methods such as fingerprint scanning during checkout.
Wechat also allows consumers to contact directly with sellers from online platforms to further optimize communications and clarify purchase and shipping expectations. This is especially helpful as JD and Taobao, two of the largest Chinese e-commerce platforms, have both B2C and C2C sellers.
Logistics can also be unique to each site in China. JD offers same day delivery, while Taobao’s delivery times are longer. Logistics have historically been challenging across such a diverse market, and increased coverage has allowed people in smaller cities to become active digital shoppers.
Chinese consumers are driven to purchase goods via cross-border shopping because of the lack of availability of some products in China, as well as the increased trust which Chinese consumers have towards foreign suppliers for certain types of product, such as luxury goods and baby and pet products. Government support has loaned itself to cross-border e-commerce by setting up administrative and financial advantages to help expedite shipping and decrease duty and taxes on some items.
Increased land prices have also contributed to the rise of e-commerce. As land prices have been driven up, it has become progressively harder for brick-and-mortar stores to offer competitive prices. This factor also provides scope for negotiating prices, which are much more flexible on e-commerce platforms. As online sellers do not need prime locations, they can negotiate lower prices with consumers, as well as providing customizable options in a time-effective manner for their customers.
The Chinese e-commerce market is expected to hit USD 1.1 trillion in 2020, providing plenty of opportunities for non-Chinese operators. Overcoming the cultural challenges not only requires translating websites, product names and descriptions, but also localising the content so it provides the information which Chinese consumers want to see. Chinese versions of information written with English-speaking customers in mind will not be enough to obtain the trust of Chinese consumers. They need to feel that products and websites are made with their requirements in mind.
This has been illustrated by one particularly famous foreign e-commerce platform whose translated Chinese site has been unsuccessful due to a lack of localisation, a misunderstanding of local purchasing habits, chaotic site display and dysfunctional search algorithms.
Chinese operators intending to go global in the future will also have to bear in mind the same considerations and will need to localise their content to ensure suitability for overseas consumers.
Online or offline, one of the most important and influential factors for consumers is trust, and only by understanding and addressing the customer’s decision-making process, aspirations and reservations can a retailer build trust. This is why localisation, and not only translation, is pertinent to taking a piece of the Chinese e-commerce pie.