Consumers in China’s less-developed interior provinces boast the highest growth rates when it comes to online spending, and shoppers are increasingly turning to their mobile phones to make their purchases, according to an annual analysis of spending patterns by Chinese e-payments giant Alipay.
Findings from the Alipay Annual 2013 China Spending Report highlight that consumption growth is gradually migrating from the wealthy coastal provinces and cities, like Shanghai, Zhejiang and Jiangsu, to the poorer but rapidly growing interior provinces. Seven out of 10 of the areas where online spending is growing fastest are less-developed provinces such as the Guangxi Zhuang Autonomous Region in the south, the central province of Henan and the central province of Hubei. (See table below).
Alipay said the top provinces for online spending were still located along China’s wealthy east coast, with the southern province of Guangdong ranking first, followed by Zhejiang and Jiangsu. The report did not give total spending amounts.
The results offer further evidence of a trend toward rising consumer spending power in the country’s less-developed West. According to a Boston Consulting Group report, over the next six years, three out of four newly affluent consumers are expected to come from China’s lower-tier Chinese cities.
Companies wanting to tap this new source of spending power will need to have a presence in more than 500 cities, says BCG—making online commerce virtually the only practical sales channel given China’s vast size, rising retail rents and fragmented distribution networks.
According to the Alipay report, consumers in smaller, poorer cities are quickly adopting mobile phones as a primary tool for shopping online. In 2013, the highest per-capita concentration of Alipay mobile users was in a rural area of western Qinghai province, where Alipay mobile had a 38.3 percent penetration rate. The Alipay report said that the top 10 highest concentrations of Alipay mobile users were all in rural provinces such as Tibet and Inner Mongolia.
Alipay, an affiliate of Alibaba Group, is China’s leading online payment provider with about 50 percent of the market by transaction volume in the third quarter last year, according to iResearch statistics.
|Top 10 Fastest Growing Regions By Online Spending||Percentage change 2013/2012|
|Guangxi Zhuang Autonomous Region||156%|