(This is thelast installmentin a four-part series examining three megatrends that are driving consumer spending in China)
So far this week we’ve covered two of the three main trends that will drive China’s consumer economy through 2020: the ongoing expansion of China’s affluent class and the coming of age of a generation of free-spending youth. Today we take a look at the increasing role that e-commerce is expected to play in the development of China as a consuming nation, a transition that is being accelerated by the growth of shopping via smartphones and other mobile devices.
“One of the most revolutionary changes in the Chinese consumer economy has been the astounding growth of e-commerce,” according to management advisory firm Boston Consulting Group. In 2010, online transactions made up only 3 percent of total private consumption in China; online channels today account for 15 percent of the total, a share that BCG projects will rise to 24 percent in 2020 (in contrast, online shopping currently accounts for about 7.5 percent of private consumption in the U.S.).
Despite China’s recent economic woes, BCG does not foresee a marked slowdown in the growth of e-commerce. Over the next five years, private online consumption is expected to surge at a compound annual growth rate of 20 percent, compared with 6 percent annual growth in offline retail sales. Chinese consumption will grow by more than half to $6.5 trillion over the next five years from $4.2 trillion in 2015. E-commerce on the whole will account for 42 percent of that growth.