China’s online retail market is expected to reach RMB 1.3 trillion in 2021

From 2016 to 2021, growth is expected to slow to a still-strong CAGR of 15%

Despite rapid growth in recent years, the Haitao market is expected to peak within China’s overall online retail market. New research from Mintel reveals that in China the total combined online cross-border e-commerce market, including Business-to-Business and Business-to-Consumer e-commerce, grew by a factor of 10, from RMB 53 billion in 2011 to an estimated RMB 626 billion in 2016, representing a CAGR (compound annual growth rate) of 64%. From 2016 to 2021, growth is expected to slow to a still-strong CAGR of 15%, to reach a total value of RMB 1.3 trillion (RMB 1281 billion).

Today, the majority of Chinese consumers shop for foreign imported products from domestic shopping websites (73%), compared with only one quarter (27%) who shop from overseas retail websites. Indeed, more than double the proportion of consumers buy from physical stores within China (56%), rather than from overseas shopping websites.

There is a clear association among Chinese consumers for some products to be more desirable from certain countries. Mintel research reveals that 31% of consumers buy imported food from Taiwan; 36% buy alcoholic drinks from France (principally wine); and 45% buy beauty and personal care products from South Korea.

According to Mintel, the only territory seeing an increase in purchasing among urban Chinese consumers over the past two years was France. Of those who have bought imported products online, 16% bought imported products from France in 2016 up from 15% in 2015. Of those who have bought imported products this year, 20% have bought beauty and personal care products from France, while 36% have bought alcoholic drinks, including wine.

Matthew Crabbe, Director of Research, Asia-Pacific at Mintel, said:

“While the Haitao market has seen rapid growth over recent years, and should maintain strong growth for the foreseeable future, it is likely to peak soon as a proportion of online retail in China. This does not stop the Haitao route to Chinese consumers from offering significant potential market opportunities to foreign brands, but it does mean that Haitao is likely to be more relevant to brands looking at initial market entry. Retailers and brands should therefore play to their different country specialities when attempting to differentiate from their competitors.”

When choosing where to buy imported products online, Chinese consumers who have bought imported products online rank proof of quality of products as important (68%), followed by ability to use third-party payment systems (44%). They also want detailed product information (36%) and Chinese-language customer service (25%).

Additionally, four in 10 (39%) purchasers said they would like to see a better choice of payment options on overseas online shopping websites. Currently, 35% are less confident about the returns policies of overseas websites than they are of domestic online shopping websites.

Crabbe added, “As well as providing a better and more entertaining experience for Chinese online shoppers of imported foreign products, brands and retailers can improve by providing better practical solutions. Offering better delivery, refund and returns options is a key area where overseas online retail websites can improve, as compared to domestic websites. This does create logistical issues, however, but having links through domestic online retail portals can help combat this.”

Mintel research reveals that 62% of surveyed consumers who have purchased overseas products agree that online shopping for imported products lacks the excitement of shopping when travelling overseas, with 20% strongly agreeing with this. Additionally, 34% of consumers agree that they are excited when shopping from websites that run interesting advertising campaigns.

“When selling foreign products online to Chinese consumers, brands and retailers really need to create a sense of excitement and entertainment about the whole process if they are to stand out in an increasingly competitive market. Simply offering a new product is no longer enough.” Crabbe concluded.

For the purpose of this Report, the ‘Haitao’ market includes buying imported products from online shopping websites, including both domestic and overseas shopping websites. It excludes purchasing imported products from domestic or foreign physical stores, or from duty-free channels while travelling.

Press review copies of the report and interviews with Matthew Crabbe, Director of Research, Asia-Pacific, are available on request from the press office.