Retail & Distribution

Retail Industry in China: The main challenges you need to know

30 March 2023

3 min
In 2021, China remained one of the leading retail markets in the world. That year, the country generated a retail sales revenue of over 44 trillion yuan, which translated to approximately 6.5 trillion U.S. dollars. The rampant COVID-19 pandemic brought profound changes to China's retail landscapes. Let’s explore all the opportunities offered by the Chinese market for luxury brands, both online and in-store.

Recent research carried out by GFK on behalf of Visa demonstrates that, since 2020, ecommerce has been on the rise at double-digit rates in Spain, Italy, Portugal, and France. Specifically, in Spain and Italy more than 50% of users have started buying or increased the frequency of their online shopping, followed by 44% in Portugal, and 37% in France.

Even the retailers most reluctant to this type of innovation eventually realized that opening up to online channels could enable them to expand their business by reaching out to new customers. The most proactive also turned to other countries, mainly located in the EU area, thanks to the favorable EU rules.

There is still plenty of room to expand in Europe, but the biggest opportunities come from one of the fastest-growing markets worldwide, the Chinese one.


Retail Industry in China: the New Frontier for Ecommerce and Retail

China’s population is just under 1.5 billion people, more than a billion of whom are Internet users. 983 million use social networks, particularly TikTok and WeChat, which are platforms used for shopping as well as communicating.

The ecommerce sector has been on the rise since 2018, with a yearly average growth rate of 11.68%. Indeed, a 2022 research conducted by Global Data estimated its value at about $2.3 billion. Therefore, today’s China’s ecommerce market is the most profitable worldwide, and it is forecasted that it will register further double-digit growth in the coming years. This was also confirmed by Statista, according to which almost the entire Chinese population (90.8%) will shop online by 2027.

Numbers suggest that those running an ecommerce business should also, if not mainly, turn to the East when defining their internationalization strategies. This has already been done by leading companies, such as Apple, that after having saturated the Western markets, could only look to China to further increase its turnovers. Additionally, it is now high time for less structured realities, such as SMEs, to join in, since opportunities have been increasing due to the indisputable interest of the Chinese population in Western and European luxury brands.

According to McKinseythe middle class in China consists of 700 million individuals, while World Data Lab estimates that this class will thrive annually by 6%, reaching 1.2 billion people by 2030. Not only will these people be buying online, but also in stores: it is not surprising that more and more companies, especially in the fashion and food sectors, are investing in opening chain stores in the East that can sustain their online presence, so as to offer multichannel experiences to local users.

Infographic : Luxury Retailing in China

Discover, in this infographic, the key figures of the luxury market in China

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Retail Industry in China: Cybersecurity, taxes, and laws

There are a variety of opportunities arising from the flourishing Chinese market, particularly in the luxury field. However, it may seem complex to get a foothold in this sector, which has its own specific rules and habits. For instance, in China, the most used payment platforms change (the most popular ones are WeChat Pay and Alipay), and billing rules are different, as well as privacy and cybersecurity laws. And, of course, the culture differs too.

Precisely to address these dissimilarities, the e-book A digital blueprint for retail businesses in mainland China, produced by Viseo and Cegid, provides market data, insights, and suggestions on how to approach the Chinese ecommerce and retail markets, delving into various aspects related to the specificities of this country’s boosting economy. The ebook download is available here.

A Digital Blueprint for Retail Businesses in Mainland China

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