China - Case Study II

China's E-Commerce Market

Following on from the Chinese Case Study I post, these notes explain how China is moving in a positive direction to achieve three of its future growth targets (increase innovation, increase the global presence of Chinese companies and increase growth coming from domestic consumption).

By 2020 China’s e-commerce market is forecast to be bigger than the existing markets in America, Britain, Japan, Germany and France combined (from The Economist)

Alibaba

Innovation:

• Alibaba is a business to business e-commerce company that sells Chinese goods to overseas suppliers.
• The company understands the spending habits of Chinese consumers
• Alifinance is microlender to small firms (planning on expanding to normal customers too)
• Insurance

Increase the global presence of Chinese companies: Alibaba is looking to become public (i.e. be listed on a stock exchange), and looking to expand to other emerging economies.

Domestic consumption: ‘Bamboo Capitalism’ is the term used to describe the efficiency of private firms opposed to Chinese state-owned enterprises. Growth in private sector firms drives domestic consumption.

Bottom line: E-commerce is driving future growth in China.

Challenges

• China’s companies are viewed with suspicion abroad
• Chinese firms are accused of supporting human rights abuses for access to resources (read this Economist article about China in Africa)