The Chinese market is the world’s second-largest buying power, with an estimated population of 1.3 billion people. The growth of the country’s middle class, coupled with an insatiable appetite for rich and luxury brands, has seen the volume of Chinese consumer goods imports increase at an average annual growth rate of 14.3 per cent between 2010 and 2015.
In the last few years, the volume of Chinese imports has grown at an even faster pace, with annual growth rates of 21 per cent in 2016 and 23 per cent in 2017. It is forecast to grow at a rapid pace of 28 per cent between 2018 and 2029, according to the U.S. Department of Commerce, which recently released its Global Trade Alert on the Chinese Market.
If you have access to the internet and have any interest in the world of business and commerce, you have probably come across the term “chinese market“. For many, this is a mystery. What is the Chinese market? How big is it? And what are its key players?
What is the Chinese market?
The Chinese market is a huge and complex market that is made up of a plethora of domestic and international players. The Chinese market is very competitive with a wide array of brands competing for customers’ attention. It is also made up of a large number of cities and counties with strong local economies.
The market is also segmented along national, regional, and local levels. National level companies account for about 80% of total sales and about 80% of the market. The main players at the regional level are often regional Chinese banks, which together account for about one-fifth of sales.
How big is the Chinese market?
Based on GDP growth, the size of the Chinese market is estimated at about $750 billion. However, this number can be much higher as many Chinese consumers do not use debit and credit cards, and many government contracts are settled in kind.
It is worth noting that the size of the Chinese market is expected to grow at a faster pace than the global market. In fact, it is estimated that the Chinese market will reach maturity by the end of this decade and will account for about one-quarter of global retail sales by 2030.
Key players in the Chinese market
There are many players in the Chinese market with a wide range of expertise and products. Here are some of the key players in the Chinese market:
Alibaba – The world’s largest online shopping mall, Alibaba, was founded in 1999. It owns and operates the largest online marketplace in China, AliExpress, which is one of the largest online retailers in the world.
Beijinger Companies – Beijinger Companies is a major Chinese insurance company.
CISCO – CISCO is a leading provider of networks, computers, technology, and services to government, business, and education organizations.
eBuyer – eBuyer (formerly evonline) is a leading European online retailer specializing in electronic products, founded in 2001.
LVMH – LVMH is a leading luxury goods company with a presence in more than 100 countries.
The Chinese consumer and buying behavior
The Chinese consumer is a buyer first and foremost. And they are not always loyal to the brand that first captured their attention. Research has shown that in order to be successful in the Chinese market, a brand needs to offer something unique and provide value beyond just the price of the product.
For example, a high-end smartphone like the Samsung Galaxy Note 10\+ needs to be priced very high considering the quality of the phone and the brand’s history.
On the other hand, a cheaper phone from a local brand like Xiaomi would do just fine in the Chinese market as long as it has a couple of useful features that the big brands definitely do not have.
Avoiding pitfalls in the Chinese market
A big challenge facing the brands that want to succeed in the Chinese market is the regulatory environment. The regulations cover a wide range of topics, including food, pharmaceuticals, and chemicals.
There are also a number of obstacles for foreign companies to navigate in order to get a grip on the market. Here are a few of them:
More regulation than other countries . The hassle of navigating all the bureaucratic red tape has often kept international companies from entering the Chinese market.
No clear-cut definition of what constitutes a drugs or chemicals breach . While the international community has agreed that certain chemicals are killers, there is still no consensus on what constitutes a drugs or chemicals breach in China.
Blurred lines between business and government . The government has increasingly blurred the lines between business and government, sometimes in a very sweet way. For example, the Alibaba group was granted permission to operate an e-commerce business only after it promised to acquire no more than 51 per cent of the shares of unrelated companies.