With a population of about 1.3 billion and an emerging middle class, China is the largest market in the world.
In the past few decades, it has emerged as a global economic powerhouse. In fact, its population may be the very reason why China alone will exceed $1 trillion in retail e-commerce sales in 2018. By comparison, global e-commerce sales in 2014 totaled about $1.3 trillion — and by 2018, United States retail e-commerce sales will only be around $500 billion.
Although Internet access in China is reported as widely censored and monitored by the state, 645 million people in China regularly access the Internet. The US has approximately 253 million users, India has 215.6 million and Brazil has 107.7 million, making China far and away also the largest e-commerce market in the world.
So what is your business doing about it?
It's a Big World
Emerging markets that are increasingly accessing the Internet via mobile devices are future e-commerce hotspots.
Payscout, a global merchant service provider (MSP), claims US businesses can benefit by partnering with China's UnionPay, which has a presence in 141 countries — from high-income markets such as the Europe and the United States to emerging markets in Southeast Asia and Africa.
“While US-based e-merchants have been enjoying strong domestic e-commerce sales in recent years, those with an eye to the future are already undertaking efforts to capitalize on the huge potential for online retail sales abroad,” Payscout CEO Cleveland Brown said. “Our analysis of current trends and data suggests that emerging markets will be the primary driver of worldwide e-commerce growth.”
One of the most important things that e-commerce retailers should recognize is the rise of mobile devices as a payment method, especially in the emerging markets that American and Chinese businesses intend to target.
Thanks to advances in cell phone technologies like near field communication (NFC), consumers can now pay for products and services using their mobile phone. Tech giants such as Google, Apple and Amazon are taking advantage of mobile payments, each offering their own mobile payment solution —Google Wallet, Apple Pay and Amazon Payments.
However, emerging markets have developed their own solutions as well. M-PESA, a money transfer service used by Kenyan telecom company Safaricom, is leading the way on the African continent as a way to get subscribers to conduct business over mobile devices.
Kenyans have used the service to pay for products and services and to transfer money to one another in a market where brick and mortar banking is impractical for many people in rural areas. Since its introduction in 2007, M-PESA has captured 72 percent of the Kenyan mobile market. Kenya is averaging mobile subscriber growth of 13 percent per year, one of the fastest in Africa and in the world.
The Chinese E-Dream
The Chinese are well versed in e-commerce — Alibaba, China's number one e-commerce firm, had an initial public offering (IPO) of $24.3 billion last September, the largest in tech history. However, American businesses that operate in China, such as Wal-Mart, are resisting the move to e-commerce. “Our priority is retail stores before we consider e-commerce,” one Wal-Mart China executive said. “We’re not [becoming] an e-commerce business simply to sell more goods.”
This shows the contrast in the way American businesses and Chinese ones conduct business. American businesses are either having a hard time or even refusing to consider e-commerce, while Chinese businesses are embracing it domestically and encouraging it in the markets where UnionPay operates.
UnionPay has already struck up a deal with Apple to allow its cards to be used on the App Store, and Samsung is also reported to partner with UnionPay and also join the mobile payments race with Samsung Pay on the Samsung Galaxy S6, which is already out on the South Korean market. In fact, Samsung beat its mobile phone rival, Apple, to the punch with Samsung Wallet in 2013 when it rolled out the service in the South Korean and Chinese markets.
Brown contends that partnerships between US businesses and MSPs like UnionPay could increase global sales and ease the way into new markets. “Companies can easily overcome challenges in tapping into global markets by partnering with a global MSP that is experienced in foreign markets, managed risk and multi-currency processing,” Brown said.