China Internet
eCommerce: China’s Consumption Growth Engine

China has the world’s largest eCommerce market: The segment is one of the country’s key
economic drivers, and leading competitors are expanding in rural China and creating value. In 2013,
China generated 35% of US$890bn global eCommerce sales, and the value of China’s eCommerce
was equivalent to 3.3% of GDP, the highest percentage globally. As the country’s consumers
embrace the channel and incomes rise, we expect China’s share to expand further. We estimate
China’s sales will rise by a CAGR of 28% in 2013-18 to reach US$1trn, or 50% of the global market.
China is aging and so are its consumers: The implications are broad, and we think companies
need to align themselves to capture the needs of an “older” China. We estimate the number of online
shoppers will exceed 660mn by 2023, with half of the 330mn incremental online shoppers over 40
years old. We think this class of “Digital Hybrid” consumer will account for one third of the online
shopping population and potentially >50% of spend, becoming the driving force of China’s
eCommerce.

Opportunities: China is in the midst of a digital revolution. Leading companies have the opportunity
to 1) drive mass consumption, 2) realign cross-regional imbalances in employment and income, 3)
streamline supply and distribution value chains, reducing inefficiencies, 4) enable data-driven
logistics management, 5) provide sustainable growth for SMEs and rural markets, and 6) integrate
online and offline commerce to accelerate a “different” omni-channel retail experience.