Asia, the world’s largest and most rapidly growing eCommerce market, is projected to account for 48% of global cross-border eCommerce sales by the end of the decade. Despite the recent disarray and economic concerns of the country, China alone is forecasted to spend $245 billion on imported products online by 2020.
In response to the booming expansion of the Asian eCommerce market, it’s important to ask what is driving such astonishing growth even with the current economic state. 26% of Chinese online consumers (and growing) currently buy imported goods from foreign sites, with U.S. sites trending as their favorites. The Chinese middle class, as large as the entirety of America’s population and expected to double in seven years’ time, has increased in their spending power over recent years.
With this uptick in consumer spending, imported western goods are becoming trendy for Chinese consumers. eCommerce companies in China (such as Alibaba and JD) have launched online U.S. digital malls for their consumers in order to meet the growing demand of the Chinese middle class. According to Internet Retailer, 61% of Chinese consumers say they would pay more for a product made in the United States.
So why are these shoppers searching across borders and overseas for their products instead of hitting local stores? With an increasingly affluent middle class, consumers crave higher quality goods, better prices, and authentic products to be delivered to their door. These three reasons are bolstered by the growing availability of mobile devices, making online shopping more accessible and because buying imported goods may be reflected as status symbols among the newly prosperous Chinese middle class. For example, the top eCommerce site in Asia (Alibaba) had an upswing in Chinese imports of U.S. cherries and seafood, as the Chinese market is lacking in these goods (considered delicacies in some areas of China).
Including this array of unique products, the Chinese market is expected to spend upwards of approximately $6.7 billion on U.S. imports alone this year. This total doesn’t even take into consideration other growing import markets from other popular continents such as Europe and South America. As of now, Chinese consumers mainly focus their spending on U.S. apparel, electronics, cosmetics, and food with health products, jewelry, and home goods also attracting a multitude of shoppers.
Many U.S. companies have taken note of the rise and are leaping head first into the growing market. Several big name web merchants (Amazon, Zazzle) have opened their own customized eCommerce sites in Asian countries and, Amazon in particular, have since increased their sales by billions of dollars. Even big-name U.S. apparel retailers have partnered with Chinese businesses, operating digital storefronts through leading online retailers in China’s marketplace. Some of them have also created unique brand lines specifically for their newfound Chinese shoppers. For example, Taylor Swift (the chart-topping U.S. pop singer), launched her own fashion line in China through an American apparel company and has received a very positive response from her widespread Asian fan base. Additional entrepreneurs are also seeking to meet the demands of China’s growing middle class – the CEO of Alibaba, Jack Ma, intends to add ten million U.S. small businesses to his site in the future.
In the next three years, cross-border eCommerce sales from the U.S. to China are expected to grow by a staggering 74%. However, the evolution and unforeseeable changes to come are a big concern for many companies wanting to enter or continue their growth in the Chinese market, especially with the Yen’s recent decrease in value. Perhaps it’s a better idea to wait and enter the market once the dust settles and the value of Yen levels out; or perhaps it would be cheaper to jump in now while the market is developing and commit the next few years to solidifying brand awareness among new customers. Either way, U.S. goods continue to stand tall among competitors, growing at a pace significantly faster than expected just a few years ago.