Bumps in the road for China’s e-Commerce market

China’s e-Commerce market has grown strongly in recent years, but the sector is now navigating more difficult times, with the following developments all reported recently:

  • Shares in online platforms such as Alibaba Health and JD Health fell last week following a report in 21st Century Business Herald that the government could ban 3rd-party platforms from selling medicines on the internet. Regulators will reportedly clarify the definition of 3rd-party platforms, which was mentioned in a regulatory proposal last month
  • The National Radio & TV Administration and Ministry of Tourism & Culture released new rules on live-streaming events, including the requirement for influencers who discuss topics such as medicine to have relevant qualifications. Live-streaming events have become a prominent promotional tool for CHC marketers, especially during lockdowns when other forms of A+P such as outdoor events and in-store activities have been limited
  • JD.com reported growth of 10.3% during this month’s 618 shopping festival (vs the same event in 2021) and sales of RMB379bn (US$57bn); this is JD’s slowest growth rate for 618, which was launched in 2004, and down from the 27.7% upturn reported in 2021. This follows Alibaba reporting its slowest Singles Day growth in November 2021 since the event began in 2009
Source: www.hicom-asia.com

Nicholas Hall’s Touchpoints: Last week we wrote that e-Commerce is essential for the new Haleon, as indeed it is for almost all CHC players. But in our calculations, we have assumed the continued high growth of China’s e-Commerce sector. And yet, the top players like Alibaba (owner of Taobao.com) and JD have been sending out SOS signals, warning of a rapid slowdown of growth, partly I suspect because they are coming increasingly under the thumb of the Government, from whose lofty perch the success or decline of e-Commerce is of very little import.

Now my colleague Nicola Allan, the CHC Insight Asia-Pacific Senior Editor, has reminded me that despite these negative stories, China’s e-Commerce channel is outperforming physical retail, as continued lockdowns drive consumers to shop online. So in one sense perhaps we don’t need to be overly concerned; on the other hand, perhaps we are wise to introduce a note of skepticism into our view of e-Commerce prospects.

According to our latest DB6 forecasts, which were constructed with great rigour only a few weeks ago, the global CHC e-Commerce market in 2031 will be worth US$97.7bn at MSP. But 249% growth between 2021-2031 is heavily dependent on China, which is slated to grow by 333%, and whose share of global is expected to increase from 34% in 2021 to 42% in 2031. Without China, e-Commerce is still a tearaway success with a forecast 205%  growth rate, but will not be in the same league.

The agenda for our Asia-Pacific e-Conference on 23rd November will be released next week! Register with elizabeth.bernos@NicholasHall.com to take a look at the first line-up of participants who will explore expanding possibilities in CHC across the region. Our Regional CHC Creative Marketing Award will also be presented during this event.

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