Faaez Samadi
Jul 10, 2019

Lower tier cities biggest driver of China ecommerce growth

TOP OF THE CHARTS: SCMP’s annual report highlights the significant opportunity for brands outside China’s most populous centres, and highlights KOLs as an essential marketing tool.

Yangzhou, one of China's many tier three cities
Yangzhou, one of China's many tier three cities

China’s lower tier cities are the biggest growth opportunities for its plethora of emerging ecommerce technology brands, according to SCMP’s latest China Internet Report.

Launched at RISE today, the extensive study into China’s latest digital, technology and innovation trends highlights the untapped potential of these cities, finding that there are 128 million internet users in third tier cities or below that have not bought anything online.

 

Consumption is very much on the rise in these cities compared to the more saturated tier two cities and above, according to the report, which was compiled by SCMP, Abacus News and Edith Yeung, partner at 500 Startups.

Dividing the research into sectors, the China Internet Report also illustrated that KOLs are a must-have for Chinese marketing strategies. For the first time in August 2018, Taobao’s recommendation feed traffic surpassed its search traffic, pointing to how much Chinese consumers rely on peer recommendations rather than search-based shopping.

Regarding influencers specifically, the study found KOLs to be the social marketing format of choice, ahead of both short-form videos or official WeChat or Weibo accounts.

That said, the rise of short-form video is one of the key trends the report highlights, taking particular note of TikTok’s meteoric rise – the company is valued at around US$75 billion. However, the overall growth rate of short-form video consumption is decreasing as the market matures.

 

In tandem with the growth in content consumption is a growing trend for Chinese consumers being willing to pay for their content, such as long-form video and music.

 

The report also assessed China’s social media landscape, and concluded that Tencent is virtually unassailable in the space—its two platforms, WeChat and QQ, have a staggering 1.1 billion and 700 million daily active users respectively.

SCMP also highlighted how Chinese technological advancements are now in demand globally, an ironic twist for the nation once known for its copycat tendencies.

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