The top five sectors with the highest growth rate in China remained unchanged in 2010-2019, including holidays (CAGR 18%), transportation (16.4%), over-the-counter drugs and pharmaceuticals (13.6%), catering services (13.1%), and personal finance and housing (12.9%).

Although the growth of most industries has gradually declined due to the slowdown of overall consumer spending growth, the beauty and personal care industry has maintained its growth trend since 2017, with an increase of 9.2% in 2019.

Spending fell in the first quarter as industries such as holidays and catering services require consumers to leave home and are likely to flock. Total consumer spending is expected to shrink by 5.6% by 2020.

Research shows that most consumer goods industries are gradually recovering, including dining out, clothing, beauty and personal care, as well as non-essential industries such as leisure and entertainment.

In the long run, China’s total consumer spending is expected to return to its pre-covid-19 level in 2021 and continue to grow at a compound annual growth rate of 7.3% from 2021 to 2024.

CIW annual subscribers can download the report here.

8 Strategic segments of China’s online consumers

The Fast Retailing Group generated rises in both revenue and profit in the first nine months of fiscal 2018 from 1 September 2017 to 31 May 2018.

Consolidated revenue totaled ¥1.7041 trillion Japanese yen (US$15.66 billion), up by 15.3% year-on-year and operating profit reached ¥238.8 billion, increased by 32.3% year-on-year. The profit attributable to owners of the parent increased to ¥148.3 billion, an increase of 23.5% year-on-year.

Within the UNIQLO International segment, revenues from Greater China (Mainland China, Hong Kong, and Taiwan) overtook the total income of the other overseas market. It also exceeded its domestic income.

China has become the second largest market for Uniqlo only after Japan for two years running. Uniqlo derived 70% of its overseas revenues from China.

Apart from strong supply chain management, fast product innovation, precision marketing is also the main factor for Uniqlo’s fast-growth in China.

During the March-to-May quarter, same-store sales at UNIQLO Greater China attained double-digit year-on-year growth following a strong launch of new Spring Summer ranges, and effective news generated by popular new UT brand contents, Kando pants, jackets, and other ranges.

Generally, Uniqlo tends to cooperate with the designer and international IP to promote its products. For example, Uniqlo cooperated with Manwei Company to launch a new superhero UT brand, which attracted a lot of consumers to the store.

To keep up with the current new retail trend in China, Uniqlo makes some adjustments to outlet experience and stock.

For example, Uniqlo makes it convenient for consumers to order online and in-store pick-up in any outlet. Uniqlo uses RFID electronic tags to enhance stock management. Moreover, given the large market order and uneven area distribution, Uniqlo adopts a weekly calculation scheme to check the stock.

Such changes promote sales. Uniqlo reported that sales directly promoted by in-store pickup service in Double 11 period this year is five times more than that of last year.

In the future, Uniqlo aims to overtake Zara and H&M to be the world’s largest clothing retailer. Tadashi Yanai, the president and CEO of Uniqlo’s parent Fast Retailing Group, has set a new target for the Greater China. It plans to expand stores to 1,000 by the end of 2021 and achieve a ¥62.5 billion turnover and a ¥12.5 billion operating profit. That means Uniqlo will open 100 new stores in China annually.

In the first two months of 2017, the total retail sales of consumer goods in China reached RMB 5,796.0 billion (US$840.3 bn), up by 9.5% year-on-year (nominal growth rate. The real growth rate was 8.1%) according to National Bureau of Statistics of China.

The total retail sales of China consumer goods in cities reached RMB 4,945.8 billion (US$717 bn), up by 9.2% year-on-year.

The catering services in the first two months, gained RMB 625.1 billion, up by 10.6%, year-on-year. The retail sales of goods gained RMB 5,170.8 billion, up by 9.4%. The retail sales amount of goods of units above designated size in the first two months was RMB 2,318.6 billion, up by 6.8% year-on-year.

China’s online retail sales of goods and services were RMB 858.0 billion (US$124.39 bn) in the first two months of 2017, increased by 31.9% year-on-year.

The online retail sales of physical goods were 641.9 billion yuan, increased 25.5%, accounting for 11.1% of the total retail sales of consumer goods; food, clothing and other commodities went up by 15.1%, 15.8%, and 30.7% respectively.

China’s online retailing market will grow to $1.7 trillion by 2020 compared with $750 billion last year.

Continue to read: China cross-border e-commerce insights 2016/2017

The total retail sales of consumer goods in China reached 3,095.9 billion yuan (US$448.36 billion) in November 2016, up by 10.8% YoY according to National Bureau of Statistics of China.

Of the total, China’s retail sales of consumer goods of units above designated size was 1,479.2 billion yuan, increased by 9.5%.

From January to November in 2016, the total retail sales of consumer goods reached 30,056.0 billion yuan, up by 10.4% YoY. Of the total, the retail sales of consumer goods of units above designated size was13,720.3billion yuan, increased 7.9%.

Retail sales of consumer goods in China urban areas was 2,674.8 billion yuan in November 2016, up by 10.8% YoY; while that in rural areas was 421.0 billion yuan, up by 11.0% YoY. From January to November, the retail sales of consumer goods in urban areas was 25,858.1 billion yuan up by 10.3% YoY while that in rural areas was 4,197.8 billion yuan, up by 10.9% YoY.

China’s online retail sales of goods and services were 4,599.0 billion yuan, increased by 26.2% YoY. Of which, the online retail sales of physical goods was 3,747.0 billion yuan, increased 25.7%, accounting for 12.5% of the total retail sales of consumer goods. Of the online retail sales of physical goods, food, clothing and other commodities went up by 28.4%, 17.9%, and 28.8% respectively.

Transactions of China’s apparel online shopping market reached 413.05 billion yuan (US$65.08 billion) in H1 2015, including women and men’s clothes and excluding bags, shoes and children’s clothes.

Apparel faced the most frequent transactions on the B2C and C2C platforms in China. C2C sales accounted for 67.7%; Taobao is one of the typical C2C platforms.

Tmall had the largest market share on apparel online shopping market, accounting for 76.2%. As a platform gathering millions of merchants and brands, Tmall provides users variety of options.

Online shopping platforms usually offered affordable products on both B2C and C2C. Consumers could buy products across the world without limitation of time and distance. However, existing problems disturbed the further expansion of online shopping:

• some merchants were lack of credibility and integrity
• some products when received look different from online photos
• after-sale services were not good enough
• potential privacy and security problems

Also read: China Mobile Shopping Turnover Surpassed PC in Q2 2015

78% online shopping consumption in China are alternatives to the traditional consumption, and 22% are new demands stimulated by online shopping market in 2014 according to China National Bureau of Statistics. Over 80% online shoppers got satisfied shopping experience.

Also read: China Annual Cross-border Consumption in 2015

According to Weibo’s daily influence index, Tmall, OKHQB, and Dangdang performed best on Weibo among 1,613 active Weibo accounts in B2C e-commerce category in 2014.

Also read: Travel Industry Performance on Weibo 2014

Shoppers from China spent 18% more on Tax Free Shopping in 2014 compared to 2013 according to Global Blue.

Global Blue’s Top Ten Globe Shopper Nations in 2014 (growth vs. 2013)

1. China (+18%)
2. Russia (-17%)
3. USA (+8%)
4. Indonesia (-10%)
5. Japan (-12%)
6. Taiwan (+29%)
7. Hong Kong (+25%)
8. Thailand (-10%)
9. Saudi Arabia (+15%)
10. Kuwait (+18%)

China and Russia are by far the most lucrative countries of origin for globe shoppers, with Chinese globe shoppers now accounting for almost one third of all Tax Free Shopping spend followed by Russia (14%), United States (4%), Indonesia (3%) and Japan (2%).

Five of the top ten increased their Tax-Free Shopping spend by more than 15% in 2014 – Taiwan, Hong Kong, China, Kuwait and Saudi Arabia. Almost 50% of purchases were related to fashion and clothing, followed by the watches and jewellery at 17%. In 2014, the number of Chinese transactions increased by a significant 38% according to Global Blue.

Paris remains the most popular shopping city.

Find out more about China Online Travel Market 2014-2017 here.

In Q3 2014, total transaction value of China clothing B2C market was RMB91.62 billion ($14.91 billion) with an increase of 54.2% from the same period of prior year according to data from EnfoDesk.

Tmall represented 73.4% market share by transaction value in Q3, remaining top in China clothing B2C market. Jingdong kept working on project of “Shang Jingdong” in Q3 which made it to 5.5% market share. Jingdong surpassed Vipshop, ranking second in Q3 2014. Total transaction value of China online shopping market was RMB691.41 billion (US$112.55 billion) with an increase of 49.8% year on year in Q3, which was much more than transaction value in Q2.

Nowadays, China B2C clothing market’s development is relatively mature. Clothing is an active vertical among online goods. In Q3, various e-commerce enterprises made great efforts competing in this vertical.

Clothing is a category with high net profit and potential retention; and it accounts for major revenue for e-commerce companies in China. Four leading online retail websites in China, Tmall, Jingdong, Dangdang and Vipshop, are now all promoting heavily the clothing and apparel vertical and associating their brand with “fashion”. China clothing B2C market tends to be featured with more elements of fashion and young.

Also read: Stats of Top Selling Brands on Taobao/Tmall in 18 Categories in Sep 2014

In October 2014, Uniqlo ranked top among Tmall flagship stores in Men’s clothes category by sales value of RMB23.52 million ($3.82 million), followed by Heilanhome and Jack & Jones Tmall flagship stores.

On Tmall/ Taobao, Jack & Jones’s total sales value was RMB25.05 million ($4.07 million) in September 2014 and it also ranked 5 on the list of top brands men’s clothes category.

Also read: Tmall Targets to Generate RMB 50 Bln Revenue on Double 11 2014

In September 2014, total online display advertising spend of China clothing brands exceeded RMB81.74 million (US$13.3 million).

Among all the clothing brands, Adidas spent RMB10.33 million ($1.68 million) in online display advertising in September, ranking first, followed by Camel and Triumph International according to data from iResearch.

Web portal and online video platforms are the top two ad placement channels for clothing companies in China in September 2014. The advertising spend on web portals exceeded RMB34.05 million (US$5.54 million), accounting for 41% of the total spend, followed by online video (29.4%).

Also read: China Top 10 Cosmetic Brands by Online Ad Spend in Sep 2014