The Possibilities of Expanding Consumption in China in the Internet Age
Senior Fellow, Jianmin Jin
- The weakness of the Chinese economy has been laid bare due to a slowdown in the growth rate, the stock market crash, capital flight and excessive investment, in addition to other factors, pointing to a slowing economic growth rate. Each country around the world takes an interest in the sustainable growth of the Chinese economy, not least of which Japan, which has seen the benefits of Chinese consumption through the “explosive buying” habits of Chinese tourists. China itself is undertaking a major policy shift – from investment to consumption – in its attempts to stabilize economic growth. When examining the raw data, it becomes clear that the contribution rate of consumption to economic growth is surely rising.
- When examining China’s consumption structure, the shift from a clothing/food-focus to an emphasis on residence/movement – from goods-centric to service-centric – is becoming clearer. Furthermore, consumption habits in rural areas are beginning to match those in urban areas, as the assumed 10-year developmental gap between these areas continues to narrow, due to measures to improve income for rural residents to rectify disparities, and improvement of the logistics and information infrastructures. In addition, information consumption is emerging as a new consumption area along with real estate/automobiles, which had been driving consumption thus far. Information-related consumption based on smartphones, smart appliances/devices, digital content, and other IT (information technology)-dependent services is emerging as a driving force for next generation consumption.
- Within the field of information-related consumption, internet-based shopping, or e-commerce (EC), is attracting the most attention. EC has a clearly “unique existence,” with its growth rate and share of total retail sales accounting for more than twice the world average. Contributing factors in the background of this “unique existence” include the rapid deployment of information infrastructure, transaction security and credit systems, online payment systems, EC logistics and so on. In terms of the transaction contents of EC, expansions can be observed – from light to heavy products, from fixed-type to non-fixed type products, from preserved food items, to processed food items, to fresh food, and from products to services. Furthermore, it can be said that EC plays a key role in activating the aforementioned rural consumption market. In addition, due to the further spread of IT, Social Commerce has emerged, with social networking services becoming an instrumental marketing channel for enterprises to reach consumers.
- Japanese companies should correctly ascertain the reasons for the Chinese economy’s slowdown, and the factors contributing to consumption expansion, without excessive expectations for its potential, while also avoiding unnecessary pessimism and devising appropriate measures.
- The full text of this report is not available in English.
The original Japanese text is here (1.23 MB ) .