McKinsey report:China set to become online market leader
Global management consulting firm McKinsey has released a study that shows China’s online sales are forecast to exceed US$420bil annually by 2020, which could likely make the country the world’s largest online retail market. McKinsey study expect China to reach between US$420bil and US$650 billion largely driven by a growing consumer class and the world’s largest population of Internet users, now more than 500 million people. The latest trend indicates that China is poised to become the world’s largest e-tailing market in 2020. That figure would match the current size of the US, Japanese, British, German and French markets combined. The McKinsey report also showed that China government has allowed Chinese e-commerce to develop without a great deal of intervention so far.
China’s online retail sales reached US$120billion in 2011 and has surged further to an estimated US$190billion to US$210billion last year according to their report. That has already placed the country close to the United States of America, the current world leader, which had estimated online retail sales of US$220billion to US$230billion in 2012. Online retail sales now account for 5-6% of total Chinese consumer transactions, slightly higher than the 5% in the United States. The McKinsey report predicted that China could forgo the national expansion of physical stores commonly seen in Western nations and move directly to a more digital retail environment. McKinsey also said such a shift could help develop domestic consumption in China, where the government is putting a lot of efforts to shift away from heavy reliance on exports and investment. McKinsey also urged the China government to expand broadband Internet infrastructure and also offer support investment in logistics and encourage innovation in technology to create a better environment for online sales.