Are you a merchant striving for business expansion in China, one of the world’s most dominant markets? Chinese New Year 2022 may be your business’ time to shine in the country’s eCommerce industry that’s expected to total $1,713,401 million in 2022, as GlobalData reports.
Keep reading to discover how you can appeal to Chinese consumers on this special occasion.
A quick primer on the Chinese New Year
Also known as Lunar New Year or Spring Season, this Chinese celebration is a rotating holiday as it’s determined by the Chinese Lunar Calendar and falling within one day of the second new moon before the spring equinox moon phase. As mind-bending as it sounds, one thing is certain: the Chinese New Year 2022 will be on 1st February.
It’s part of the Chinese tradition for locals to crisscross the nation every year to reunite with loved ones for the festivities, which last for approximately 40 days. During Chunyun (i.e., the period of mass travel across China), which will begin on 17th January 2022 and will culminate on 25th February 2022, the country experiences massive spikes in traffic. However, with the Omicron variant setting new record for Covid-19 cases, natives might be rethinking this year’s holiday plans.
How could the Lunar New Year 2022 be different?
China is afflicted by one of worst increases in Covid-19 infections since Wuhan, with local government enforcing more rigid restrictions over border control ahead of the 2022 Winter Olympics in Beijing. With the new variant raging, authorities advised more than half a million people to remain at home while an additional 100,000 have been allocated to quarantine amenities. Despite the challenges brought by the pandemic, the Lunar New Year 2022 may be the chance for merchants to set up a dynamic eCommerce strategy and excel in the Chinese market.
Let’s explore some of the ways they can accomplish this.
mCommerce remains key for Chinese consumers
Chinese consumers and mobile phones share an unbreakable bond. Based on Statista findings, 71.2% of the population in China were mobile phone internet users as of 2021 – a figure that's expected to soar to 75.4% in 2022 and 88.1% by 2026. China’s top online marketplaces continue to grow exponentially, achieving even greater penetration rates. In fact, Taobao, Alibaba’s B2C eCommerce platform, drives a steady stream of visitors per month with registrations reaching as high as 265.9 million in Q2 2021, while Pinduoduo, the online discounter, received nearly 235 million monthly visits during the same period.
Evidently, there’s a correlation between the high numbers of China’s tech-savvy mobile users and ever-increasing online shopping rates, which enables mobile commerce (also referred to as mCommerce) to thrive domestically. In 2020, the volume of social commerce users equated to ¥2.3 trillion, while Gen Z composes the age group that's most likely to inspire economic prosperity within the eCommerce industry in 2022. It seems that the ground is fertile for online merchants to strategise their brand positioning and stand out in the Chinese market.
What’s trending for Chinese consumers in 2022?
With China’s high penetration in mCommerce, mature eCommerce economy, and robust infrastructure for online sales, innovation and optimised shopping experiences are prime movers of this festive season. Let’s take a deep dive into the top three trends to keep an eye on for the year ahead.
The “group-buying” principle will build momentum
A key trend to apply is the group buying feature (otherwise dubbed as community group buying or collective buying). This pioneering eCommerce trading model gained traction in China's cyberspace during the pandemic. “Group buying” involves communities mainly from two tier and three tier Chinese regions that coordinate their orders to get discounts on wholesale goods by purchasing in bulk. To clarify, China's cities are split into Tier one, two and three, with two and three encompassing the smaller, less affluent regions than the country's tier one metropoles (e.g. Shanghai and Beijing). A prevalent eCommerce platform which caters to collective buying is Pinduoduo, with a market share of 6% worldwide and profits that amounted to ¥59.49 billion in 2021, as Statista states.
With Pinduoduo, a self-appointed group leader uses China's leading social network, WeChat, to recruit locals onto the platform. The leader notifies the group about goods and services regularly, directing them to the best deals. All users must complete the communal transaction within 24 hours by selecting their preferred payment method such as Alipay or WeChat Pay, both of which are eWallets of great magnitude in Chinese eCommerce. The time-sensitive nature of order placement through Pinduoduo incentivises customers to immediately invite friends or family and complete the purchase. The onboarding process is an equally hassle-free process managed by WeChat or by scanning a QR code.
Not only does the trend offer convenience, but it's also a cost-effective and time-saving solution, as shoppers buy directly from suppliers — be it a manufacturer or a farmer. The Chinese New Year holidays and oh-so delicious treats are closely related, so it seems like the best time for merchants to adopt collective buying and propel their business forward. By delivering discounts on goods and services to a larger scale of consumers, they are well placed to uplift their product sales and profitability.
Opportunities are ripe for “live commerce”
Live commerce – also known as livestreaming eCommerce or live shopping – is the offspring of China’s online selling that's anticipated to notch sale volumes by ¥4.9 trillion in 2023 according to Statista. As the term indicates, this phenomenon relies on video content and digital media broadcasting to promote or sell products and services in real time.
Live commerce is a form of shoppertainment that infuses the in-store shopping experience into the eCommerce ecosystem, as online shoppers engage with sellers, such as influencers or subject matter experts, on the spot. This suggests that buyers can tackle the usual online shopping struggles, including pricing, trust, and the lack of first-hand interaction with the product. Make-up and personal care goods are treated as impulsive purchases of high demand mainly because it’s easier to present their benefits during a session. Austin Li Jiaqi, an Internet sensation in China's eCommerce also quipped as the “Lipstick King”, heralded Alibaba's Singles Day Shopping Festival 2021 on its Taobao app, accumulating an astronomical ¥1.7 billion worth of goods during a 12-hour livestream.
A new sales channel is in the making within the eCommerce industry which is worth pursuing this holiday period if you want to keep your finger on the pulse of a new generation of Chinese buyers from 2022 onwards.
Cross-border transactions and payment preferences will continue to flare up
With the globalisation and digitalisation of trade, consumers from around the world can buy products and services from any nation. Chinese consumers believe that it's more budget-friendly to purchase imported goods than getting them from native stores. Their extended focus beyond domestic eCommerce has created pockets of opportunity for international brands that aim towards a Chinese customer base. In fact, a report from Statista shows that despite the slowdown in trade and travel due to the Covid-19 crisis, cross-border eCommerce payments had a ¥271.3 billion valuation in 2021 — a figure that’s estimated to hike to ¥1.3 billion by 2025.
Additionally, the Chinese government has recently bolstered their inspections in an attempt to ensure product integrity and a more secure and transparent eCommerce landscape. This opportunity could spur cross-border merchants into earning the trust of Chinese buyers by delivering their most sought-after commodities for the gift-giving rituals of the season, including beauty products, food and beverages, as well as luxury brands for jewellery and fashion.
It’s imperative for online merchants to gain capabilities beyond card processing and tap into local payment preferences, such as WeChat Pay and Alipay. According to GlobalData, Alipay has been the leading eCommerce payment instrument in China for over decade, accounting for nearly half of transaction processing (46.9%) across the country in 2021. Furthermore, data from the Statista Global Consumer survey revealed that mobile payment adoption via WebChat Pay was standing at 88% in June 2021.
Apart from being the preferred local messaging app with over 1.26 billion monthly active users as of Q3 2021, WeChat is also a digital wallet and a channel that serves consumers inside and outside China in all things gaming, social commerce, livestreaming and travel. Therefore, meeting regional consumer appetites through payment availability, speed and ease is more crucial than ever.
An efficient way to make checkout experiences more seamless and localised is by partnering up with a payment service provider who specialises in cross-border transactions and much more.
Break into the Chinese market with emerchantpay
Given the buzz surrounding mCommerce in China, diversifying your offering in mobile alternative payment methods (APMs) is synonymous with a successful business expansion in this country. WeChat Pay and Alipay govern the payments landscape in this corner of the globe.
If you’re looking to localise your payment solutions and deliver bespoke payment experiences for higher conversion rates, emerchantpay is your go-to payment service provider. We offer a variety of solutions through a simple integration – from cross-border payments and alternative payment methods to shopping carts and global acquiring to help you win over the hearts and minds of Chinese consumers.
Are you ready to localise your services no matter where you're situated in the world? Get in touch with our payment specialists and get to know how.