Shanghai #1 In Online Shopping

Rising Connectivity, Stronger Yuan Push Internet Spending In Shanghai From 208 Billion Yuan In 2006 To 352 Billion Last Year This might not be much of a surprise, considering Shanghai is both China's most populous city and its richest, but this week a Shanghai official, Sha Hailin (沙海林), announced that the city's residents outspent the rest of the country on online shopping, parting ways with some 352 billion yuan (US$51.55 billion) last year. That's up from an already-impressive 208 billion (US$30.5 billion) just four years ago. While some of this huge growth owes itself to a quantitative increase in Internet users, other factors such as a stronger yuan (for purchases from foreign vendors), a desire to sidestep China's stiff luxury tax, and greater consumer spending power, are undoubtedly at play here. From People's Daily: As of the end of 2009, the number of Shanghai netizens climbed to 11.7 million, and their online spending accounted for 5 percent of total retail sales of consumer goods. Shanghai has many successful online shopping enterprises, such as Blemall and eBay, and payment businesses and logistics companies, which facilitated the city’s online shopping, said the official. The Chinese Academy of Social Sciences predicted that the country's total Internet spending in 2010 would grow to around 500 billion yuan, accounting for some 3 percent of the total retail sales of consumer goods. According to iFeng (Chinese), the study indicates that the top ten cities by online consumption are: 1. Shanghai 2. Beijing 3. Shenzhen 4. Hangzhou 5. Guangzhou 6. Nanjing 7. Suzhou 8. Tianjin 9. Wenzhou (2.8 billion yuan, a three-fold increase year-over-year) 10. Ningbo As the article notes, most of these cities are concentrated in the Yangtze River Delta region, with the other two situated in the Beijing-Tianjin area. Again, no major surprise there, considering these are the two richest regions in the country. Averaged out among Shanghai's estimated 19.2 million residents, the study finds that the 352 billion yuan spent online last year amounts to three online purchases and a total of 906 yuan (US$132.68) per person. Unfortunately, the top-ten list doesn't break down the results into different categories, so we can't see how they stack up in terms of low- vs. high-end. However, other recent surveys have indicated that high-end online shopping is one of the fastest-growing e-commerce segments, with more Taobao stores specializing in luxury products (generally purchased and sold by Chinese students in Europe or North America) to help netizens sidestep China's steep luxury tax. While the growing popularity of high-end online shopping, particularly in wealthier cities like Shanghai, presents serious challenges for high-end companies, it also presents great opportunities. A handful of companies, such as Giorgio Armani and Dunhill, have already made moves to capitalize on this shift from low- to high-end online shopping, launching Chinese-language e-commerce sites, and others -- such as Hermes and Tiffany -- have launched full simplified-Chinese-version sites, although they (and other major brands like Chanel) are resisting the urge to launch online stores at the moment.

Shanghai #1 In Online Shopping

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Published June 03, 2010

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Shanghai #1 In Online Shopping