China
5 things we can learn from China’s e-commerce explosion
Online marketplace Alibaba saw sales growth of 39% in comparison with the event in 2016, suggesting that Chinese consumers are confident in their spending
China’s e-commerce market continues to see high double-digit growth year on year. The Double 11 event on 11 November 2017 – also known as Singles’ Day, when single people in China celebrate, and which has become a popular shopping holiday – was a clear example of how China’s consumption-led economy is evolving digitally.
Online marketplace Alibaba saw sales growth of 39% in comparison with the event in 2016, suggesting that Chinese consumers are confident in their spending and that consumption will continue to rise.
China: a booming market
China’s economy continues to grow steadily as it ended 2017 with GDP at 6.8%, according to China’s National Bureau of Statistics (NBS). In line with this positive momentum, at Nielsen we saw China’s consumer confidence index (CCI) reach a historic high of 114 points in both the third and fourth quarters of 2017, up two points from the second quarter of 2017 and six points from 108 in the fourth quarter of 2016.
CCI scores above and below 100 points represent, respectively, positive and negative consumer confidence. An all-time high CCI, coupled with healthy disposable income growth of 7.5%, as reported by the NBS, means that consumers are confident and consumer demand or consumption is expected to remain steady.
We see consumption increasing as consumers in China spend more than ever: 43% more compared with five years ago. That’s leagues ahead of the 24% growth in the US and 33% globally.
Nielsen’s e-commerce tracking data, within 34 fast-moving consumer goods categories, shows that in a 12-month rolling average leading up to November 2017, online sales grew 27% versus the year before, whereas offline sales increased only 6% over the same period.
Meanwhile, the ratio of enterprises with e-commerce services increased significantly in the last year. According to Nielsen’s CCI report, up to Dec 2016, the ratio of enterprises launching online sales reached higher than 45%.
There’s no doubt that China’s e-commerce market is on an overall upward trajectory. In line with this, Nielsen has identified five key trends that we believe are driving the development of the market, and which will be essential for businesses to leverage to ensure success in 2018.
Five key trends driving China’s e-commerce market
1) E-commerce shopping festivals
E-tailers are creating more shopping festivals and themes to unlock consumer desire. Based on Nielsen’s survey, before Double 11 this year, 79% of consumers said they planned to participate in Double 11. Alibaba saw 168 billion RMB in sales and 39% growth on Singles’ Day, while another main competitor, JD.com, achieved RMB 127 billion during 1-11 November, with over 50% growth.
Double 11 and similar shopping festivals are an opportunity for local brands, but these are also key opportunities for foreign brands to leverage the collective enthusiasm for shopping among Chinese consumers. On these holidays, consumers are looking to experiment, try new things and buy products that may be new to them. These festivals are a perfect opportunity for new brands entering the market to get noticed.
2) Consumption upgrade
Two triggers are sparking a trend known as “consumption upgrade”. Rising disposable income means that consumers are more confident in spending their money on a number of categories – especially food, cosmetics and clothing. An emphasis on quality and fashion are growing much faster than other consumer demands. Following this, middle- to upper-class consumers are now increasing their demand for goods that are not available domestically. Online platforms, where international high-end and niche brands are easily accessed, are rising in popularity, while cross-border shopping sites are leading the consumption upgrade movement.
According to Nielsen’s online shopper trend report, the proportion of consumers who had recently made a cross-border…
China
Balancing China’s labour migration through education
Abstract
The 2020 Chinese census showed a 69.7% increase in domestic migrant numbers, leading to concerns about regional economic disparities and the impact of skilled labor migration on underdeveloped regions.
Yongjie Xiong, a scholar at the Central University of Finance and Economics, discusses the findings of the 2020 Chinese census, which revealed a 69.7% increase in domestic migrant numbers compared to 2010 data. This significant influx of people has sparked debates about the Chinese government’s approach to managing large-scale labor migration.
The shifting landscape of China’s migrant worker demographics reflects changes in employment sectors and educational attainment. Notably, a higher percentage of newer generations of migrant workers are involved in the manufacturing sector, indicating a shift away from sectors like construction. Additionally, the newer cohort of migrants is better educated, which has implications for labor dynamics in urban environments.
These changes in labor demographics could exacerbate regional economic disparities and impact technological developments in various regions. The depletion of skilled labor in underdeveloped areas could hinder growth and affect the technological decisions of firms, ultimately widening the economic gap between cities.
As regions grapple with the challenges and opportunities presented by labor mobility, examining the impact of these changes on the economy and society is crucial for informing future policy decisions.
China
Annual Confirmation for China IIT Special Additional Deductions to Commence on December 1st
Starting December 1, 2023, the confirmation process for annual individual income tax (IIT) special additional deductions begins in China. All individuals, including expatriates, should determine eligibility and confirm the information before the end of the month to avoid difficulties in tax savings.
Starting on December 1, 2023, the confirmation process for annual individual income tax (IIT) special additional deductions begins. All individuals, including expatriates working in China, are advised to determine their eligibility for relevant special additional deductions. If eligible, individuals should promptly confirm the special additional deduction information through designated channels before the end of the month. Failing to confirm the IIT special additional deduction information may result in unnecessary difficulties in tax savings for the following year.
In 2019, China introduced special additional deductions for specific expenditures. According to the amended IIT Law, the taxable income amount of a resident individual in China shall be the balance after deducting the standard deduction (RMB 60,000 per year), as well as special deductions (social insurance and housing fund contributions), special additional deductions, and other deductions determined pursuant to the law, from the income amount of each tax year.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
China’s top diplomat visits Vietnam ahead of likely Xi trip
Chinese Foreign Minister Wang Yi is expected in Vietnam Friday, paving the way for a possible visit by President Xi Jinping this month.
Wang will co-chair the 15th session of the Vietnam-China Bilateral Cooperation Steering Committee, an annual event, with Vietnam’s Deputy Prime Minister Tran Luu Quang.
Vietnam’s Ministry of Foreign Affairs says the Chinese foreign minister will have talks with his Vietnamese counterpart Bui Thanh Son and greet Communist Party General Secretary Nguyen Phu Trong and President Vo Van Thuong.
Xi – who is also the Chinese Communist Party General Secretary – was originally expected to visit Hanoi in October or November for talks with his counterpart Trong, who was in Beijing last year. Instead, Xi traveled to San Francisco for November’s APEC summit and a meeting with U.S. President Joe Biden. His Vietnam visit is now expected to take place from Dec. 14-16.
Since Trong’s 2022 China trip Vietnam has elevated its relations with the U.S. to a “comprehensive strategic partnership,” putting it on a par with China, along with India, Russia and South Korea. This week Vietnam also conferred its top partnership ranking on Japan during a visit to Tokyo by its president Vo Van Thuong.
Courting Vietnam
Improved relations with Vietnam are likely to help the U.S. and Japan diversify supply chains and reduce their reliance on a politically and economically turbulent China. That in turn seems to have prompted Beijing to seek even stronger ties with Hanoi.
Carl Thayer, a Vietnam analyst and emeritus professor at the Australian Defense Force Academy in Canberra, said when Xi visits Hanoi he will likely want to discuss the same issues with Trong that U.S. President Joe Biden raised with the Vietnamese leader during their September meeting:
“[I]mproving the efficiency and stability of bilateral supply chains, creating better conditions for Chinese businesses to invest and operate in Vietnam, enhancing cooperation in e-commerce and the digital economy, increased science and technology joint research, education and training exchanges, … green development and climate change response, public health cooperation, protection of water resources along the Lancang-Mekong River, cross-border tourism and cultural exchanges, and coordination on international issues.”
China is Vietnam’s largest trading partner with bilateral trade rising 5.5% last year to US$175.5 billion, according to Vietnam’s Ministry of Industry and Trade.
China’s Commerce Minister Wang Wentao also visited Vietnam this week pledging to deepen trading ties and open the Chinese market to more agricultural imports.
Despite an improving trade relationship, Vietnam and China have clashed frequently over territorial claims in the South China Sea. Hoang Viet, an expert on the issue, told Radio Free Asia that Beijing is likely to tone down its rhetoric, in order to avoid souring top level relations.
“In anticipation of Xi Jinping’s visit to Vietnam, China may exercise maximum restraint to create a more moderate atmosphere,” he said.
Despite their differences in the South China Sea, China and Vietnam have been holding joint patrols between their navies and coast guards in the Gulf of Tonkin in November and December.
Beijing and Hanoi said the patrols aimed “to carry forward the traditional friendship and deepen mutual trust between the two countries, as well as further promote mutual understanding between the two militaries.”
Edited by Elaine Chan and Taejun Kang.
RFA Vietnamese contributed to this story.
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