The never ending growth of e-commerce in China

     Over the last decade China has decided to put digital economy at the centre of its economy. The digital economy is the use of modern networks and technologies linked to communication such as the Internet. These new technologies have changed the way we communicate and have boosted productivity and innovation. These changes have allowed economic activities to be more flexible and made international trade easier. China’s economic strategy has proven to be very effective so far.

     Over the last few years China has become very important in the world’s digital economy, and is one of the leaders in terms of productivity and innovation. China’s development is mostly due to its progressive opening to the world which has led to a sudden access to information and knowledge. The Chinese government promotes e-entrepreneurship as well as e-shopping and invests in innovation in various sectors (artificial intelligence, virtual reality, drones, robot and automatic cars). By doing so China went from being the workshop of the world to being one of its laboratories thanks to its innovations. As a result, digital economy accounted for 30.1% of China’s GDP in 2016. 

     By being so powerful in the sector, China is defying the theory of “platform imperialism”. This theory states that western firms will always have the monopoly on the digital market with firms such as Google, Facebook and Amazon, even though new firms are challenging them. China is slowly proving this theory wrong with its technology such as Huawei phones or its platforms like Wechat and Taobao.

     As if to prove the theory wrong, the prime minister Li Keqiang revealed the government’s projects in a discourse to promote mass entrepreneurship and innovation in 2015. China went on with his plan and new objectives were added to the list. Among them is to create solid relations between the Chinese government and the firms controlling the major digital platforms in the country.  The leaders in China are Wechat who provides payment services with which people can pay with their smart phones for daily purchases and Alibaba which offers online retailing as well as online bank services.

      Alibaba and Wechat have changed how products are produced and distributed, as well as the way firms and customers communicate. These changes have allowed China to expand its market on a national and global scale and to shorten the lead times between production and delivery. The development of Alibaba was made easier by the fact that the government didn’t apply the regulations on e-commerce correctly in order to enter the global economy faster. The company took advantage of the state’s strategy to take over the e-market leadership in China.  Nowadays Alibaba provides customers with a variety of low-price products and is beginnig to challenge Amazon on the Western market. Its success is in part due to the Chinese government strategy od developping new technologies and innovation.

     A recent example of Alibaba’s desire to innovate is the fact that they have spent billions of dollars on research to make access to technology easier for disabled people. In oreder to make its website accessible and easy to use for people with bad sight the company came up with a new product: Smart Touch. Smart Touch is a thin layer of silicone with buttons (in Braille) disposed on top of the phone’s screen responsive to pressure. To make sure that no mistakes are made, users have to double tap on the check-out box to validate the purchase.  This new technology will allow customers to roam through the website easily despite their poor sight. Additionally, producing the screen only costs a few cents which means that a lot of consumers will be able to have access to it. The product should launch on the market in 2019 showing Alibaba as an example to the competition as the screen can be adapted to other applications.

    Alibaba’s growth will enable further access to the global market for China whose digital economy has an average growth of 20% per year. The Chinese e-market will keep on growing as only one third of the population shops online, making it a very interesting market for investors all around the world.

M. Maraval