China may still be classified as an emerging market, but on the Internet it has arrived. By 2015, China will add nearly 200 million users, reaching an Internet population of more than 700 million—almost double the combined number of Japan and the U.S. (See Exhibit 1.)
If not by 2015, then shortly thereafter, China will likely become the largest online retail market in the world, with close to 10 percent of retail sales occurring online. It already has more online shoppers than any other market, including the U.S.
While China is a huge online market, it is not an easy one. Although consumers are rapidly gaining sophistication, they have their own patterns of online consumption and behavior that are different from those of consumers in the West. The big three Internet companies—Alibaba, Baidu, and Tencent—have a firm hold on their corners of the market (e-commerce, search, and messaging, respectively) and are working hard to consolidate their positions and move into new fields.
The Boston Consulting Group has regularly tracked the evolution of China’s digital consumers since 1998, and this report is the latest in our series chronicling the epic transformation of China’s consumer landscape. Companies that want to succeed in China’s consumer market must understand both these new consumers and their rapidly evolving digital lifestyles. They also need to learn how to reach, sell to, and retain these consumers as they create the world’s most important consumer market of the future.