The so-called bakugai (explosive buying) in Japan by Chinese consumers is by no means limited to shopping forays by short-term visitors.
Nikkei Business (21 March) takes note of the rapid growth of e-commerce in China by Alibaba Group Holding Limited’s JD.com. Others can be expected to open up new opportunities for firms with products to sell. In China, the percentage of electronic transactions relative to the total is expected to rise from 19.6% this year to 33.6% by 2019 (projections for over the same period are 7.8–9.8% for the US, and 11.4–15.3% for Japan).
Lijun Sun, chief executive of Alibaba, has said that while his firm’s sales have been product-oriented until now, he hopes to expand in such areas as insurance, loans, medical services and agriculture. In the latter field, Sun wants to enable farm households to market their agricultural produce online.
The biggest bottleneck to further expansion has been distribution in rural areas, but Sun has earmarked investments equivalent to ¥180bn in order to boost the number of local service centres (currently operating in every Chinese province except Tibet) nationwide from 40,000 by the end of this calendar year to 100,000 by 2019.
So how does this affect Japan? Since 2013, China has gradually opened up its e-commerce market to overseas transactions; this business has been doubling every year. According to projections by the trading house Mitsui & Co., Ltd., revenues will exceed ¥10trn within 2017, and hit the ¥18trn mark by 2019, accounting for nearly one-tenth of all transactions on a value basis. Transactions using smartphones and other mobile terminals currently account for 55%, compared with 45% using personal computers. These transactions are projected to increase to 71% by 2019.
Among the foreign firms that have been setting their sights on online sales are Nestlé, for which e-business accounts for 30% of its total turnover in China. Other European brands making more effort to include e-commerce into their China strategies include French apparel brand Lacoste, and Belgian chocolate retailer Godiva.
Vacuum cleaner manufacturer Dyson Limited, which entered the Chinese market in 2012, achieves roughly one-half of its sales via e-commerce, particularly from the Alibaba Group’s T-Mall and JD.com. A PR spokesman for Dyson in China, told Nikkei Business that “China has skipped past the stage of technological evolution that other advanced countries underwent, and has become accustomed to virtual shopping that transcends the in-store shopping experience”.
Nikkei Business predicts that the Chinese market is likely to prove particularly attractive to small and medium-sized Japanese firms. Thanks, in part, to the relative geographical proximity of the two countries, and the firms’ ability to bypass wholesalers and agents, they will be able to deliver goods to consumers in China in about five business days from receipt of an order. However, one possible risk will be an increase in customs duties.