Retail sales of consumer goods in China is set to exceed CNY 40 trillion or approximately $5.73 trillion in 2020. Key sectors are on the lead for six years straight according to report from the Ministry of Commerce. Overall, the sale of retail consumer goods will likely reach CNY 41.1 trillion. An increase of about 8 percent YoY. That’s according to an unnamed official in the department of market operation and consumption promotion.
This surge is driven largely by new business models. Models like fresh food, broadcast-themed online retail and overseas expansion by international retail chains. Such as German’s Aldi and the US warehouse and retail giant Costco who have now entered the Chinese market. eCommerce retail sales were in excess of CNY 7.6 trillion in the year ending November 2019. That’s an increase of about 20 percent for the same period in 2018.
The Ministry of Commerce official added that the growth is also driven by the diversified import channels. Such as daily living expenditure. The service sector, 24-hour economy, and strong purchase power from central and western regions of China. This was reported during the ministry’s end of year meeting in December 2019.
Digital tools, online business models, and industry cooperation plays a key role in the thriving consumption sector and this is made possible through job creation in large numbers and availability of better infrastructure including roads that now reach even the remotest and rural counties in the country. Let’s take for example the headcount at Meituang-Dianping which is currently the country’s biggest on-demand platform by sales, their delivery workforce increased from 2.7 million to 4 million between 2018-2019.
Internet technology is a key enabler. It continues to play a pivotal role in almost every thriving sector of the economy. Hu Jianping, the deputy director-general at the Ministry of Commerce, department of market system development was quoted saying “With digitalization being one of the core trends of China’s takeaway business, delivery options have witnessed expansion. In addition to food and beverages, orders for flowers, plants, cosmetics, and daily necessities have grown in recent years,” as quoted in an article by China Daily.
She finished by saying, that the consumption potential of the Chinese people can be enhanced by increasing incomes. And by companies improving the quality of their offerings for the domestic market. Even when most parts of the globe are experiencing an economic contraction. A strong domestic purchasing power with new service and business models will be central to attracting and keeping foreign direct investment (FDI) for the long term.
The Ministry of Commerce is working to speed up the upgrading of the road network. In major cities across the country. This will open up the consumption potential of rural areas through the use of the internet. China seeks to expand its service sector for export. And at the same time also seek to import quality services to satisfy local demand.