M-Commerce to Reach $41 Billion in China By 2015

on April 25 2013 | in Digital Trends | by | with No Comments

M-commerce, mobile commerce, Starbucks

China’s e-commerce exploits are well known by this point, but recently the China Economic Review suggested that the nation is dominating the newest playing field: mobile commerce, or m-commerce.

According to the IT analyst firm IE Market Research, 1 billion people are expected to make upwards of $1 trillion in transactions via mobile devices worldwide by 2016.

In 2012, Chinese customers spent $210 billion shopping online, and made $7.7 billion worth of transactions on mobile devices, according to McKinsey. That translates into growth of more than 200 percent for China’s mobile commerce market between 2011 and 2012. McKinsey expects that mobile commerce transactions will grow to $15.3 billion this year.

China’s largest online retailer, Alibaba, made $170 billion in online sales last year – more than eBay and Amazon combined.

Alibaba and other small internet firms helped generate buzz for mobile commerce by developing apps for shopping and payment on the go. Now, however, the initiative is being picked up by China Unicom, the country’s second largest mobile service provider, in a partnership with Korean conglomerate SK Group.

The duo is hoping to develop enticing mobile shopping tools, similar to the “mobile wallet” that Google offered Sprint clients in the U.S. Mike Chen, an internet analyst at China Merchant Securities in Shenzhen, called the joint venture, “the first substantial move from one of China’s mammoth telecommunications companies to support mobile commerce in the country.”

Alibaba data predicts that m-commerce in China will be a $41 billion industry by 2015, surpassing the projected $31 billion for m-commerce in America for the same year.

Alibaba said that payment volume on Alipay, its online payment service, grew 546 percent via mobile devices in 2012. On China’s “Singles Day,” a burgeoning November consumer holiday, Alipay handled $193 million in transactions.

In 2011 internet developer Shanghai Baiban launched Zhuixin, a mobile shopping platform that allows merchants to create mobile applications for their stores in minutes, McKinsey reported. With 50,000 merchants joining daily, Zhuixin boasted 20 million users after 13 months of operation. So what is standing in the way of this unprecedented industry?

“Security is the first challenge. If you’re using a PC, people feel more comfortable. But if you use a phone for sensitive info, people worry about security,” said Chen. But the partnership between China Unicom and SK is thought to alleviate these concerns, as the association with a Korean partner will help keep Unicom operating with international standards.

In 2011, smartphone penetration in the U.S. reached 42 percent, but the country accounted for just 5.4 percent of the m-commerce marketplace. Meanwhile smartphone penetration in China stood at just 11 percent; yet about 4 percent of goods were bought with a mobile device in 2012. As the smartphone industry is expected to expand rapidly in the coming years, China’s share of the m-commerce landscape will likely increase with it.


photo credit: jason howie

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