E-tailing: Report on E-Commerce in China

Starbucks Guomao 1

Deleting Spam. Again

1034 hrs.

Paul Denlinger over at China Vortex points us to a new report from the Research Institute Data Center of China Internet, which claims that online spending in China passed US$37.5 billion in the first six months of the year, representing a 58.2% jump over the same period in 2007. The report goes on to predict that overall spending online in China will surpass $86 billion for all of 2008.

Given that the report supports my belief that electronic retailing in China is on the verge of really taking off, I was pleased to see it. But I have reservations about the report nonetheless.

The first is a small thing. There appears to be no distinction made between “electronic commerce,” which can cover business-to-business transactions along with business-to-consumer and consumer-to-consumer, and “electronic retailing,” which is primarily business-to-consumer but also includes a large chunk of consumer-to-consumer.

This is important because business-to-business commerce in China is huge (remember the Alibaba IPO?), and could well be skewing the numbers. Let’s set that caveat aside for the sake of argument.

The second concern the research itself. I used to conduct market research seminars for foreign students coming to China, and I noted that, with apologies to Mark Twain, there are lies, damned lies, and statistics, and that this holds trebly true in a country where there is a long history of massaging numbers to serve political, economic, and commercial purposes. I am concerned this might be the case here.

I didn’t manage to find the organization that produced the report online, nor have I actually seen the report and reviewed its methodology, so I it is hard to judge the veracity of the numbers. What is more, AFP notes that the Data Center of China Internet is an industry group, so I worry that the report may have been influenced by its sponsor.

If you can get your hands on the report, give it a read, but have a full salt shaker close at hand.

The way I normally handle reports of this nature is to give more credibility to the overall trend than the actual numbers. The real takeaway from this is that e-commerce in China is – as Paul Denlinger says – hitting the bend in the hockey stick.