NRI Papers
No.162 May 1, 2011
  Strategic Use of Online Sales Aimed at China's Rapidly Growing Consumer Market (Volume 1)  
Hisao NAKAJIMA, Tomoyoshi KUZUSHIMA, Xiaochun HUANG

The Chinese consumer market is spreading from the coast to the inland regions. To be able to respond to this expansion, Japanese companies must move quickly to expand their sales channels inland and to enhance their management of sales channels that are dispersed throughout the country.

As one of the strategies for tapping the middle class market consisting of households with an annual disposable income of 50,000 yuan or more, which is rapidly expanding in the inland regions, Japanese companies should focus on the strategic use of online sales.

Online sales can lead not only to an increase in sales, but also to the ability to project future demand, which enables companies to optimize distributor inventories. It is also possible to develop brands aimed at young people within the Internet community. These effects brought about by the strategic use of online sales have already been proved in existing online shopping sites.

As of the end of June 2010, the number of Internet users in China had reached 420 million, making the country the world leader in terms of the number of users. The size of the online shopping market in China already equals that of Japan. Up to 2013, the market is projected to continue to grow at an average annual rate of 48 percent.

Currently, Alibaba Group's Taobao has an overwhelming market share of China's online retail industry. The presence of Taobao is, therefore, by no means insignificant for Japanese companies planning to conduct online sales targeting Chinese consumers.

Contents
I Reform of Sales Channels Needed to Tap the Inland China Market
II Rapidly Expanding China's Online Shopping Market
III Trends in the Online Sales Industry in China

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