As the capital of the People's Republic of China and home to the largest e-commerce market globally, Beijing has actively addressed and invested in infrastructure, product safety, consumer protection and facilitating cross-border international trades to further cultivate the industry. Today, Beijing is home to some of the biggest names of the industry such as JD.com and other digital giants, vying to set a new precedent at a global scale on the changing nature of digital commerce. Its centralized government has also contributed to the growth of the e-commerce industry by providing a more transparent and inclusive set of operational guidelines.
Our latest report, "Top E-commerce Cities in Asia", examined that Beijing is one of the top e-commerce cities in Asia, along with other cities, such as Singapore, Bangkok, Tokyo, and many more. The report aims to shed light upon the significance of e-commerce landscape in the region and its quick adaptation to global trends. An "e-commerce city" here is referred to an urban city with interconnected infrastructure which makes up an e-commerce ecosystem, helping it thrive.
Beijing's e-commerce growth will remain strong and is expected to contribute up to one third of total retail sales, supported by 78% internet penetration rate, 85% smartphone penetration rate and 68% digital banking penetration. Combination of platforms and payment solution also help to stimulate e-commerce growth, notably in smaller, third-tier cities. Moreover, Chinese consumers are very open to new tech ideas and desire new retail experiences with high expectations of delivery times and convenience.
Beijing's centralized government has contributed to the growth of the e-commerce industry, providing a more transparent and inclusive set of operational guidelines for online vendors to protect consumers. Since the majority of online B2C transactions are conducted by small vendors through multi-functional platforms like WeChat, a large fraction of daily commercial trade online is steered by small vendors with obscure identities and registrations. Recent regulation developments have brought upon consumer rights protection, like banning unscrupulous practices by vendors from deleting reviews, or deliberate order cancellations, mandatory vendor registration and penalties for selling fraudulent goods.
However, Beijing still scores poorly on competition intensity, as the city's e-commerce industry occurred in a vacuum within the boundaries of governmental barriers, isolated from foreign brands and online services. This has cultivated local champions who dominate the current market with platforms and services that cater directly to Chinese consumers. Overemphasis on a Western-based market segmentation model and not a localized approach also fails to capture inherent insights and customer motivations in the city.
Our studies recorded that the e-commerce industry has continued to witness exponential growth worldwide, with an astonishing USD 2.86 trillion in 2018 and are projected to grow further to USD 6 trillion in 2022. The Asia Pacific market had a 35% economic growth rate in 2018 and USD 1.8 trillion retail e-commerce sales, positioning Asia to be a clear leader in achieving one-fourth of global e-commerce share by 2023.
The report provides recommended framework, consisting of 5 key building blocks for startup ecosystem to reach its full potential for Beijing and other global cities can improve their e-commerce ecosystem. This includes: stable and predictable regulatory environments; adequate talent; market readiness and robust infrastructure; funding to scale up the business, and global culture to empower innovative ideas.
Download the full report on Top E-Commerce Cities in Asia.