2021: what is hot and what is not in online business in China

As we all well know, Chinese online market is extremely dynamic: consumer preferences change, new technologies and solutions are being adopted as we speak and the whole landscape is being pressured from all directions to be more efficient, user friendly and especially environmentally sustainable. And as the volumes are massive (in 2020 online sales amounted to 1.82 trillion US$, year-on-year growth of 10.9%), small mistakes or wrong strategy entering the market may become very costly.

In this article we have listed some of the hottest & latest developments in the Chinese online market from our perspective.


What are the new & emerging technologies and related regulations in Chinese online business?

Drone delivery infrastructures are being deployed beyond city centers, to more suburban districts, opening the eCommerce markets in the remote counties, thus further increasing the reach & growing the potential markets for drone deliveries.

Video-, livestream- and chat-based sales solutions offering consumers not only a better introduction to the products, but also how those products would sit in consumers’ homes (VR) and how those products could be used. Going beyond typical product introductions, covering ideas for how to use the products, suggestions for alternative use cases and demonstrations.

New technologies like 5G, new server & optical fiber technologies enabling the use of HD video, high quality live streams and interactive discussions with high speed and affordable prices. Like in Beijing, if you pay 200RMB (26 euros) per month, you get 1000MB home WIFI line with unlimited data plus two free of charge 5G mobile numbers with 40GB monthly mobile data quota each, making this very affordable. Therefore, also lower income people from suburban areas can afford watching videos & livestream while shopping, expanding the markets further.

Consumer data protection and privacy related matters are quickly becoming more strictly regulated. Any company holding over 1 million accounts will be subjected to constant inspections to ensure consumer data security & privacy.

New legislation on environmental delivery packaging became effective on March 12. Delivery boxes and materials are to be changed according to a strict schedule to eco-friendly materials. Also major delivery companies are required to start using shared-cartons for delivery.


New developments in the e-commerce industry

Tao Bao platform (owned by Alibaba) has become ever more important player. In the past, Alibaba used to focus on Tmall and Tmall Global. But now due to tightening competition and changes in consumer demand, Alibaba has turned their focus back on Tao Bao. There are many reasons behind this, but we believe one major reason is tightening competition & Tao Bao being perceived to be friendlier towards SMEs & farmers especially. Alibaba cannot overlook this part of the market, otherwise platforms like Pinduoduo would take them over.

Sales of imported products have been decreasing especially in the grocery business (because of the documented coronavirus cases & concerns). Local brands have gained market share in almost every category, together with “global brand/design, made in China” products. Locally produced products are perceived to be more secure.

One very interesting & evolving development is the new anti-monopoly law and national security law and the challenges they set to internet giants like Alibaba: as we have seen, Alipay and Didi (ride hailing service) have already been impacted. We will keep our eyes on further developments around this.

Lastly, buying online traffic has become very expensive. Therefore online shops are making their own content in an attempt to effectively lead traffic to their shops.


How does China’s online business differentiate from European online business?

One of the most striking differences in online business between Europe & China is in the way Chinese consumers use & demand live chat throughout the whole buying process: they are asking many details about products, prices, delivery, usage, how to get best deals etc. before making the buying decision. Typical (passive) Amazon-like pages do not work in China.

Similar to Europe, in China consumers can return any products they buy from online within 7 days after they received the products, without any reason. Consumers typically buy all the things they like at a time and then pick 1-2 things and return rest: return rates in some categories like fashion can be as high as 45%!

Chinese consumers are extremely careful about the quality of products when the retail price is roughly over 100RMB (around 22€). Any kind of imperfections are not accepted, anything like a minor scratch or a slightly squeezed package or a barely unseen flaw is not acceptable: goods with any flaws will be returned.

Chinese consumers are extremely price sensitive. In most categories, consumers are always putting price as #1 buying criteria. Other things matter too, but price is always #1. Consumers would like to pay more for better quality or better functions, or better brand for sure, but then in that same “higher” level of quality, same level of better function and same level of branding, they are seeking for the lowest price.

Therefore consumers use online channels for their purchases because the general perception is that online platforms have better prices. Many International companies have however neglected this fact, executing wrong strategies repeatedly.

However, the extreme price sensitivity does not apply to luxury items, or high-tech gadgets, cars, educational services, cosmetics or medicine where brands and products have certain commonly-accepted values and where consumers are fine accepting higher prices. So the price sensitivity in China goes to two extremes: certain goods with commonly-accepted high prices, price is not a problem; for all other goods, price is #1 factor.

Chinese consumers have also a very strong sense of protecting their rights, they easily sue retailers or product companies. The authorities offer very easy, highly effective methods for consumers to sue sales and product companies if they feel the need for it. This has forced retailers, especially online retailers, to strictly follow the legislation.

Lastly, consumers are often using financing tools to pay for even the smallest amounts in installments, even for as low as 20RMB (2,5€) deals.


Should you be interested in discussing any of these or related topics further in detail, we would be happy to do so. Just contact me through email heikki.lassila(at)

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