Executive Summary - Fung Business Intelligence€¦ · Online retail sales growth decelerates;...
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Transcript of Executive Summary - Fung Business Intelligence€¦ · Online retail sales growth decelerates;...
Consumer market continues steady growth; strengthening role of consumption to drive economic growth 01
Government issues multiple policies to support circulation industry development and facilitate supply-side reform
02
Online retail sales growth decelerates; e-commerce players aim for new growth paths03
Smart business models emerge; social networks become new marketplace for commerce04
“New Retail Regime” sees emergence of new retail formats and business models05
Highlights of China’s Commercial Sector 201710
Lifestyle service sector proliferates; growth engine for the commercial sector06
Financing through public listing; smart logistics bring new opportunities to logistics sector10
Building a trustworthy business credit system 07
New forms of business collaboration; outbound M&A activities prevalent09
Strengthening agricultural produce circulation; contract farming gains attention08
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Fung Business Intel l igence
Consumer market continues steady growth; strengthening role of consumption to drive economic growth
In 2016, China’s economy faced persistent downward pressure against the
backdrop of a more complex internal and external economic environment. That
said, the Chinese government’s efforts to push forward supply-side reforms and
transform the economy into a consumption-driven economy have seen some
positive results so far. China’s economy is set to maintain its growth momentum in
2017. GDP growth is expected to grow at 6.7% yoy and retail sales to grow at
10.2% yoy in FY17.
Government issues multiple policies to support circulation industry development and facilitate supply-side reform
The government has promulgated several major policies to support the
development of domestic trade and the circulation industry over recent years.
Within the principle of supply-side reform (refering generally to the upgrade of
quality outputs to accommodate an evolving demand pattern), the country’s
development themes of innovation, coordination, green development, openness
and a shared economy will each play a crucial role in guiding the transformation
and upgrading of the circulation industry.
Online retail sales growth decelerates; e-commerce players aim for new growth paths
After years of rapid growth, many online retail segments such as apparel and
home electronics products have shown some signs of saturation. Players are now
seeking to tap into new market segments and extend their offline reach.
Additionally, they are finding new business practices in the hope of better
meeting the needs of consumers. At the same time, the rural online retail market
has become a particular growth engine with the near saturation of the urban
online market. Some leading e-commerce players have increased efforts to
expand their distribution networks in rural areas.
Executive Summary
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Ten Highl ights of China’s Commercial Sector 2017
Smart business models emerge; social networks become new marketplace for commerce
In today’s digitized world, the wide adoption of the mobile Internet and advanced
technologies has facilitated the creation of new business models and innovative
business practices. The adoption of virtual reality technology in business, the use
of social media in the context of e-commerce and live streaming on social
networks are examples. All these are set to revolutionize the ways enterprises
operate their businesses.
“New Retail Regime” sees emergence of new retail formats and business models
China’s retail market has seen a great deal of change as it entered a “New Retail
Regime”: An explosive growth of community-based small-format stores,
dominated by convenience store chains, specialized stores, small-scale
supermarkets and fresh produce grocery stores plus an increasing number of
concept stores aiming to enhance the shopping experience have opened in top
tier cities; larger numbers of online retailers are advancing from clicks to bricks.
Moreover, the deployment of online-to-offline (O2O) business strategies by
retailers to enhance shopping experience has transformed the retail landscape.
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Ten Highl ights of China’s Commercial Sector 2017
Lifestyle service sector proliferates; growth engine for the commercial sector
Thanks to the rapid development of e-commerce, booming O2O platforms and the
rise of the sharing economy, the local lifestyle service sector in China have enjoyed
impressive growth over the past year. Among the subsectors, the catering sector
took the lead with mass dining being the key driver of growth. As well, the concept
of O2O has evolved and extended to services beyond retailing. In particular, O2O
food delivery, accommodation and housekeeping service industries have witnessed
tremendous growth. These industries are expected to help push China’s transition
towards a more consumption-driven, service-based economy.
Building a trustworthy business credit system
China has witnessed extraordinary progress in economic development and
commerce over several decades. Yet, exponential growth has also been
accompanied by business malpractices. Food safety issues, corporate fraud,
fake products, tax evasion, illegal crowdfunding, “brushing” orders on
e-commerce platforms and raised prices before sale have drawn particular
attention. Creating a sound, trustworthy business credit system will become a key
government initiative in 2017.
Strengthening agricultural produce circulation; contract farming gains attention
China’s “Internet Plus” strategy has substantially boosted the upgrading and
transformation of agricultural circulation. The rise of rural e-commerce, in
particular, offers a new distribution channel for farm produce. At the same time,
agricultural production through contract farming, carried out according to prior
agreement, has gained increasing acceptance as an innovative move and will
continue to serve as a broad-based strategy for rural development.
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New forms of business collaboration; outbound M&A activities prevalent
New forms of business collaboration and partnership emerged in China’s
commercial sector over 2016. To strengthen their industry positioning, increasing
numbers of companies used mergers and acquisitions (M&A) to expand into
related businesses. Many M&A activities appeared not only within the same
industry but also between companies of different sectors, different channels and
between traditional rivals. Additionally, China’s “Go Global” strategy and “One
Belt One Road” Initiative have prompted large domestic companies to seek
overseas expansion through M&A. Both domestic and outbound M&A activities
are set to remain prevalent in 2017.
Financing through public listing; smart logistics bring new opportunities to logistics sector
China’s logistics sector has entered a phase of transformation and upgrading in
2016. The integration of the express delivery market, in particular, has been
expedited by M&A and restructuring, as increasing numbers of companies
embrace capital markets. This trend will continue into 2017 and remain a
strategic method for companies to expand their businesses. At the same time,
the development of smart logistics and adoption of advanced technologies to
improve operational efficiency and provide more high value-added services have
become winning cards for the logistics sector.
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Ten Highl ights of China’s Commercial Sector 2017
Fung Business Intelligence, Member of the Fung Group
Authors
Teresa Lam and Lucia Leung (Asia Distribution and Retail, Fung Business Intelligence)
Contributors
Christy Li and Renne Chan (Asia Distribution and Retail, Fung Business Intelligence)
Administrator
Yu Di (Deputy Secretary General, Expert Committee of the China General Chamber of Commerce)
For more information
Secretariat of the Expert Committee of the China General Chamber of Commerce
25 Yuetan North Street, Beijing, China; Postcode: 100834
Phone: (010) 6606 2250 Fax: (010) 6606 2250
Email: [email protected] http://www.chinabt.net
Fung Business Intelligence
10/F, LiFung Tower, 888 Cheung Sha Wan Road, Kowloon, Hong Kong
Phone: (852) 2300 2470 Fax: (852) 2635 1598
Email: [email protected] https://www.fbicgroup.com
@ Copyright 2017 Fung Business Intelligence and the Secretariat of the Expert Committee of the China General Chamber of
Commerce (ECCGCC). All rights reserved.
Though Fung Business Intelligence and the Secretariat of the ECCGCC endeavor to ensure the information discussed in this
material is accurate and updated, no legal liability can be attached as to the contents hereof. Reproduction or redistribution of
this material without Fung Business Intelligence’s or the Secretariat of the ECCGCC’s prior written consent is prohibited.
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