THE BLOG
05/05/2014 16:01 BST | Updated 02/07/2014 06:59 BST

China's Billion Dollar Game-Changing M-Commerce Industry

SHANGHAI, China- The second largest economy in the world and growing at a rate faster than any other country can compete with. The Chinese economy grew by 7.4 per cent in Q1 of this year alone, with the Yuan Renminbi surpassing the Swiss Franc to become the seventh most traded currency in the world. The Chinese are set to spend $274.5bn on e-commerce platforms alone this year and by 2018 China will be the biggest mobile-commerce market in the world.

By the end of Q4 of this year, m-commerce will grow by 91.1 per cent in China, exceeding $50bn in revenue. One company in particular are leading the business of m-commerce. The Alibaba Group (who is also preparing for one of world's biggest ever IPOs) are the single dominant force of both e-commerce and m-commerce in China.

Two of Alibaba's e-commerce sites; Taobao and Tmall account for 76.1 per cent of total spending from smart phones in China (its main attraction being branded products are 30-50 per cent cheaper than in the stores). To put this into perspective in November 2013 on Taobao's annual shopping event, 'Singles Day', sales reached in excess of $5.6bn, compared with Cyber Monday in America grossing only $2bn.

The increase in m-commerce transactions is symbiotic with China being the world's biggest maker and consumer of smartphones. However, the influx of m-commerce isn't without its problems. Although Chinese retailers have tried to develop digital payments solutions to make the checkout process simpler on smart phones, mobile payments are still in its infancy stages.

No one company has yet stepped forward to lead the mobile payments industry in China. Instead, the competition is rife with many retailers competing against each other to come up with faster and more tech-savvy solutions. Alibaba's parent company Alipay, (who led the mobile payment market last year by 69.9 per cent) however, are spending millions to maintain their dominance by trying to get their competitors to adopt their unique m-commerce checkout solution.

So what's driving the m-commerce boom? According to KPMG: "Mobile purchasing aligns with the Chinese consumer's desire for speed and the convenience for 'any time' shopping...The trend towards smarter and more functional phones and tablets, coupled with the rising use of social media platforms to inform and connect consumers, is likely to fuel the continued rise in the number and proportion of so-called m-commerce transactions in the Chinese e-commerce market."

Not everyone in China is so keen on m-commerce, however, particularly when it comes to buying luxury goods. Chinese consumers accounted for nearly 50 per cent of total global luxury sales in 2013. According to KPMG China, 69 per cent of consumers still prefer to use traditional desktop PC's to shop for luxury fashion. They cited reasons such as; higher prices resulting in longer decision-making and ease of searching through retailers for choice as the main reasons for favoring PC's.

Surprisingly, m-commerce is still in its early stages and only accounted for less than 1 per cent of the total $3.9 trillion generated from card payments in China last year. But with Alibaba's billion-dollar IPO about to be announced, there is the potential for one company to be the single biggest generator of revenue in both the e-commerce and m-commerce industries globally.