China to keep ruling global e-commerce market

The country’s massive production output benefits its e-commerce platforms.

China’s e-commerce giants are likely to continue dominating cross-border trade in the next five years, driven by the country’s strong manufacturing base and efficient logistics, analysts said.

The country’s e-commerce platforms benefit from a structural advantage due to the sheer volume of goods produced in China, Chia Yi Han, principal consultant at business consulting firm Frost & Sullivan, told Retail Asia.

“If we kind of look at what products we have at home, I think the large majority comes from China,” he said. “It's demand and supply. There’s a lot of production that comes from China, and this gives Chinese e-commerce companies a significant advantage.”

China also has a well-developed logistics ecosystem that ensures efficient distribution across global markets. “You cannot get more efficient than companies where the products have originated from.”

Chia added that an integrated logistics infrastructure, including distribution hubs and customs processing, strengthens China’s market position.

China, which has the biggest digital buyer population, leads global e-commerce, surpassing US revenue by more than $486b. The nation’s e-commerce transactions reached $6.56t (¥46.83 t) in 2023, up from $6.14t (¥43.83t) a year earlier, according to German data portal Statista. 

Lionel Berthe, CEO for the Asia-Pacific region at global e-commerce and mail delivery firm Asendia Management SAS, said Chinese platforms have accelerated their cross-border expansion in the past 18 months amidst shifting consumer habits.

Chinese marketplaces have capitalised on consumers looking for more affordable products, letting them capture a huge chunk of e-commerce growth, Berthe said.

But the rise of Chinese platforms and increased cross-border transaction volumes have placed new demands on global supply chains, he pointed out. “With this huge increase in cross-border flows, there are potential bottlenecks.”

Established global players are also responding to China’s growing e-commerce influence by copying proven methods used by platforms like Temu, which offers heavily discounted consumer goods mostly shipped directly from China.

Berthe said policy shifts in key markets could affect global e-commerce growth prospects, especially as governments try to protect local products.

Despite these challenges, both Chia and Berthe expect Chinese dominance of global e-commerce to continue in the near term.

Whilst manufacturing shifts in markets like India, Vietnam, and Indonesia could affect global trade dynamics in the long run, China’s infrastructure and scale give it a formidable lead, Chia said.

“It’s a long-term shift that needs to happen,” he said. “For the next five years at least, China will continue to lead cross-border e-commerce.”