China’s place in the world economy has been on the up since 1978, when the country first opened to foreign investment. That year, China’s total imports and exports of $20.6 billion ranked 32nd among all nations and accounted for less than 1% of global trade.
Fast forward to today and China has surged ahead, accounting for 16.3% of world GDP, with only the USA ahead.
This, coupled with the fact that Chinese consumers purchased 172% more than US consumers in 2015 in terms of value ($589.61 billion vs $247 billion), shows that Chinese spending is well and truly outperforming the West.
It’s no wonder that foreign brands are increasingly trying to establish an effective and sustainable way of reaching China’s 1.35 billion consumers.
Open for international business
Many international businesses treat the Chinese market with caution, often due to a lack of knowledge of the market, language barriers and simply not knowing how to gain a foothold in the market.
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However, the Chinese government has taken several steps to make it easier for consumers to buy overseas goods online, including setting up cross-border e-commerce pilot zones, which now exist in approximately 10 cities.
Here, China’s customs service provides fast clearance of small orders sent to Chinese consumers from outside of China. This means goods no longer have to be cleared by customs before reaching their end recipient, ensuring the process is easier for both parties, and infinitely less time consuming for the receiver.
Using the cloud to access china
While the internet in China remains a mystery to many foreign businesses, modern technology means it has never been easier for foreign outfits to access and thrive in the world’s largest consumer market.
Indeed, consumers are hungry for Western brands, as demonstrated during the Alibaba Group’s recent 11.11 Global Shopping Festival which set all sorts of records as USD 17.8 billion of gross merchandising value (GMV) was settled through Alibaba Group’s third-party online payment platform Alipay (an increase of 32% compared to 2015).
During this festival, 37% of total buyers purchased from international brands or merchants from countries including Japan, United States, South Korea, Australia and Germany.
Powered by Apsara, Alibaba Cloud’s super computational engine supported the festival with scalable computing capabilities. It facilitated a record-breaking 175,000 orders per second seen during unpredictable peak traffic spikes, without incident.
Of course, this is just a snapshot of the opportunity within the retail sector, but the broader trend is that, for those who can establish themselves, China offers significant opportunities.
The surge in interest in the Chinese market also coincides with a broader global trend in cloud computing.
Initially, the cloud was regarded as the domain of large businesses and they were the target market for some traditional IT service providers and their “enterprise cloud” offerings.
However, in recent years, public cloud service providers have emerged and not only become the provider of choice for small and medium sized businesses, but also attracted larger clients from under the nose of the traditional enterprise cloud providers.
Ultimately, this shake up of the market is down to CTIOs within large enterprise businesses basing their choice of cloud providers on the product and price, rather than a provider’s specialism in a particular business type.
One additional important consideration for businesses tackling the Chinese market is data compliance and operating beyond the Chinese Firewall.
Alibaba Cloud suggests it is the only major global cloud provider able to operate efficiently inside and outside China, facilitating access to the Chinese domestic market whilst also providing the peace of mind for businesses who can focus on their day-to-day plans in the knowledge that their data is safe.
As the Chinese market matures, China’s public cloud market is expected to more than double to $3.8 billion by 2020 from $1.8 billion last year, according to a 2015 report from Forrester.
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Factors driving the adoption of public cloud services in China include more smartphone users, which means developers have to handle heavier traffic on apps, and the fact that China’s digital penetration continues to rise year on year.
The next few years are likely to see a huge amount of technological progress within the cloud services industry, which will be accentuated by the opening of relatively unknown markets, most notably in China, India and Southeast Asia.
Those businesses who are able to capitalise on the dual opportunities of modern cloud based IT infrastructure and access to new markets are likely to steal a march on more conservative competitors.
Sourced by Yeming Wang, general manager, Alibaba Cloud Europe