Chinanet Group Limited (CNG), the largest business-to-consumer (B2C) online marketplace in China, recently released their annual report for 2018. The report found that the e-commerce market in China grew by 18% in 2018 compared to 2017. And the majority of online shoppers in China now prefer to purchase brands they know and trust.
While the growth in China’s e-commerce market is promising, it comes with some challenges. Many online shoppers in China currently buy products based on fraudulent claims of authenticity or reliability. In some cases, online shoppers in China may fall victim to online fraud and scams.
Scammers target online shoppers in China with offers to buy counterfeit products at a discounted price. These products are usually of poor quality with a low price tag to make them attractive to bargain hunting consumers. The problem is that once a consumer makes the purchase, there’s no way for them to recoup their losses due to the product’s low quality.
Counterfeit Products Plague E-commerce Markets in China
According to the Chinesenets Group Limited (CNG) 2018 Year in Review report, 22.9% of online shoppers in China have fallen victim to online fraud or scams. Of those who purchased a branded product, 1.8% have reported it as being faulty or counterfeit. This is compared to 1.5% of those who purchased a generic product. Most commonly, respondents said they were misled by an unauthentic product’s claims of authenticity or reliability.
Based on a YouGov survey conducted in December 2018, 11% of Chinese respondents said they would avoid purchasing a product from an unauthentic or unreliable brand. 26% would only purchase a product if they knew the brand was genuine. 13% weren’t sure, while 5% would purchase a product regardless of its authenticity.
The Chinese e-commerce market is now worth US$220 billion and growing at 24% year-on-year. The market share of the biggest online marketplace, Alibaba Group Holding Limited (BABA), is expanding, too. In 2018, BABA’s share of the market grew to 23.3% from 16.9% in 2017. This is largely because of the company’s massive reach into China’s rural communities, where shopping online is not yet common practice.
Why Buy From An Unauthentic Or Reliable Brand?
There are several important factors that determine whether or not to purchase a product based on its authenticity or reliability. According to the Chinesenets Group Limited (CNG) 2018 Year in Review report, 28% of online shoppers in China said they would consider paying more for a product that was authentic or reliable. 24% said they would pay the same price for a product that was either authentic or reliable. 21% weren’t sure. These figures represent a slight increase from last year’s figures.
While the growth in the number of online shoppers in China is promising, it will likely never reach the size of the country’s roughly 900 million population. The market is skewed towards younger generations who have grown up in the digital era and have learned to shop online. With the rise of TikTok, we are likely to see more of these savvy shoppers.
The prevalence of fraud and scams in China’s online shopper ecosystem is a major concern. The majority of online shoppers in China prefer to purchase brands they know and trust. Authentic or reliable brands, such as those that appear on Taobao, Tmall, and JD.com, gain a competitive advantage by connecting with consumers on a personal level. This builds consumer trust when there’s no other way to build trust in a digital world.