DATA POINTS: With online retail in China, connection equals spending

McKinsey points out that China was already the world’s second-largest e-tailing market in 2011, with a value of US$120 billion—around $70 billion behind that of the US. Japan was the next largest at $107 billion. The sector has seen a compound annual growth rate of 120 per cent since 2003 and drove $190 billion in sales last year. It is likely to grow substantially in line with an increase in the access to broadband internet.

The market has an altogether different structure to that of the US. Rather than being dominated by independent B2C merchants, up to 90 per cent of Chinese e-tailing is made up of marketplaces. More than six million sellers operate on the Taobao marketplace alone, according to McKinsey.

A surprise finding was that fourth-tier cities attract the highest ‘share of wallet’ online. While first-tier consumers spent the most overall, their fourth-tier counterparts directed the greatest percentage of their disposable income online — 27 per cent compared to 18 per cent in the first tier.

The most money is spent on apparel, followed by recreation and education and household products.

The market is highly concentrated. Tmall.com holds the lion’s share of the B2C space, while Taobao dwarfs competitors in C2C retailing.

The number of broadband accounts currently stands at 129 million — the highest in the world — but represents a penetration rate of just 30 per cent.