Now and Next for China: Economic Snapshot
In the last couple of weeks, there have been a couple of economic news items from China which may be of interest to readers.
China Now 2nd Largest Economy
The first was the big news that after three decades of continuous double-digit growth, China has recently passed Japan to become the world’s second largest economy behind the United States. Although this had been widely anticipated for some time and is largely symbolic, it confirms that despite the economic downturn caused by the global financial crisis, China is still maintaining its march to an economic superpower.
The country has still a long way to go to overtake the USA. Currently, the Chinese economy is less than one tenth of the size of the US, however, many expect that if China maintains its current growth then it will overtake the USA in about 20 to 30 years.
Ecommerce Sector Surges
The other news which may be of greater interest to readers is that the Chinese ecommerce sector volume sales have surged by 60% in the first half of 2010 and are expected to see rapid growth over the next few years. The industry as a whole is expected to grow by an average rate of 35%. There has also been a huge increase in the number of new businesses starting or moving to an online platform particularly in the B2B sector.
I believe this growth is a direct result of the economic downturn as businesses are identifying and establishing new innovative ways to cut costs, improve efficiency and provide innovative solutions to customers via an online platform.
Despite these impressive economic figures, there are serious challenges ahead for China. The economy is heavily dependent on exports which have been seriously affected by the world’s economic downturn particularly in the West. Rising labor costs and domestic inflationary pressures have seriously cut into the profitability and cost effectiveness of Chinese businesses particularly manufacturing exporters.
For some time it has been obvious that the country has to move away from its captive export driven manufacturing base towards a new innovative approach. As Chinese businesses make this transition, new and better products and services will emerge.
Push To Innovation
There is now a concerted push by the Chinese Government to introduce a Chinese innovation policy through the use of incentives, education programs and other methods. My company, DHgate.com, is also working actively to ensure our Chinese clients and other SME exporters are at the forefront of innovation. I believe that constant innovation is the key factor in ecommerce businesses. We have constantly been at the forefront of developing new policies, facilities and tools to improve the Chinese wholesale trading experience for both buyers and sellers
One of our major programs is training Chinese suppliers and manufacturers on how to utilize ecommerce technology to better interface with their Western customers as well as teaching them how to provide Western style customer service.
In future posts, I’ll give some further details of these programs and how they are changing the way Chinese online wholesalers and suppliers are doing business with their Western customers.