China: The Future of Social Commerce

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We recently highlighted the surge in ‘Chinese Pinterest clones’ on this blog and when asked by the BBC to comment on an article on the same topic, I mentioned “I am looking to these Chinese clones to provide the next key paradigms in social commerce.” Two days later, we excitedly read the McKinsey China report on  ‘China’s Social Media Boom’; the results were impressive.

Chinese netizens

China’s internet audience is huge – over 500 million – and growing rapidly. More importantly, this audience is active with over 50% spending more than 12 hours a week online. 95% of netizens living in cities with a population in excess of 2.5 million are registered on a social networking site and Chinese internet users spend an average 46 minutes per day on such sites.

Trust in Chinese e-commerce

This has great significance. This is already the largest internet population in the world and it looks like the most actively social. The Chinese internet population is also heading towards forming the largest e-commerce market in the world by 2015.

China predicted e-commerce boom

When I lived in China 2006/2007, it was nigh impossible to order physical goods online – trust in infrastructure was simply not yet there. The impressive growth in e-commerce sales indicates a greater trust in China’s postal network and e-commerce sites.

The issue of trust is important in marketing to Chinese consumers. Peer-to-peer recommendations have a more profound impact, as the McKinsey report says this is likely due to a distrust of formal institutions. Building networks of trusted influencers – not as a commodity but as groups of people who can and will trust your products and messages – will be crucial to online interaction with Chinese netizens.

Social Commerce

This leaves the issue of social commerce. One of the more interesting insights into the rise of Pinterest clones is that they tend to have closer links with e-commerce. While Pinterest has had trouble implementing its revenue model, Chinese sites like Faxian showcase what can be bought and funnel users to a purchase.  Per McKinsey:

‘As e-commerce rises, a compelling opportunity for brands will be to prompt immediate purchases online by consumers searching for product information using social media.’

The key to unlocking these immediate purchases will be through harnessing netizen recommendation.