Business / Companies

Caught out by the online shopping craze

By Meng Jing (China Daily) Updated: 2015-08-25 09:29

When Huang Guangyu, the former chairman of GOME Electrical Appliances Holding Ltd, went to prison in 2008, the most popular mobile phone in China was Nokia.

Seven years later, Nokia is no longer a major player after being bought by Microsoft Corp in 2013, and now smartphones such as Apple Inc's iPhone dominate the market.

For Huang, understanding how smartphones can change a business will be crucial when he is finally released from prison. But then, the online sector has revolutionized the way people shop. Below are the major online changes that Huang has missed since being locked up in prison:

Internet boom

About half of China's population are now regular Web users compared with just 22.6 percent by the end of 2008. The country's online population has more than doubled to 668 million by June this year.

About 88.9 percent of them access the Internet through smartphones, according to China Internet Network Information Center, a government-backed industry body based in Beijing.

Rise of e-commerce

Just two months after Huang went to prison, Inc, which was launched in 2004, received $21 million in funding from venture capital investors after going through a rough patch.

Riding the online shopping wave, has since built an e-commerce empire, specializing in selling consumer electronic brands. The company has more than 60 percent of the online home appliance market in China and is a major rival to GOME.

Tmall, the business-to-customer Internet site rolled out by Alibaba Group Holding Ltd in 2012, is another key competitor. It now runs the biggest B2C marketplace in the country.

Popularity of WeChat

Texting was probably the easiest way for people to stay in touch when Huang went to prison. By 2010, Tencent Holdings Ltd had launched WeChat, the instant messaging app, which has grown into a powerful online gateway with 600 million users.

According to Tencent, about 55.2 percent of its users open the app more than 10 times a day. Brand loyalty is strong because WeChat is constantly looking to upgrade its services.

Marketing and branding on WeChat has also become vital for companies if they are to stay ahead of the pack. The mobile app acts as a platform to connect offline companies and service providers with potential online users.

It has become trendy for Chinese shoppers to book services or buy tickets and coupons online before visiting major stores.

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