Yihan Ma
Research expert covering e-commerce and FMCG in Greater China
In 2021, China remained one of the leading retail markets in the world. That year, the country generated a retail sales revenue of over 44 trillion yuan, which translated to approximately 6.5 trillion U.S. dollars. The rampant COVID-19 pandemic brought profound changes to China’s retail landscapes. On the one hand, e-commerce has become increasingly crucial in China’s retail industry, with new trends like live commerce and quick commerce prevailing amid the pandemic. On the other hand, patriotic consumption was on the rise. Domestic brands and products with Chinese characteristics became the new favorite of many Chinese consumers.
In 2021, China remained the most attractive retail market in the world. For that reason, it is only natural that foreign and domestic vie fiercely for the attention of Chinese consumers. Once successful in China, international retailers today must face the fact that many Chinese shoppers have shifted their brand preferences. Half of the respondents in a post-COVID-19 survey said that they increased the purchase of Chinese products after the pandemic. In another survey, two-thirds of consumers confirmed that they prefer Chinese brands over foreign ones. The decision was not only caused by patriotism but also because domestic brands offered greater value for the money.
Retail industry in China
Digitalization and localization were integral to China’s most recent retail industry development. In 2021, China’s online retail of physical goods grew significantly. FMCG retailers have gained more online penetration as fresh food commerce and q-commerce have emerged. Besides, an increasing number of offline retailers started to develop an omnichannel retail strategy. A survey in June 2022 revealed that nearly 50 percent of Chinese consumers increased their online shopping usage in the last year.In 2021, China remained the most attractive retail market in the world. For that reason, it is only natural that foreign and domestic vie fiercely for the attention of Chinese consumers. Once successful in China, international retailers today must face the fact that many Chinese shoppers have shifted their brand preferences. Half of the respondents in a post-COVID-19 survey said that they increased the purchase of Chinese products after the pandemic. In another survey, two-thirds of consumers confirmed that they prefer Chinese brands over foreign ones. The decision was not only caused by patriotism but also because domestic brands offered greater value for the money.
Retail industry amid the pandemic
The strict zero-COVID policy undoubtedly benefited the Chinese economy in the first two years of the pandemic. While the rest of the world was caught in the post-COVID recession, in 2021, China’s retail revenue recorded its most robust growth since 2014. Rural and urban households continued to witness steady growth in disposable incomes. However, as the world enters the third year of the COVID-19 pandemic, it has become bitter-sweet for many Chinese business owners, especially those who engaged in the retail industry. April 2022 saw a full lockdown in China’s 25 million-resident metropolis Shanghai, resulting in China’s consumer goods retail sales revenue dropping by more than 11 percent month-over-month, the most significant decline in two years. With the unemployment rate and inflation both seeing an upward trend that month, consumer confidence in China experienced a drastic plunge, hitting the lowest point since the 90s.
