Consumption statistics during the past holiday week topped one trillion yuan ($157.6 billion), a significant landmark since China introduced the weeklong holiday over National Day.
The record number shows that consumption has become the biggest driving force of the economy amid sluggishness, and a close look into the statistics reveals future growth points.
Xu Zheng, rural consumption director in Shaanxi, Gansu and Ningxia provincial and regional areas for Alibaba Group Holding Ltd, said employees of the company had barely any rest during the hectic holiday week.
“From washing powder to electric vehicles, our partners in villages helped locals to shop online,” Xu said.
The consumption enthusiasm in rural areas outpaced those seen during normal periods. During the seven-day holiday, rural residents from the areas Xu was responsible for completed more than 10,000 deals.
Rural China has large consumption potential, but it had been hampered due to logistical barriers and an underdeveloped consumption culture. E-commerce has bridged the gap between rural consumers and commodities popular in large cities.
A 2014 report on China’s Taobao villages predicted that the rural online shopping market value has expanded from 180 billion yuan three years ago to 460 billion yuan in 2016, and this has lured China’s e-commerce giants, including Alibaba Group and JD.com to enter the rural market.
Increased incomes of rural residents is a major factor. According to the National Bureau of Statistics, the growth of China’s rural retailing sales has surpassed urban growth for three consecutive years. In the first half of this year, rural retailing increased 11.6 percent.
Zhao Ping, a research fellow at the Ministry of Commerce, said rural consumption is a key component in overall consumption in China, and it is vital in stabilizing the economy.
A Nielson report said although consumer confidence in the first and second tier cities is declining, consumers in smaller cities are upbeat, which shows a stronger growth potential in rural and suburban areas.
Many tourists enjoyed the convenience of booking airline tickets, hotels, taxis and even finding the nearest toilets with their smartphones during their trips.
Official statistics showed at least 740 million Chinese traveled during the golden week holiday, with Japan, South Korea and Thailand as the most popular destinations.
In addition, domestic movies, such as Lost in Hong Kong, Ghost Blows Out: The Nine-Story Demon Tower and Goodbye Mr Loser, became instant hits. The box office made a record high of 315 million yuan on Oct 1, an increase of more than 53 percent year-on-year.
A report released by the Ministry of Commerce confirmed that consumers now purchase more “living quality-enhancing’’ goods rather than the necessities they purchased previously.
The change in spending structure has facilitated economic restructuring. Value-added services took up nearly half of the total gross domestic product (GDP). Meanwhile, the government-backed Internet Plus strategy also compelled businesses to provide better service. Long-established restaurants have branched out with online delivery platforms.
“The service sector has taken up half of China’s GDP, and consumption contributes more than 60 percent to economic growth,” Zhao said.
O2O weighs in real economy
Online-to-offline events are also becoming more popular, whether the consumer stays at home or goes out.
The financial service of Suning, a leading retailing giant, offers interest-free mortgages with no down payment requirement to consumers if they purchase commodities through an online payment platform of Suning.
The O2O market expanded by nearly 80 percent in the first half of this year, according to the Ministry of Commerce.
Zheng Min, CEO of Ebrun, a Beijing-based Chinese e-commerce consulting firm, said the development of O2O businesses gives incentives to the real economy and stimulates consumption.