Wealthy cities located in the south and east of China are the roaring engines of growth when it comes to e-commerce, representing a high degree of online consumption and large number of online businesses, according to a report released on Thursday by Alibaba Group’s research institute, AliResearch.
The AliResearch report on China’s 2013 e-commerce development analyzed e-commerce data gathered by Alibaba Group from 294 prefecture-level cities in Greater China. Researchers gave each city a score based on factors such as the total number of online shoppers versus the total city population, or the number of online stores to the total city population. The cities were then ranked, with a higher score indicating a more developed e-commerce industry.
In terms of e-commerce consumption, Shenzhen, a city in Guangdong province, came out tops with a score of 50.24. Guangzhou and Zhuhai, also located in Guangdong province were ranked second and seventh, respectively. The developed eastern cities of Hangzhou, Shanghai, Suzhou and Nanjing also made the top 10 list for e-commerce consumption. The nation’s capital, Beijing, came in fourth with a score of 42.93.
The overall e-commerce scores, which also took into account the number of online stores in a city, didn’t see much divergence from the e-commerce consumption scores. Shenzhen came in first with Guangzhou, Hangzhou, Beijing and Shanghai occupying the second to fifth place respectively.
Shenzhen is a bustling Chinese city that borders Hong Kong. Over the years it has become a vital city for the China’s e-commerce industry. According to local government statistics, the number of e-commerce transactions in Shenzhen has risen 50 percent annually since 2009. Last year, 71 percent of Shenzhen’s population shopped online, spending RMB 88.9 billion ($14 billion) in the process. This amount is equivalent to about 20 percent of the city’s total consumer retail sales.
Although e-commerce is maturing in the southern and eastern Chinese cities, there are still plenty of growth opportunities in the country’s vast interior. According to the AliResearch report, of the top 25 Chinese cities for e-commerce consumption by population density, six of those cities, such as Wuhan, Taiyuan and Chengdu, are located in the interior or west of China.
“The online shopping growth rate in the middle and western China is much higher than cities in the east,” said Xie Zhoupei, a senior researcher at AliResearch in a press release.
In January, Alipay released a report that mirrored this emerging trend. The report showed online payment growing fastest in China’s less-developed interior regions.
“We can observe that e-commerce is now quite penetrated into areas where offline retail is still very underdeveloped,” said Xie.