Forbes shared their idea of which are the top 25 cities in China in terms of commerce, innovation, operation cost and developed tourism.

1. Shanghai appeared for 4 times in the top 3 as the best commercial city, the best innovative city, city with highest operation cost and city with most developed tourism.
2. First tier cities, Shanghai, Beijing, Guangzhou and Shenzhen, ranked high in the top 25 best commercial cities and top 50 best innovative cities. Sadly, doing business in such big cities also means extremely high operation cost
3. Judged from the performance of those cities in Yangtze River Delta, we can see the great potential innovation capability in this area

CPT is short for Cost Per Time, a comparatively fixed charging model. Most websites or blogs will charge for a certain sum of money per month, which assures their stable advertisement income. But the advertising results are quite difficult to measure. Maybe that’s why its distribution decreases year after year.

CPC is short for Cost Per Click or Cost Per Thousand Click-Through, which is based on the number of clicks. It is mainly used by Google AdSence for Content and Baidu Promotion. With more attention to search ads, its distribution increased generally and even account for 51.9% in 2012.

CPA is short for Cost Per Acquisition and it charge on the base of actual results.

CPS is for Cost Per Sale, mostly used by shopping or guide sites.

CPM is for Cost Per Thousand Impression. Regardless of the outcome, advertisers have to pay as long as the ads are shown.

1. Unlike China, American and Japanese consumers mainly use credit cards for payment
2. Compared with the USA and Japan, Chinese consumers are far keener to e-commerce transactions
3. Hot categories of these three countries include books, clothes and ornaments
4. Transnational e-commerce has great potencial in the long run

Recently, Alibaba Group announced that by Nov 30 in 2012, total Taobao sales (including Tmall and Taobao.com) exceeded 1 trillion yuan (USD160 Billion).

Great Potential of Domestic Consumption

During last month’ Bachelor’s Day Promotion, Taobao accomplished sales of 19.1 billion yuan (USD3.07 billion) in only one day. Not only did this figure reflected the strong consumer demand, but also represented the great growth of consumption, mostly generated from third- or fourth-tier cities.

Clearly, the consumption growth of third- or fourth-tier cities, which was 60%, was much higher than that of first- and second-tier cities. Meanwhile, enterprises in Yangtze Delta and Pearl River Delta, who previously hindered by limited exports, now have ushered in new opportunities following the trend of e-commerce.

E-commerce: Emerging Economies’ Past and Present Life

Behind this 1-trillion-yuan transaction, China netizens should see the enormous change in the environment of e-commerce. When firstly appeared, some people criticized that Chinese e-commerce could not pull down the three “mountains” of credit, logistic and payment.

Until now, China internet users have credit evaluation systems to insure the internet trading safety, such like Taobao’s transparent one whose transaction figures and credit records are available to consumers. They have convenient online payment system such like Alipay. They also have complete logistic system to support the incredible development of e-commerce.

Alibaba’s exploration represents the growth of Chinese e-commerce. In 1999, Alibaba was founded in Hangzhou. Many trading enterprises began to take in oversea orders through this channel. Taobao.com was first established in 2003, accomplishing only 22.71 million yuan (USD3.64 million). And the transaction rose to 1 billion (USD160 million) in the next year.

We shall not ignore the key event in 2003, the setup of credit evaluation system. Since then, Taobao dropped into the flourishing growth with the transaction rising from 8 billion yuan (USD1.284 billion) in 2005 to 1 trillion yuan in 2012. At the same time, the whole transaction on the Internet reached 2 trillion yuan.

Driven by new consumption mode in Internet environment, e-commerce has become the dominant business model. With strong data processing and promising prospect, e-commerce will be the major force to deliver profound changes for retailing industry and boost domestic spending.

Take logistics industry as an example. By 2011, daily amount of parcels of Taobao.com and Taobao Mall (Tmall’s predecessor) surpassed 8 million (USD1.284 million), accounting for 60% of the whole. In H1 2012, this number increased sharply to 12 million and even soared to 72 million on Bachelor’s Day. There were 64,000 branch networks and more than 700,000 people employed in 2011. Chinese logistics market is worth 70 billion yuan (USD11.24 billion), the third highest in the world.

The Future of This Emerging Economies

A new economy represented by e-commerce is incredibly changing the development pattern of Chinese economy.

Jack Ma, the president of Alibaba Group, said that,” we are very lucky to live in this era of the Internet and witness the surprises and changes that the Internet and e-commerce bring to us. Without exaggeration, 1 trillion yuan is a start, and we are ready to target 10 trillion yuan in the future. There will be 10 million small but hopeful enterprises in China and they will serve for 1 billion consumers in the world.”

“I don’t think the essence of e-commerce is so-called virtual economy. Instead, this is the actually emerging economies, the perfect combination of Internet technology and traditional real economy. It can integrate available resources efficiently, lower the operation cost of enterprises and promote the competitive strengths of SMEs. Millions of e-retailers and consumers are reshaping the economy of China.”

According to data from the Office for National Statistics, retail sales of consumer goods in the whole country totaled 18.39 trillion yuan and 1 trillion yuan accounted for 5.4%. Obviously, e-commerce has already become a huge emerging economies and will experience rapid growth for a long time to come.

This is just the start.

The latest statistics from iResearch showed that China online video market reached 2.66 billion uuan (USD430 million) in Q3 2012, with the QoQ growth of 16.2% and YoY growth of 37.2%.

As the major part of online video revenue sources, the online video advertising market is 2.01 billion yuan (USD320 million) in Q3, with the QoQ growth of 21.6% and YoY growth of 49.7%. Influenced by the overall economic conditions, the growth rate of online marketing industry is slowing down.

Also, under the big picture of industry consolidation, the \video broadcasting license payment for TV series dropped in Q3.

The total number of China Internet users as well as mobile internet user is experiencing steady growth ever since 2008. The total number of China mobile Internet users is close to 400 million by the end of the first half in 2012.

Compared with September, total visits to Baidu increased and its market share by visits went up to 61%, keeping its safe lead in this field. Moreover, Bing is experiencing an obvious growth ever since its strategy adjustment.

Qihoo’s 360 search engine is now the second most visited search engine in China after Baidu.

CNNIC reported that nearly 80% of Chinese netizens pay close attention to commercial information on social networking sites. In September, the average visits per user on a single day is 2.2 times, 11 minutes. 

More than 40% of netizens are interested in items shared by their friends. Almost 40% of netizens will regard friends’ comments as references to help with their own shopping decisions. In addition, 37.2% of netizens will share their favorite items, brands and stores on SNS. More than 25% of them would complain on SNS if they had bad shopping experience.

Only 22.1% will not participate in any actions mentioned above. That is to say, approximately 80% of them keep an eye on commercial activities or commodity information on SNS, from which we can see SNS influence in online shopping.

Following the global trend of smart TVs’ popularity, 40% of the TVs that shipped in China in Q2 were web-enabled. According to NPD’s October 2012 DisplaySearch “Quarterly Smart TV Shipment and Forecast Report”, “this was an increase from 26% of televisions shipped in Q2 2011”.

This increase is quite reasonable. Firstly, most TV users are spoiled netizens and are very tired of TV shows’ schedule. Secondly, online content are ready to meet the need of smart TV users. It seems that UGC could be transferred from online videos to TV series.

In 2012, the number of China online shopping users reached 220 million, far exceeding 150 million in the U.S according to eMarketer. It is estimated that there will be 423.4 million internet users who make at least one purchase in 2016.

In 2011, China B2C e-commerce market (including online retailing and travel booking) was USD55.37 billion, and the growth was 103.7% compared with that in 2010. In 2012, the total transactions will reach USD107.5 billion, exceeding that of 2011 by 94.1%.

China is the second largest B2C e-commerce market in Asia, only second to Japan. China will likely surpass Japan and replace UK to be the second in the world.

These statistics represent both challenges and opportunities for foreign brands. China has great potential in online consumptions. Local enterprises are taking control of market shares in most online channels like search engines and social media, which foreign brands are not so familiar with. Also, the problem of fake and inferior products, price wars and rising supply chain cost could make new entries more difficult.

According to EnfoDesk, the total transaction of China online payment market reached 976.4 billion Yuan (USD156.4 bilion) in the third quarter. The QoQ growth was 13.1% and the YoY growth was 73%.

Influenced by National Day holidays and other business trips, online payment transaction for travel booking experienced obvious increase. And some emerging markets like retailing, cross-border trading also kept mushrooming.

Here are 3 trends in third-party online payment industry:

1. Quick payment services develop rapidly. Following the steps of Alipay and Unionpay, payment enterprises like Tenpay, 99Bill and Chinapnr accelerate their development into quick payment services.
2. Increased innovation in mobile payment. In Q3, Alipay established some mobile payment products based on the application of QR code and LBS. Tenpay cooperated with weixin to release Micro-life Payment Services, which may be a helpful strategic step for the process of O2O.
3. Most payment enterprises expand into their offline POS region. Take Chinapnr as an example. It has founded branches for POS services in more than 30 cities, speeding up its overall arrangement to compete in the POS services market via agencies.

In Sep 2012, Tmall was catching up with 360buy and the gap was gradually reduced. Meanwhile, Suning slipped one spot to the fourth and Vancl even dropped off the top 10.

With the coming “11.11”, so-called Bachelor’s Day, we can expect to see fierce competition among China B2C online retailers.

The Evening Post reported, free music download in China is to be ended on Dec 31. Most online music platforms like Baidu Music, QQ Music, Duomi, Kugou are going to charge for music download services. However, this is a special thing for high-quality copyrighted music download while the online streaming is still free.

 Is it an agreement in the industry?

Shi Jianping, president of Duomi Music, admitted that Baidu, QQ Music, Duomi, Kugou and Kuwo had reached an agreement to charge at download services. These 5 platforms occupied more than 95% market share in China. Other websites are likely to join this charge army in the near future. And more and more record companies are negotiating relative charging issues.

As for the timing, it is not compulsory since each platform could adjust it according to the situation. Due to the unfinished contracts, Baidu music will charge download next April.

How can online music be charged?

Top three record companies, Warner, Sony and Global, provided a list of guiding prices, including minimum monthly fees for downloads. But most music websites prefer to differentiate their prices, of course based on some specific principles. At present, seldom websites will reveal their charge policies. Basically, the price will be 1 yuan for each song or 10 yuan to 20 yuan for a month.

Also, charges are only for high-quality copyrighted music download while the online auditioning is still free. That is to say, only when users downloaded music whose formats are APE, FLAC or something else, will they be charged. QQ Music has established a policy called “VIP Download”. Users will be only charged 10 yuan per month to enjoy high-quality music.

Based on the principle of guarantee and division, all profit will be divided between music platforms and record companies

What are the comments at all sides?

Certainly, record companies feel thrilled with this change. They used to losing hope for online channels and they could not see any respect for their copyright before. But this trend of charging may emerge new look for the record industry. In the eyes of website owners, charging used to be extremely hard under the big picture of pirate copies and free music services. However, action should be taken.

Image source: Sohu.com

According to Trade and Industry information on Oct 29 2012, 360Buy had completed the acquisition of Chinabank Payment. Meanwhile, 360buy is investing in the technology development to build its own online payment platform.

The Trade and Industry information demonstrated that the legal representative of Chinabank Payment (Beijing) Technology Co., has been transferred to Liu Qiangdong, the CEO of 360buy. Previously, the legal representative was Zhao Guodong.

A reliable source disclosed that, 360buy negotiated the acquisition with several payment companies and decided to choose Chinabank Payment, who provides with comparatively lower prices but has greater potential. The business matchmaking is ongoing and Zhao appears in the executive meetings of 360buy.

According to analysis from industry insiders, there are two major reasons for 360Buy to set foot in the field of online payment. Firstly, it will add weight for its IPO to acquire another company. Secondly, this is a strategic step to integrate its industry chain, which will be a trend in the near future. Beforehand, 360Buy had to settle accounts with buyers via other third-party online payment gateway, which costs a lot and may result in data disclosure. After the acquisition, 360buy can handle the cash flow and even provide petty loans for SMEs.

According to the latest statistics from iResearch, the transaction scale of China online payment reached 776 billion yuan (USD 124 billion) in Q1 2012, with the YoY growth of 112.6% and the QoQ growth of 1.2%.

Though growing speed slipped down a bit, online payment services keep high growth in 2012

The first quarter was an off season for online shopping and travel booking industry, whose decrease in transaction scale directly affects online payment industry. In Q1 2012, the total transaction scale of e-commerce market is 1.75 trillion yuan (USD 280 billion), showing an increase of 25.8% compared with last year and a decline of 4.2 on a sequential base. The transaction scales of online shopping and travel booking declined for 0.8% and 2.1% respectively compared with last quarter.

While traditional industries bring new sources of growth for online payment services, some online payment enterprises extend their services into industries like steel, logistic, capital funds and education. Except for payment settlement services, they will even provide specific industry solutions.

The competitive landscape of online payment was relatively stable

Based on the market share distribution, the competitive landscape of online payment was relatively stable with Alipay keeping its safe lead in Q1 2012. It seems that these businesses had their footing and unique advantages in this industry.

This chart above shows the top 18 concerns of Chinese people. 60% of interviewees think that rising prices is a serious problem in their daily lives; 45% are worrying about the negative influence of corrupt officials, followed by the concern of the wealth gap. Many people hold the opinion that the rich are getting richer and the poor are getting poorer.

Source: news.163.com

People have got used to card purchasing

According to the research from CCFA, the proportion of credit card purchasing is increasing with the year-on-year growth of 30%. The domestic card spending has surpassed 16 trillion yuan (USD2.56 billion), accounting for 40% of total retail sales of consumer goods.

Card charges are divided up by 3 parties

Businesses have to bear the card charges

By regulation, businesses have to bear all card charges with the standard rates ranging from 0.5% to 4%. The costly fees result in the situation that some businesses don’t accept payments by credit cards.

Commercial banks don’t think the card charge is high in China

Some banking industry insider stressed that our domestic average card changes are not so high compared with other card changes in the world. Standing in the position of banks, they will not welcome the policies on cutting the card charges.

Data source: Beijing Times, Xinhua Report

Sina recently launched a section on Weibo called micro-tasks, which could be useful to marketers. There is no doubt that this is an important step for the commercialized process of Sina weibo.

What is Sina Weibo Micro-task?

Micro-task, or Weirenwu in Chinese pinyin, is the official platform for posting and accepting Weibo tasks. At present, this section is visible only to enterprise users. Enterprises users can start this function by entering this section. Then they can create tasks and choose some specific weibo accounts to post or repost ad campaigns. As for the non-enterprise users, in order to being part of this, they have to apply for enterprise certification or contact customer servicers.

Before establishing a task, the enterprise users need to top up their account via a new online payment tool by Sina, Xinfutong. Only when there is enough sums in the account can the task be created; and, the minimum to top up is 5,000 yuan (USD 800). Texts, pictures, URLs and time settings are also needed.

Who receive micro-tasks?

And how does this platform choose the listed accounts to accept tasks? Depending on the total number of fans, activity of fans, quality of weibo post and some other parameters that Sina use to evaluate, each account on this platform will be graded. And their scores have significant meaning to users’ choice.

The qualified rating from low to high is: one star, two-star, three-star, four-star, five-star, six-star and diamond. Except for the grades, micro-task platform will calculate advising price for each account.

What are the advantages of using the task platform?

According to the official, Sina micro-task could provide more benefits for marketers than grassroots weibo accounts. It has great advantages in credibility and transaction protections.

For enterprise users, micro-task could provide most suitable data supports to guide and help with the promotions. For task receivers, all contents on this platform had been audited, so no account will be cracked down because of spamming.

Online Discussion Regarding Micro-tasks

Micro-task platform aroused a lot of concerns since its release.

Someone said there was no need for such kind of weibo marketing platform. Most weibo marketing accounts have their own system to attract business, plan campaigns, and charge by type of content. With more than 2 years’ operation, they have their own target clients. In addition, pricing between marketers and weibo account owners could be more flexible without intervention of third-parties.

Someone doubted the public credibility and transparency of this platform. What are the measures of account grades? It is very hard to persuade the public without more details. More openness in marketing accounts may be counterproductive in promoting sales. People are always disgusted at obvious advertising. By listing them on this platform, marketing accounts are likely to lose the trust from their fans.

What do you think?