Chinese E-commerce Digital Purchasing Expected to Exceed $142 Billion in 2020

JD.com, Alibaba, and Suning are the industry's biggest players.

Author: Belinda Zhou   

China's national think tank reported on Wednesday that the enterprise digital procurement would continue to skyrocket in 2020, fueling industrial digitalization in the country.

A report backed by the Ministry of Industry and Information Technology (MIIT) said in 2019, China's enterprise-level e-commerce market transaction size reached 20.46 trillion yuan ($2.92 trillion), up 1.5% year-over-year.

China's enterprise digital procurement powered by information technology jumped to 590 billion yuan ($84.3 billion) in 2019, up 64% year-over-year, according to the report.

The intelligent procurement system covers big data, supply chain services, and financial services.

The MIIT report also said due to the Covid-19 pandemic, which stimulated the Chinese digital economy, the enterprise digital procurement market was expected to hit one trillion yuan ($142 billion) in 2020.

"The epidemic will trigger the reflection and adjustment of the supply chain system's anti-risk capabilities in various industries around the world," Mingtao Li, the president of the China International Electronic Commerce Center Research Institute, said in the report.

The penetration rate of digital procurement in the enterprise-level e-commerce market is as low as 2.88% although it has doubled in the past two years.

JD.com Inc. (Nasdaq: JD), Alibaba Group (NYSE: BABA; HKEX: 09988) and Suning Holdings, a Nanjing-based conglomerate and one of Alibaba's biggest partners in China, were the three key players, with market share penetration of 52%, 30% and 13% respectively. 

Additionally, the MIIT report said the biggest consumption source areas for the intelligent procurement system are Guangdong Province, Beijing and Jiangsu, followed by Shanghai. The transaction volume in the top four areas accounted for over 60%, while Henan Province and Hebei Province saw the highest growth rate.

"The next stage of the intelligent supply chain can achieve a seamless connection between supply and demand, forcing upstream enterprises in the industrial chain to accelerate digital transformation," Li added.

Another report from market research firm IDC showed China's spending on digital products and services is expected to reach 2.1 trillion yuan ($297 billion) in 2020. 

Teleworking, teleconferencing, telemedicine, and tele-education have achieved rapid development, the IDC report said.



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