The Chinese government has heavily subsidised the rollout of high-speed access, so internet penetration now approaches rich-country levels. That boosts e-commerce, of course. But so, too, do the shortcomings of China’s costly, inefficient bricks-and-mortar retailers. For example, a quarter of Chinese shoppers seek products online because they are not available at physical stores. Also, until recently, China lacked a reliable and cheap method of shipping packages, so the e-commerce industry has invested in developing one.
The biggest snag holding back e-commerce for years was a lack of trust. Consumers worried (quite rationally) that online firms were fraudsters, or that their credit cards would be abused, or that purchases would get swapped for counterfeits during shipment. Chinese e-shoppers are also big users of social media. Precisely because they do not trust sellers or advertising much, they devour online customer reviews of the sort made popular by eBay and Amazon. According to BCG, over 40% of Chinese online shoppers read and post product reviews online, making them twice as likely as American online shoppers to do so and four times as likely as Indians."
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