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November 4, 2015

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Young generation set to power e-commerce

THE e-commerce penetration rate in China is seen to at least double by 2020 as young people become the major force behind domestic consumption, Credit Suisse said.

The penetration will surge to more than 20 percent in 2020, according to Credit Suisse estimates. The rate was 10.7 percent last year, above the 7.6 percent in the US and around 5 percent in Japan.

Young people who are proficient on the Internet will soon become the main driver of China’s domestic consumption, Credit Suisse said.

The young generation born between 1985 and 1995 is set to contribute 35 percent to China’s total consumption in 2020, up from 15 percent contribution in 2014, it said.

“They are a generation that is more receptive to new technology and embrace cyberspace. Moreover, they are well educated, have sustainable earning power, and have a strong desire to spend on upgrades,” said Kevin Yin, head of Regional Consumer Research at Credit Suisse.

“We believe this relatively affluent young group is replenishing China’s future middle class as the lower-income elderly phase out.”

One of the biggest beneficiaries to gain from the rise of the young generation is the online-to-offline food delivery sector which Credit Suisse predicted to grow to 41.8 billion yuan by 2017 from 9.5 billion yuan in 2014, or a compound annual growth of 63.7 percent.

Cinemas will also gain from the fast growing e-commerce activities, the firm said.




 

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