China - a glimpse into the future?
Reflections from a market study trip to China regarding Norwegian seafood.
“How do you pay in Norway then?”, asks an alarmed taxi driver in Qingdao, when we want to pay for the trip but can’t pay via the Chinese “didi” app and don’t have enough cash to cover the cost. “Uhh, by card”, we answer, and he starts laughing loudly and asks if we really still pay by card in Norway?
The transition from cash and cards to payment via various apps has happened extremely fast in China! Over the course of a five-year period, the largest cities in China have moved from using cash and cards to making all purchases via certain apps on mobile phones. This applies to shops, in the café or in a taxi – which meant for us foreigners who had not managed to download the taxi app, an extra half an hour drive around the city in search of a cash machine. This was an interesting drive, where the taxi driver, who only spoke Chinese, used the translation app on his phone to talk to us. It helped us to explain the money problem, find a cash machine and withdraw some money for him. However, we are still struggling to understand what it meant when he asked “do you want to get higher and run fast down the water pipe”.
Delivered to the door in half an hour
After a very exciting and informative journey to Beijing, Qingdao and Shanghai to study the development of online shopping in China, my research colleague at Nofima and I are left with the impression that Norway is being left behind. A simple trip to the shops in China made us feel both a bit silly and helpless, especially since we left our personal mobile phones in Norway due to security reasons, and not much works on the mobile phones we have with us.
We are in China to study the possibilities and challenges regarding Norwegian seafood. The shops have an enormous range of products, including countless tanks with live seafood from all corners of the globe. They also had QR codes that can be scanned to gain full information and tracking of the goods. There were silent conveyor belts moving above our heads carrying pre-packaged shopping bags that customers had ordered online. These orders would then be delivered to people’s doors within a short period of time. JD, the second largest e-commerce conglomerate in China after Alibaba, can guarantee that in some cities, goods will be delivered to your door half an hour after they have been ordered. FreshFresh, which is a considerably smaller but emerging actor dealing with fresh produce, guarantees delivery within three hours. We are talking about cities with populations that are many times greater than the whole of Norway. Their logistical solutions are simply impressive!
Everything is bought online
So, we need to pay for our goods. But it’s not as straight forward as that. They don’t accept cards, either. Supposedly, they accept both Master and Visa, but when we try our cards, they don’t work. Don’t you have WeChat? No, we don’t have WeChat! (WeChat is China’s extended version of Facebook that is used for virtually all communications, the tracking of goods and payment etc.). Wait a minute, we’ve got it, and we now have managed to get four Chinese friends there. However, we haven’t connected it to our bank accounts since we haven’t travelled with our personal mobile phones. Well, that means we have to go to the till at the far corner of the shop where they still accept cash.
Everyone we talk to, everyone we interview, buys everything they need online. E-commerce, or electronic commerce, is a type of business model that allows companies or individuals to conduct their business via the Internet. Many different business models are used in the e-commerce sector. These include business-to-business (B2B), business-to-consumer (B2C), mobile commerce (M-commerce), or cross-border e-commerce (CBEC). The latter describes transactions made across two or more customs borders.
Phone addiction in China is astounding. Even with a teenage daughter at home who really loves using her mobile phone, China really shocked me. Even at restaurants, we saw that most people sat slurping noodle soup, heads at an angle, staring into their phones. They don’t look at each other or talk to each other. It’s a bit sad. We still eat dinner at home without using our phones, but it’s not long before there’s an end to that too.
The trade of groceries via the net is not only increasing in China, it’s happening all over the world. Online seafood trade is also increasing, but the Chinese are still pretty traditional in this department, at least the older generation. They prefer to see the goods and assess the quality of seafood themselves. This has resulted in the creation of so-called “New retail” stores. These are stores that serve as a “showroom” for consumers. Consumers can see and handle the goods, and decide for themselves whether to buy there, get the goods delivered to their homes, or go home and order what they want online – after they have seen the products. Live produce is very important for the Chinese. If it’s alive, it’s fresh. This means that these “New retail” stores are filled with tanks holding live fish, crabs, shellfish, sea cucumbers and all sorts of treasures and curiosities that can be found in the sea. The Chinese people that we interviewed (importers/e-commerce actors) told us that these stores are still necessary, but will soon become obsolete as new generations take over.
Should we prepare ourselves to participate in this development?
E-commerce is the future and development is happening quickly. Just ten years ago, China accounted for less than one percent of worldwide online transactions. This number has now risen to over 40 percent. China’s transactions are estimated to be larger than France, Germany, Japan, the United Kingdom and the USA put together. These transactions were estimated to be around 30 trillion Norwegian kroner in 2016. It is the younger generation, born after 1980, who is pioneering this development. They are more willing to spend money on expensive products and brands than those born before 1980. The younger generation’s consumption of products is growing twice as fast as older generations and they prefer to use the Internet to buy imported food, among other things. Online shopping in China is also expected to continue to increase seeing as online shopping in small towns and districts is still relatively low.
In the future, we won’t need to leave the house to buy things, nor will we have to spend time or energy figuring out what we need to buy. JD.com sells its own smart refrigerators equipped with a camera and image recognition technology. This enables the user to know exactly what is inside, when the food goes out of date and when it is empty. The user can then easily check the refrigerator’s information, of course by using an app on their phones, and order what they need at JD.com.
This is quite a development we’re witnessing. Whether this is a desirable development, the type of society we wish for in the future, is up for debate. However, I don’t think that anything we say or do to stop this development would have any great effect. Instead, maybe we should just start preparing ourselves to take part in the development?