ECX2630 Chap.9 Doing Business in China
Doing Business in China
E-commerce is a system, not one driver
Digital-market growth reflects interacting changes in income, mobile access, payment, logistics, platform supply and merchant participation. More users attract sellers; product variety increases platform value; convenient payments reduce friction; reliable logistics expands the feasible product range.
The analysis should explain these reinforcing links rather than attribute the outcome to internet penetration alone.
Segment before choosing a channel
Consumer patterns differ by geography, income, age, category and motivation. Rising discretionary spending or trading up does not imply that every buyer wants a premium foreign brand.
A firm should identify a customer problem, current alternative, trust requirement and buying journey. National market size opens the question but does not answer product-market fit.
Test unit economics and control
Platforms provide reach while controlling ranking, customer data and fees. Logistics creates convenience while raising service expectations.
A viable strategy tests conversion, repeat purchase, returns, support burden and contribution after all channel costs. Expansion should follow a defined trigger, and the firm should protect an owned customer relationship where platform dependence creates material risk.
What this chapter covers
- 01
Middle-class growth and discretionary spending
- 02
Mobile access, digital payment and platform adoption
- 03
Logistics options and fulfilment expectations
- 04
Geographic, age and value-based consumer segments
- 05
Platform reach, fees, data and dependence
- 06
Pilot design, unit economics and expansion triggers
Worked example · free
Design a staged consumer-market pilot
- 2Choose one customer segment and use case.
- 2Test message, price, payment, delivery and support in a limited geography.
- 2Measure acquisition, conversion, returns, service and repeat use.
- 2Compare platform reach with fees and loss of customer control.
- 2Define an expansion trigger and a risk-based stop rule.
Key terms
- Consumer Segment
- A consumer segment is a group sharing relevant needs, behaviours or constraints that justify a distinct value proposition or route to market.
- Platform Economy
- A platform economy organises transactions between participant groups while the platform controls rules, ranking, data access and fees.
- Customer Acquisition Cost
- Customer acquisition cost is total sales and marketing expenditure required to gain a customer under a defined channel and period.
- Repeat Purchase
- Repeat purchase is a later transaction by an existing customer and can indicate ongoing value beyond an initial promotion or novelty effect.
- Unit Economics
- Unit economics compares revenue and variable costs at the customer or transaction level to test whether growth creates or destroys value.
- Expansion Trigger
- An expansion trigger is a pre-specified performance threshold that must be met before a pilot receives wider investment.
Doing Business in China FAQ
What drove the growth of e-commerce?
The course highlights interacting drivers including middle-class growth, mobile and internet access, expanding logistics and a larger supply of platforms and sellers. Payment convenience and network effects reinforce those channels.
How should I discuss changing consumer patterns?
Identify the segment, geography, category and buying occasion. Trends such as discretionary spending, trading up or an older market are hypotheses to test, not universal descriptions of one national consumer.
What is the main platform trade-off?
Platforms offer reach, traffic and transaction infrastructure, while retaining influence over ranking, fees and customer data. Evaluate incremental contribution and learning against dependency and reduced control of the customer relationship.
What should a market-entry recommendation include?
Name the target customer, problem, channel, trust mechanism, fulfilment plan, pilot metric, expansion trigger and largest compliance or partner risk. The sequence should preserve learning before irreversible scale.
Assessment move
Map discovery, evaluation, payment, delivery, use, support and repurchase for one invented product. Attach one course driver to each stage and identify where the proposed offer can fail. Calculate no unsupported market number; focus on the decision logic. Practise converting a broad trend into a segment hypothesis, a pilot and an expansion trigger. End with the risk that would stop the plan, not only reasons to enter.
Create a separate customer profile for a specific city tier, income band, use occasion and trust concern; avoid treating a national trend as a ready-made segment. At each journey stage, record the platform or channel, the friction, the partner capability and the evidence that would show conversion. Practise distinguishing a localisation decision from a change that dilutes the offer's core value.
For channel choice, compare reach, data access, control, compliance, margin and reversibility rather than assuming digital access removes operational constraints. Turn relationship-building into observable work such as partner verification, expectation alignment and escalation routines.
A strong case answer proposes a limited pilot, defines learning metrics, sets a threshold for expansion and identifies an integrity, regulatory or unit-economics result that would stop the plan.
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