Chinese shrimp-processing firm Zhanjiang Guolian Aquatic is increasing its investment in its e-commerce arm, even as China’s large online e-commerce firms have seen their domestic earnings sag as of late due to weaker consumer confidence and fierce competition.
Coming off a challenging Q1 2024, Guolian is upping its annual investment in e-commerce from CNY 2 million (USD 280,226, EUR 253,760) to CNY 60 million (USD 7.6 million, EUR 8.4 million), the company recently announced. It said the move was prompted by tough competition in both its domestic and international markets.
According to statistics from HSBC Bank, 37 percent of Chinese retail spending is conducted through e-commerce channels, while the U.S. sits at 22 percent, and Western Europe conducts 16 percent of its retail spending online.
Over 60 percent of China’s 1.4 billion consumers go online for their shopping, according to HSBC.
“This leaves limited room for further expansion at home, especially when the domestic economy is relatively muted, so China’s e-commerce giants are venturing overseas in search of faster growth,” HSBC said.
HSBC estimated China’s cross-border e-commerce business could reach USD 500 billion (EUR 445 billion) by the end of 2025, up from USD 350 billion (EUR 311 billion) in 2023 and just USD 155 billion (EUR 138 billion) in 2019.
Guolian’s heavier investment in e-commerce comes amid a shift in its business model, punctuated by its departure from shrimp farming.
However, China’s largest online platforms facing fierce competition in the domestic market, forcing leaders like Alibaba and JD.com to cut prices. Alibaba announced its revenue fell 1 percent year over year to CNY 243.2 billion (USD 34 billion, EUR 31.6 billion) in Q2 2024. Revenue at JD.com, which Walmart recently pulled out of, rose 1.2 percent in the same period, thanks to a focus on discounting.
To combat domestic struggles, Chinese firms have placed a new focus on international markets – in part due to the success of Temu, an e-commerce platform owned by Shanghai-based Pinduoduo, which has spent massively on marketing to grab market share in the E.U. and U.S. The company reported its net profit rose by 246 percent to CNY 28 billion (USD 3.9 billion, EUR 3.6 billion) in the Q1 2024 on revenues of CNY 86 billion (USD 12 billion, EUR 10.6 billion), up 131 percent year over year.
