Last Updated on June 11, 2024
China’s economic growth shows great promise in 2024, with the first quarter garnering an impressive GDP rate of 5.3%. According to reports, the same period has generated a total value of $4.1 trillion or 29.63 trillion RMB.
The Chinese market has a flourishing digital economy that drives a significant portion of this rapid growth. As the world’s largest economy in terms of social media usage, it’s a highly lucrative venture for foreign investors and businesses to explore.
So, if you’re interested in entering the market through online channels, here’s a list of top Chinese industries worth checking out.
How is China’s economy doing today?
Beyond China’s GDP growth, the country currently holds a major global economic power with a foreign trade surplus of 890.9 billion yuan. This year, the industry revenue increased by 5%, which is a notable development from the country’s stagnant growth in 2023.
The growth of China’s economy can also be attributed to the rising wages of middle-class consumer groups and the 6.2% increase in disposable income of average residents.
Foreign investment firms also drive the positive outlook for this year’s revenue growth. Recent reports suggest that this segment experienced an impressive increase of 6.2%.
What are the key industries in China today?
1. Health-oriented Products and Services
After the worldwide pandemic, the domestic consumption of wellness products and healthcare services seems to have bolstered beyond regular demand.
Around 75% of consumers in this segment actively search China’s digital ecosystem for information about these goods. The top sources of health information include short videos, local search engines, and social media.
With 87% of Chinese people considering health as the top priority in their lives, it’s no surprise that wellness trends like “light health” are infiltrating the local F&B industry.
KFC China offering “green foods” to health-conscious consumers (Source: China Daily)
Foreign and Chinese companies are quickly catching up with the health and wellness trend. Most are adjusting their offerings, incorporating beneficial health ingredients, low-calorie components, and dietary additives into their products to appeal to the younger consumer base.
The domestic demand for healthy living goes beyond consumables. In the services sector, digital fitness apps seem to make more industry revenue than before. By 2028, this market segment is projected to reach a market value of $38.82 billion.
2. Seasonal and Themed Tourism
After the Chinese government lifted travel restrictions caused by the pandemic, outbound tourism was one of the major industries contributing to economic growth. Instead of traditional sightseeing within the country, local travelers seek unique, personal experiences.
Interest in travel trends like eco-tourism and city tours shows substantial growth. Hotel brands with large-scale events and performances attract the most tourists, allowing them to set premium rates that increase by more than 40%.
Source: Global Times
An article from SCMP mentioned that Trip.com bookings to developing countries like Thailand, Malaysia, and Singapore increased by 30% compared to 2019 statistics. This impressive development was marked by China’s celebration of the Spring Festival or Chinese New Year.
With more countries offering visa-free policies for Chinese tourists, it’s clear as day that China’s outbound tourism market is set to contribute to the global economy in the long run.
3. Retail Sales/E-commerce and Live-streaming
With Chinese government policies backing up cross-border e-commerce channels, foreign businesses can expect continued development in this sector. Today, online shopping accounts for 27.6% of the market’s overall retail sales volume.
With a new record of 47.15 trillion yuan in the last quarter of 2023, the retail sales segment is expected to bring more industry revenue in 2024.
The live-streaming trend also seems to be aiding the continued domination of e-commerce in China’s digital landscape. In fact, over 69% of Chinese consumers from urban cities are utilizing these channels for their daily online shopping needs.
In December 2023, the market generated over 597 million live commerce users in China. This user base amounts to 54.7% of the country’s internet population, making it a crucial marketing channel, especially for foreign brands.
It’s an online selling format that combines influencer marketing with real-time content’s social element. The effectiveness of this strategy can be seen in the average live commerce per capita consumption, which ranges around 7,399.58 RMB.
4. Technology and Electronics
Innovation and modernization are central to China’s transition to a technology-driven economy.
Programs like Made in China 2025 emphasize enhancing the industrial sector through advanced technologies. This initiative seeks to revolutionize key industries and boost the consumption of high-tech products.
Beyond that, it’s worth mentioning that China is the largest market for consumer electronics, with a strong demand for smartphones, laptops, wearables, and smart home devices.
Brands like Apple, Samsung, and Xiaomi have a significant presence, but there’s room for innovative products that cater to the tech-savvy Chinese consumer.
Apple store in Shanghai, China (Source: Xinhua)
With the rapid expansion of 5G networks, the country is also at the forefront of telecommunications technology. This sector opens many opportunities for foreign investors specializing in network equipment, IoT devices, and related technologies.
5. Investment and Financial Services Industry
In 2020, China removed foreign ownership limits in the securities, futures, and life insurance sectors, allowing full foreign ownership of these businesses. This policy allowed companies like JPMorgan and Goldman Sachs to take full control of their Chinese operations.
Today, the financial services market in China is valued at approximately USD 2.8 trillion, with a projected compound annual growth rate (CAGR) of around 10% over the next five years.
6. Construction and Manufacturing Sector
Industrial production covered 31.7% of China’s GDP in 2023. Although it has seen a significant decline over the years, the market remains thriving with continued product demands for iron, steel, aluminum, textiles, cement, chemicals, toys, electronics, and automobiles.
Meanwhile, China’s construction market was valued at approximately $1.8 trillion in 2023. The sector offers significant opportunities for foreign companies, particularly in green building technologies, smart city solutions, and sustainable construction materials.
Pilot Free Trade Zone in Shanghai
China continues to attract substantial foreign direct investment (FDI) in manufacturing. Just last year, FDI in the manufacturing sector reached 317.92 billion yuan. With the removal of ownership restrictions in several manufacturing sectors, experts predict that the market will open further in the coming years.
7. Food and Beverages Industry
China’s food and beverage sector has notably increased at-home consumption, especially during the pandemic.
Growth in specific segments, such as instant noodles and frozen foods, may slow as dining out resumes. However, staples such as herbs, spices, and cooking oils are expected to maintain their growth trajectory.
There is a growing demand for high-quality, healthy, and safe food products. Chinese consumers are increasingly concerned about food safety and are willing to pay a premium for organic and imported food and beverages.
Convenience is a significant driver, with a preference for ready-to-eat meals, snacks, and beverages that fit busy urban lifestyles. This trend opens opportunities for foreign brands specializing in these market segments.
Chinese consumers looking at precooked dishes (Source: China Daily)
Top Challenges Foreign Businesses Might Face in the Chinese Market
● Regulatory Environment
The regulatory landscape in China is constantly evolving, making it challenging for businesses to stay compliant. Companies must follow cybersecurity, data protection, advertising restrictions, and foreign investment regulations.
Recent changes, such as the Personal Information Protection Law (PIPL) enacted in 2021, have also added complexity for companies handling data.
● Market Competition
China’s market is fiercely competitive, with both domestic and international players striving for market share. Local companies often have the advantage of better understanding the cultural and consumer nuances.
Many renowned global brands are also already utilizing cross-border e-commerce platforms to gain a foothold in the country’s digital landscape.
● Cultural Differences
Understanding and adapting to local cultural nuances is crucial for success in China. Marketing strategies that work in Western markets may not resonate with Chinese consumers.
For instance, their preference for mobile-first and social commerce experiences requires a more localized digital marketing approach.
Quick Q&A
What is the most profitable industry in China?
‘The industrial sector, which includes manufacturing, mining, and construction, is the most profitable in China. It accounts for about 31.7% of the country’s GDP, making it the largest contributor to the Chinese economy.
What product is in high demand in China?
High-tech gadgets such as advanced smartphones, gaming consoles, and smart home appliances are currently in high demand in China. This trend is fueled by tech-savvy Gen Z and Millennials, who eagerly seek the latest innovations and cutting-edge technology.
Ready To Dominate The Chinese Market? Get In Touch With Us Today!
China is a very diverse and distinct market. While it’s tempting to enter industries with many opportunities, you must remember that these perks come with fierce competition. You must be well-versed in consumer behaviors and ever-changing trends within the country’s fast-paced business landscape.
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Whether it’s creating an advertising campaign or launching a virtual storefront on e-commerce platforms, we have all the digital solutions you need. Contact us today, and let’s start working together!
References:
5 Key Industries to Watch in China in 2023
China Top Industries: An Overview
The 3 Industries Driving China’s Economy