China's online shoppers outspending those in US

Chinese shoppers who make purchases online from US merchants are spending more than three times what US consumers are spending, according to new research from PayPal.

The shoppers are customers who said that cross-border purchases made up at least 10 percent of their yearly online shopping transactions, said Daniel Jenkinson, head of research at PayPal, the electronic payment site. Chinese shoppers are increasingly buying their goods from US online merchants, with the draw being quality, authenticity and value, he said.

PayPal, which spun off from eBay earlier this month, released new findings on Tuesday in partnership with Nielsen on Chinese cross-border buyers and their shopping behaviors. An online survey was conducted over six days in June with 1,313 adults age 18 and over.

"The growth of the Chinese market has been widely heralded. Our research on Chinese online buying confirms strong growth potential across a wide spectrum of retail sectors," the company said in its report. "Overall online purchasing is expanding swiftly, with projected growth rates of 20 percent or more in the next few years."

PayPal China launched its China Connect service with China UnionPay earlier this year, which links the online payment system with China's largest bank card issuer, allowing China's shoppers to use their UnionPay cards with the PayPal system. PayPal doesn't break down its transactions or users by country, but the company has 165 million active users and recorded 1.1 billion transactions last quarter, 25 percent of which were cross-border.

"Chinese purchasing power has increased so much in the past 10 years. Now they have all this money and they don't just want to spend this money internally. They desire and they have an urge to copy the lifestyles of Westerners," said Matthew Lee, vice-president and general manager of PayPal North Asia.

" 'We ship so much stuff outside of China,' they're thinking, 'but now we want to enjoy. The people outside of China are enjoying, and I envy their lifestyles,' " Lee said of Chinese consumers at a media event in New York announcing the findings.

More than half of Chinese online shoppers plan to begin or to increase buying from overseas merchants. They spend an average of $485 on clothing, $1,229 on electronics and $512 on cosmetics, the statistics show.

In response to the growing appetite in China for cross-border transactions and concerns over logistics and shipping, PayPal launched buyer protection for users and offers free return shipping as well.

These services were first tested in May with Chinese users, and after "tremendous positive response," Lee told China Daily, they were officially made available to Chinese users of PayPal in July. Free return shipping is available in more than 20 markets, according to the company, but the service is currently not available for US shoppers.

US retailers are the preferred source for Chinese shoppers, PayPal said, and when they plan to make online purchases overseas, the "US tops the list of sources for Chinese cross-border purchases, with 14 percent of online shoppers having purchased from the US in the past 12 months - putting the US ahead of Hong Kong, Great Britain and Japan."

Fourteen percent of survey respondents said that they buy from US retailers; 9 percent said Hong Kong; and 6 percent prefer the UK and Japan.

The Chinese government is encouraging citizens to spend more on services, and has cut the import tax by 50 percent, which Lee said is a good development for US retailers.

PayPal can only be used by Chinese shoppers to purchase goods overseas. It does not have a license to operate as a payment system in the country.

amyhe@chinadailyusa.com