Consumers in China spent S$1.55 trillion online last year — a 16.5% increase over last year, according to China’s National Bureau of Statistics. That’s more than 2.5 times what Americans were estimated to spend online in 2019. The total retail sales of consumer goods in China reached $6,010 billion, up by 8.0% year-on-year.

Even though China’s GDP grew only by 6,1% over the previous year, spending on fast-moving consumer goods (FMCG) grew consistently, increasing overall by 6%. This was the case even more among imported goods which now account for 18% of all FMCG sales and progressively exceed category growth. 78% of Chinese urban families purchased FMCG online at least once over the year with an average frequency of 14.5 times in the past year. Online sales of imports jumped by 30% solely in the first half of 2019 and imports accounted for 35% of all online sales in China during this time.

Packaged food saw a 3.1% in Q4 2019 and 2.5% in total in 2019. Homecare categories and personal care categories maintained a strong performance, reporting 8% and 11.5% growth respectively in 2019, driven by the desire of younger consumers to upgrade their lifestyles.

“Even as homegrown products dominate most of their categories in China, consumers have an enduring desire for imports,” explained Bruno Lannes, a Bain & Company partner in Shanghai. “This is especially true for product categories where consumers perceive foreign goods as higher quality than those produced domestically”, he added.

For brands that have not yet entered the Chinese market, there is an easier course of action that brings out the importance of digital platforms as the main channel and brand-building tool. “By concentrating on selling online, foreign FMCG companies gain traction in China without the need to build a physical route to market model which can be more complex,” said Jason Yu, Managing Director of Kantar Worldpanel Greater China. Imported goods have become a crucial force for moving towards more premium products and consumption upgrade, said Derek Deng, a partner of Bain and lead for the company’s consumer products practice.

Nowadays, imported goods are no longer exclusive to residents in first-and second-tier cities, due to the rise in the disposable income, along with convenient and efficient e-commerce channels, experts said. JD Daojia, the local on-demand retail platform of Dada Group, said that during the first round of a Spring Festival shopping carnival held from Dec 28 to Jan 5, total sales from third-tier cities and below increased by 5.6 times over the same period last year, while those for imported goods grew by 9.8 times year-on-year. Candies and chocolates are among the most popular types of imported goods in third-and fourth-tier cities, the data showed.

Statistics from global data analytics company Nielsen showed there are 953 million people living in third-tier cities and below, far surpassing the 427 million people in the first-and second-tier cities. This means that smaller cities have huge untapped consumption potential.

A report from Deloitte China, the China Chamber of International Commerce and AliResearch said demand from less-developed areas is becoming a new driver for the imported goods market in China. The demand for quality imported products with specific added value is higher due to maturing consumption patterns and increasing income in third-to fifth-tier cities and counties, as well as growing coverage by convenient, efficient e-commerce channels, it noted.