Sunday, January 01, 2017

The consumer benefits of a very large market

China is a large country with a large population--and this causes many challenges but it also creates many opportunities, not least because almost the entire population speaks (and reads) the same language, and is of the same ethnicity.

For technology companies it is hugely helpful to have such a large market speaking the same language, using the same regulatory system, having similar interests, and even using the same banks. When trying to scale up services this makes it much easier to invest money and get fast results at a large scale compared to having to do this across multiple countries where none of these factors are true. This is one reason why many of the Chinese technology companies are so successful and able to invest in innovation: because one single service can quickly be rolled out to several hundreds of millions of people.

There is also a whole ecosystem that works together at large scale: the same suppliers and distributors are often nationwide and thus good partners for companies. And with such tremendously large and dense urban populations, like Shenzhen for example, which are also fairly wealthy, with good infrastructure, and with many relatively wealthy people within them, it is a consumer's paradise.

Having lived in Shenzhen you can find a dozen providers of organic food who will bring food to your door daily, that you order in advance on an app, hundreds of restaurants nearby who will deliver food to you (also ordered on an app or by phone if one really prefers) directly or indirectly (through a delivery company), and millions of locally manufactured products that will be at your door within 24 hours. In fact there is almost too much choice!

Then of course there are the additional services. Shenzhen has more than a dozen trampoline parks (last year there was only 1), more than 4 large theme parks, a wildlife park, multiple beaches, hundreds of parks, hundreds of shopping malls (all with cinemas, playgrounds and more inside), several exhibition centers and so on. No matter what you are looking for, you can find it simply because there is such a large market. Even if you are part of a very niche market, that would be sizable enough for someone to cater to it--whether it is a strange hobby or a weird product.

As so many things are made in China, even things that the Chinese don't want you can still buy in China--such as a toasted cheese maker (though online rather than taking up space in shops). But it is also imported products.I don't think any Chinese would eat smoked salmon but its easy to buy online from a company who imports it and then sends it across the country to your door still frozen within a day due to the good logistics system (and suitable packaging). I also don't know who would want to buy a Christmas advent calendar but there are several available; or Original Source Tea Leaves Shampoo - but even that is available online that someone has already imported into China and can send to you. In fact even this availability of imported goods is only possible when you have such a large domestic market.

Governments have been able to invest in infrastructure; companies have been able to invest in services and supply chains; and consumers get a fantastically convenient life. Spoilt......

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