According to data from the US International Trade Administration China became the largest global market for e-commerce in 2021 with revenue of $1.5 trillion, overtaking the US itself. Also according to the government agency, the country accounts for 50% of the world’s web-based transactions.

Factors like the widespread adoption of mobile phones and the internet, a rising middle class and urban population and low-cost manufacturing capacity have helped drive the growth of the sector in the intervening period.

This is reflected in the Chinese stock market where internet companies dominate. Combined, leading e-commerce plays Tencent (0700:HKG),  Alibaba (0241:HKG), Meituan (3690:HKG) and Temu-owner  PDD (PDD:NASDAQ) have a weighting of 33.2% in the MSCI China index.  

Drilling down further into these individual companies, Alibaba is established as a global leader in e-commerce, Tencent provides online retail services off the back of its WeChat app, which has a vast number of users in mainland China, while PDD has been expanding outside of China with its Temu brand. Meituan is a leader in food delivery with an additional focus on offering deals and vouchers linked to local Chinese merchants.

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit www.temit.co.uk

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