Looking to Start B2B Business in China? Understanding China’s B2B E-commerce Market is a Must.

China B2B industry

China's B2B industry has entered a new stage of digital development. In the 1990s , the B2B industry gradually developed from the display form of information yellow pages. After experiencing a rapid development of online transactions from 2005 to 2020 , China's B2B industry has now penetrated into various vertical fields. Based on the continuous accumulation of industry data and increasingly mature digital technology applications, China's B2B platform meets the diversified needs of enterprises in a digital form.

China's B2B industry market size

In 2022, the scale of China's B2B industry will reach 15 trillion yuan, a slight increase of 1.2% year-on-year. Affected by the supply chain, the industry suffered a certain impact in the first half of the year, but it recovered well at the end of the year, and the annual data remained basically the same. It is expected that with the further elastic recovery of production and life, the growth rate will be restored in 2023, pushing the industry scale to exceed 17 trillion yuan. In the future, as online transaction habits continue to consolidate, the online penetration rate of the B2B industry will further increase and reach nearly 20 trillion yuan in 2025.

The development environment of China's B2B industry

Policy support, technological progress, China's digital economy growth and capital support have provided a good soil for the development of the B2B industry :

1. Favorable policies for digital economy and industrial digitalization: Combining top-level guidance with local implementation policies to accelerate the deep integration of digital technology and the real economy .

2. Progress in technological application: Digital technologies represented by AIGC are accelerating their penetration into the entire B2B chain, promoting cost reduction and efficiency improvement in the industry .

3. Improved digital penetration rate: The scale of industrial digitalization and the penetration rate of the digital economy have increased year by year, providing a high-quality development foundation for the digitalization process of the B2B industry. China's digital economy is the main engine of national economic development. New digital formats and models continue to emerge, and the dominant position of industrial digitalization continues to stand out. In 2021, the scale of industrial digitalization accounted for 81.8% of the digital economy, and its scale increased from 1.74 billion yuan in 2016 to 3.72 billion yuan in 2021. In 2021, the digital economy penetration rates of China's agriculture, industry and services were 10%, 22% and 43% respectively. With the widespread implementation of digital technology applications, the digital economy penetration rates of the three industries in the future will still have a large room for growth.

4. Capital support: In 2022 , affected by the slowdown in overall macroeconomic growth and the epidemic, the number of industry financing events declined, but the proportion of single financing events of more than 100 million yuan in the industry reached 50% , an increase of 25.4% compared with 2020. Single financing is on the rise, and large-scale enterprises are more favored by investors.

China's B2B online marketing market size and structure

In 2021, the amount of e-commerce procurement by Chinese enterprises reached 12.6 trillion yuan, with an average annual compound growth rate of 14.2% from 2017 to 2021. The rapid development of e-commerce in enterprise procurement has directly driven the growth of upstream enterprises' online marketing tendency. In 2022, the proportion of online marketing tendency of Chinese enterprises has increased to 39%. Under the background of overall pressure on corporate marketing budgets, enterprises are accelerating the layout of online marketing paths such as platform entry, official website optimization and multi-channel distribution, gradually releasing the potential value of online marketing.

Benefiting from the dual increase in the awareness and recognition of online marketing on the enterprise side, China's B2B e-commerce marketing industry has ushered in rapid development in recent years. In 2022, the industry's revenue scale has reached 25.5 billion yuan, of which online marketing of consumer goods accounts for about 60%. With the increase in the overall penetration rate of online marketing and the increase in the attention of industrial product companies to online marketing, China's B2B online marketing market is expected to reach 32.7 billion yuan in 2025. The industry's leading players, represented by Baidu and Alibaba 1688, rely on their technology and platform traffic advantages to open up online sales for many companies and provide basic guarantees. They have accumulated a good user base and will continue to consolidate their scale advantages.

Why do we need a B2B platform?

the B2B industry chain

The traditional procurement process is inefficient. From the perspective of before the transaction, enterprises have to go through multiple rounds of screening and inspection from the generation of procurement needs to the determination of suppliers. When the number of SKUs required by the enterprise is large, it will face extremely high procurement costs. Traditional procurement transactions rely more on manual labor, from viewing goods to delivery, communication costs are high, decision-making cycles are long, and it is easy to accumulate payments, which can have an adverse impact on the development of large enterprises, and small and medium-sized enterprises are more likely to face a survival crisis. After traditional procurement transactions, further after-sales service and customized services are limited, resulting in low customer stickiness. Customers are easily dominated by channel dealers and middlemen, and will face the situation of re-selecting suppliers in subsequent purchases.

B2B platforms continue to improve the standardization of procurement systems, gradually simplify traditional procurement processes, and enable downstream procurement companies to communicate more directly with upstream suppliers. B2B platforms further subvert traditional procurement processes by broadening product information dimensions, integrating procurement supply chain systems, and improving one-stop services and a series of value-added services. Downstream companies have greatly improved their operating efficiency, profitability, after-sales protection, and warehouse management.

B2B platforms expand the coverage of product categories and product service areas. B2B platforms integrate supplier information and reduce enterprise search costs. At the same time, based on a powerful supplier information database, it can increase the bargaining space for enterprises and avoid the monopoly of a single supplier.

The B2B platform further standardizes the original procurement supply chain system and realizes efficient coordination of procurement enterprises in sourcing, transactions and logistics. The B2B platform uses CRM, customized approval flow and commodity flow and other technical means to integrate customized service resources and assist downstream procurement enterprises in completing customized procurement.

The B2B platform itself has a large amount of supplier information, product information, channel information, etc., and has a complete supply chain system. It can provide full-process procurement services based on the procurement needs or customized procurement needs of downstream companies, and effectively solve the procurement pain points of downstream purchasing companies such as low bargaining power and high after-sales costs.

The B2B platform's credit endorsement guarantees product quality. The B2B platform provides a variety of settlement tools and provides customers with credit terms based on their qualifications, ensuring that small and medium-sized customers have sufficient cash flow. When companies face after-sales problems, especially small and medium-sized enterprises, the B2B platform can protect their rights on their behalf.

the B2B industry chain

Traditional B2B upstream merchants face development bottlenecks throughout the entire business process. In the customer acquisition stage, due to the large number of downstream corporate customer types, upstream merchants often face the dilemma of downstream scenario positioning and demand analysis, making it difficult to conduct precision marketing and stimulate corporate procurement decisions. In the customer identification and conversion stage, some upstream merchants have low omni-channel lead operation capabilities, and the degree of refinement of lead management needs to be improved, resulting in low efficiency in business opportunity conversion. In the repurchase stage, due to the lack of a subsequent stock customer operation system, customer stickiness is low, making it difficult to establish a long-term trust relationship, and customer repurchase rates are generally low. From the perspective of industry links, in the traditional transaction system, market management efficiency and standardization are low, and there are too many transaction channels, resulting in upstream merchants having a low degree of control over the transaction process.

The B2B platform has a full-link layout around the core pain points of merchants. In the field of marketing, the platform has established a marketing system covering the entire life cycle of users, which can help merchants improve their customer acquisition capabilities and customer operation efficiency, and ultimately increase the repurchase rate. From the perspective of channel management and supply chain, the B2B platform can achieve the optimal solution for management and contract fulfillment with the support of data by leveraging the massive amount of data it has accumulated. Finally, based on the intermediate attributes of the platform, it can further promote market standardization and strengthen supervision of procurement processes, while providing more value-added services to enterprises and promoting the healthy and orderly development of the industry.

The B2B platform strengthens its comprehensive capacity building to meet the marketing demands of upstream brands in different business scenarios. In the store scenario, the platform uses traffic and design tools to help merchants increase traffic exposure, break through geographical restrictions, and improve the marketing efficiency of upstream brands through precise matching of supply and demand. In the commodity scenario, the platform optimizes product release information by setting standards to achieve a dual improvement in display effect and buyer experience. In the service scenario, the platform helps merchants analyze operational data based on big data technology, optimizes merchant operations based on data, and provides value-added services such as training and agency operations to merchants, solve the problem of merchants' lack of talent and experience, and improve their online business capabilities. In summary, the platform helps merchants build their own brands and enhance their market image value by strengthening their marketing capabilities in all scenarios, and further achieves the goal of long-term online operations for merchants.

From the perspective of corporate structure, small and medium-sized enterprises are large in size and growing rapidly, and are the main force of China's economic development. However, due to multiple factors such as assets, technology and experience, the digitalization level of small and medium-sized enterprises is generally low. B2B platforms can use their own advantages in traffic, data and industrial layout to build diversified solutions from marketing to value-added services around the core pain points of small and medium-sized enterprises such as marketing, services and funds.

What B2B platforms are there in China?

Baidu - AiCaigou

Based on its experience and technical accumulation in the B2B industry, Baidu continues to deepen its platform service capabilities based on its accurate insight into the demands of both supply and demand parties. By standardizing information such as goods and processes, the hidden costs caused by information asymmetry are reduced, and the transparency and standardization of the industry are improved. At the same time, Baidu continues to optimize the accuracy of supply and demand matching and the efficiency of matchmaking based on its own full-link service ecosystem, thereby improving the efficiency and experience of both supply and demand parties. On the technical level, Baidu relies on its own AI and big data technologies to digitally empower both parties to the transaction in multiple dimensions such as business analysis, marketing acquisition, and resource matching, accelerating the digital transformation and upgrading of enterprises and improving the quality of business operations on the industrial side.

Based on its own technology and service advantages built up over many years in the ToB industry, Baidu AiCaigou provides members with full-link and full-cycle operational guarantees in terms of customer contact, problem solving, customer relationship maintenance and operational guidance. Baidu AiCaigou also sets up offline service points and uses self-built + third-party capabilities to enhance user localized service capabilities and strengthen the integration of online and offline scenarios. On the technical level, AiCaigou uses AIGC-related capabilities to provide timely and professional intelligent guidance in all aspects of business operations, helping companies improve digital operations. With the continuous strengthening of the internal circulation ecosystem, Baidu AiCaigou will continue to consolidate its core advantages and consolidate its one-stop service capabilities in the future.

Alibaba -1688

Relying on years of accumulation in the B2B e-commerce wholesale industry, the company has built a service product matrix covering store establishment, marketing, transactions, customer management and after-sales consulting, providing operational support for merchants in all important business links of B2B e-commerce, helping merchants achieve their core demands of improving transaction efficiency and promoting traffic conversion.

Development Trends of China's B2B Industry

As the e-commerce purchasing needs generated by user iteration gradually become prominent, the leading B2B platforms are actively exploring the deep integration of digital technologies such as AI, IoT and cloud computing with the entire B2B chain to drive the entire B2B chain towards digitalization and intelligence. At this stage, the AIGC technology application revolution represented by ChatGPT has begun. AIGC technology can adapt to multiple B2B industry development scenarios, such as assisting merchants to optimize product grouping strategies, assisting merchants in product design, extending platform value-added services and improving platform marketing efficiency, further enhancing the practicality of China's large language model, promoting the continuous improvement of the digitalization penetration rate of the B2B industry, and ultimately achieving high-efficiency, refined and forward-looking operations in the B2B industry.

Given the dual dilemma of rising public domain traffic costs and difficulty in acquiring customers in private domain operations, reducing customer acquisition costs has become the primary task for merchants. Considering that B2B purchasing behavior will be greatly influenced by purchasing decision makers, similar to the B2C public-private domain linkage operation model, in the future merchants can use the public domain platform to import traffic for private domain operations, and combine efficient private domain operation solutions to create a refined customer operation system, and use core buyers as hubs to spontaneously promote the brand through core buyers, so as to form a ripple communication path for the private domain to feed back the public domain. Merchants continuously improve their product competitiveness and terminal service capabilities based on the customer data accumulated by the public-private domain linkage to repeatedly reach potential buyers and help merchants operate in the long term.