Market Research Report : E commerce market in china 2014 - Sample

E-commerce Market – China November 2014

Executive Summary Market

Drivers & Challenges

Trends

Government Initiatives

 E-Commerce market in China has been demonstrating rapid growth and development over the past few years  GMV of China’s E-Commerce market is expected to grow from USD x tn in 2013 to USD y tn by 2018, registering a CAGR of more than xy% over 2013-2018

Drivers: - Increasing Internet Use - Emerging Middle Class - Rise in Online Shopping - Extensive Usage of Plastic Money - Enhanced e-payment services - Rise in mobile Internet Users - Growing social networking user base

Challenges:

 Use of Mobile Devices  Group buying  Initiatives by players

 Internal logistics networks  Use of Social Media  Rising popularity of e-books

- Huge online counterfeit market - Psychological barrier and adaptive difficulty - Security issues

- System lacks talent and information resources

 12th Five-Year Plan of China (2011-2015)  Regulations : Foreign Investment  E-Commerce Tax: China

Major E-Commerce Vendors

Competition

Player A

Player B

Player C

Player D

Player E

Player F

Player G

Player H

E-COMMERCE MARKET IN CHINA 2014.PPT

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•Macro-Economic Indicators •Introduction •Market Overview •E-Commerce Technology •Demand and Supply Perspective •Drivers & Challenges •Government Initiatives •Trends •Mergers and Acquisitions •Competitive Landscape •Strategic Recommendations •Appendix E-COMMERCE MARKET IN CHINA 2014.PPT

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SAMPLE

Economic Indicators (1/3) Current Account Balance USD bn

O

D C

X

B

Y

Z

M

2011

2012

2013e

N

A 0 2010

2014e

2015e

Exchange Rate: Half Yearly USD/CNY

Period Average

Period High

a10

x6

a9

a11

x5

a12

x4 x3 x2 x1

Period Low

a8

a6 a5 a4 a1

1/1/14

a3

a13 a14

a15

a7

a2

2/1/14

3/1/14

E-COMMERCE MARKET IN CHINA 2014.PPT

4/1/14

5/1/14

4

e-Commerce in China is fast evolving and is expected to mature further in the ensuing years E-Commerce Market – China Overview • GMV of China’s E-Commerce market is projected to reach USD x tn by 2018 from an estimated USD y tn in 2013, by registering a CAGR of more than xy% over 2013-2018 • Currently, the domestic market is dominated by a and b with payments facilitated by aa

• Factors such as Large presence of internet users coupled with a continued increase in purchasing power of the Chinese population is primarily pushing the market

E-Commerce Revenue – Online Retail Share

GMV of China’s E-Commerce Market USD tn a6

x5 X

x4

a5 a4

x3

x2

y

China's E-Commerce revenue in 2013 surpassed USD x tn, including USD xx bn from online retailing

a3 a1

a2 y

x1

x

x

0

2013

2014e

2015e

2016e

2017e

2018e

Note: Gross merchandise volume(GMV) refers to total sales dollar value for merchandise sold through an online based marketpl ace over a certain time frame.

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E-Commerce Market China (1/x) – Online Retail Overview Online Retailing

Major Online Chinese Retailers

• Point a

Site

Daily Page Views per visitor*

Percent of Chinese visitors (xx Sep)

X

X

X

X

X

X

X

X

X

X

X

X

• Point b • Point c

• Point d • Point e

E-Retail’s Share of Total Retail Sales % E

XX

D

x5

x3

C B

x4

x2 x1

A

0 2010 Note: Major Online Chinese Retailers: Data taken as of

2011 1st Sep

2012

2013

H1 2014

2014, *last three months data

E-COMMERCE MARKET IN CHINA 2014.PPT

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E-Commerce Market China (2/x) – Online Advertisement Overview Online Advertisement

Major Online Chinese Publishers

• Point 1

China’s Online Advertising Revenue Share

Online Publishers

• Point 2

• Point 3

X

X

• Point 4

X

X

• Point 5

X

X

X

X

X

X

Online Ad – Spent Share

Online Ad – Spent: Asia Pacific Region A

B

C

D

E

F

G

A

B

USD bn

D 2013

A

a2 a1

B

a3

C

a4

D

a5

E

A

C

C

D

E

c1

d1

e1

B

A a1

B b1

A

a2

b2

c2

d2

e2

2013

2014e

2015e

2016e

2017e

0

Note: Online ad spent refers to digital ad spent E-COMMERCE MARKET IN CHINA 2014.PPT

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E-Commerce Market China (5/x) – Online Gaming Overview (2/x) Online Gaming

Rise in Revenue – Online Gaming

• Point 1

USD bn

• Point 2

E

• Point 3

D

• Point 4

C

• Point 5

B

• Point 6

A

X x1

x3

x2

x4

0 2013

2014e

2015e

2016e

Online Games Segment – Wise: Share %

Large Client Games

Web Games

Platform Games

Social Games

Around x-y% revenue was generated by games developed within China

F

E x%-y%

D C

a1

b1

c1

d1 a%-b%

B A 0

a2 a3 a4 2013

b2 b4

b3

2014e

c2 c4

c3

2015e

d2 d4

d3

A

B

2016e E-COMMERCE MARKET IN CHINA 2014.PPT

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Internet popularity assumes massive scales to provide huge consumer base, thus…

Increasing Internet Use (1/x)

Impact

• Point 1 • Point 2 • Point 3

• Point 4 • Point 5

Internet Population and Penetration Rate

Top 3 Countries – Internet users (2013)

mn

%

D C

B

B

A

A

a1 a2

b1

2008

0

C c1

F

D

E

d1

e1

f1 f2

b2

c2

d2

e2

2009

2010

2011

2012

2013

60 40

Users (mn) D C

20

B

0

A

China has the highest number of internet users

X

Male

Z

USA

India

0 China

Penetration Rate

Y

Female

E-COMMERCE MARKET IN CHINA 2014.PPT

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Ease of shopping online over traditional retail outlets coupled with…

Rise in Online Shopping (1/x)

Impact

• Point 1 • Point 2 • Point 3 • Point 4 • Point 5 • Point 6

Online Shoppers – Growth Trend

Mobile Online Shoppers

Users (mn)

Users (Mn)

D x6

C

X

B A

x3 x1

x5

b

C B

x4

A

x2

x2 a

x1

x

0

2012 2008

2009

2010

2011

2012

2013

E-COMMERCE MARKET IN CHINA 2014.PPT

x3

y

0 0

%

2013 Penetration Rate

10

Increased usage of plastic money offers immense support to e-commerce market in China Extensive Usage of Plastic Money

Bank Cards Issued in China

• Point 1 • Point 2 • Point 3 • Point 4 • Point 5 • Point 6

Impact

no. in bn E

X

x2

D C

x1

B

A

Credit Card Transaction Value Growth

0 2010

Q1, 2014

USD tn F E

X

x2

x1

D

C

XX

x

xx

B

A 2012

2013

A E-COMMERCE MARKET IN CHINA 2014.PPT

B 11

Better online security services are encouraging people to pay for goods and services over the internet Enhanced e-payment services

Impact

• Point 1 • Point 2 • Point 3 • Point 4

Rise in E-Payment Users Users (mn)

E-Payment Providers – Market Share (2013) %

X

C

a2

a3

x4

a1 B A

a

x5

b

x3 x1

x2

x3

d

x2 x1

0

c

0 2011 Penetration Rate

2012

2013 Online Payment Users

b

E-COMMERCE MARKET IN CHINA 2014.PPT

c

d

a 12

Government encouragement continues to boost the ecommerce market in China 12th Five-Year Plan of China (2011-2015)

Primary vision of the 12 th Five Year Plan is to target complete technological up gradation to support the expansion and development of e-commerce in the future

• E-commerce regulations for the 12 th Five-Year Plan has been drafted by nine national government bodies, including China's Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC) • The major targets of the policies are: • XX • XX • XX • XX • XX • XX

China’s e-commerce market may also benefit from the government’s focus on the next generation IT

E-COMMERCE MARKET IN CHINA 2014.PPT

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Government has introduced a tax structure to strengthen tax supervision and tackle tax evasion in the country

SAMPLE

E Commerce Tax: China • XX • XX • XX

Tax Heads

Tax (%)

Corporate Income Tax

X

Dividend Tax

X

Value Added Tax

X

Business Tax

X

Individual Income Tax

X

E-COMMERCE MARKET IN CHINA 2014.PPT

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Shopping through mobile device has quickly gained acceptance among Chinese digital consumers Smartphone Usage *

Use of Mobile Devices • Point 1 • Point 2 • Point 3 • Point 4 • Point 5

%

D

X1 X2

X3

India

Singapore

C

Online shopping through mobiles are getting more attention

B A

0 China

Smartphone Usage (Online shopping) %

Mobile Shopping Apps – Monthly Estimates Application Name

Active Accounts (mn)

X

X

X

B

X

X

X

A

X

X

X

X

X

X

X

X

X

D

Average Usage Times

x1

C

x2

0

China

US

Note: * Use of Smartphones for searching price comparisons and Product review

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Development of e-books in China will mature in the coming years Rising popularity of e-books

E-Books Penetration: China

• Point 1 • Point 2

Z

• Point 3

Y

• Point 4

X

x2

x1

Expansion of the ebook service pattern to promote the application of e-book

X

• Point 5

0 2011

2012

B2B segment is the most quickly developing market for English-language trade eBooks in China and players operating in B2C segment are principally offering eBooks in the Chinese language

English Language E-books: Market Opportunity

y x

B2B

Currently, opportunity for trade English-language title sales in China is x percent B2B and y percent direct to the consumer

B2C Note: CAPP refers to the Chinese Academy of Press and Publication and the mentioned survey covers more than 19,000 people from 51 cities in 29 Chinese provincial regions

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Mergers & Acquisitions (M&A)/Private Placement (X/X) Announced Date

Closed Date

Transaction Type

Target

Buyer/Investors

Sellers

Deal Size (USD mn)

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Note: Data for the year 2014

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Market Competition – Porter’s Five Forces Analysis Threat of New Entrants

SAMPLE Impact X

• XX

Impact X Bargaining Power of Suppliers

• XX

Competitive Rivalry

Impact X

Impact High

• XX

Bargaining Power of Buyers

• XX

Threat of Substitutes

Impact X

• XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Competitive Benchmarking (1/X) Public Trading Comparable (FY 2013) Player 1

Player 2

Players 3

Market Capitalization (USD mn)

X

X

X

Share Price (USD)

X

X

X

EV/EBITDA (x)

X

X

X

EV/Revenue (x)

X

X

X

PE Ratio

X

X

X

Note: Top 3 Public companies based on the Market Capitalization; Market Capitalization is as on 28/08/2014, Share Price is as on 27/08/2014 and PE ratio is as on 28/08/2014 E-COMMERCE MARKET IN CHINA 2014.PPT

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Competitive Benchmarking (2/X) Key Ratios of Top 4 Companies – Operational Basis (FY 2013) (1/x) A

% E D

B zz1

x1

x2

C B

y1

y2

A 0

zz2 z1

Player 1

Player 2

z2

Player 3

Player 4

• XX • XX

• XX • XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Competitive Benchmarking (3/X) Key Ratios of Top 4 Companies – Operational Basis (FY 2013) (2/x)

A

B

A

% Y Z

Z

x4 x1

y1

x2

y2

0 Player 1

Player 2

y4 x3

x1 x2

Y

x3

x4

y3

Player 3

0 Player 4

Player 1

Player 2

Player 3

Player 4

• XX • XX

• XX • XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Competitive Benchmarking (4/X) Key Ratios of Top 4 Companies – Operational Basis (FY 2013) (3/x) A

B

%

D

x4

C B A

x1

y1

0

Player 1

x2

y2

Player 2

x3

y3

Player 3

y4

Player 4

• XX • XX • XX

• XX • XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Competitive Benchmarking (5/X) Key Ratios of Top 3 Companies – Financial Basis (FY 2013) A E D C B A 0

B y2

y1

x1

x2 Player 1

y3

x3 Player 2

Player 3

y4

x4 Player 4

• XX • XX • XX • XX • XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Public : Domestic Company – Player 1(1/x) Company Information

Locations – China

XX Corporate Address Tel No.

Xx

Fax No.

Xx

Website

Xx

Year of Incorporation

Xx

Ticker Symbol

Xx

Stock Exchange

Xx

Products and Services Category Products and Services

Headquarters

Products/Services • XXXX

Key People Name

Designation

XX

XX

XX

XX

XX

XX

XX

XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Public : Domestic Company – Player 1 (2/x) Financial Snapshot Total Income USD mn 6,000 4,000

534.7

2,000

1,222.8

0

Key Ratios

Profit Total Income Profit / Loss USD mn 1,737.5 1,677.4 2,000 1,053.1 1,000 5,542.3 3,800.1 2,381.6 0

2010

2011

2012

2013

• The company earned a net profit of USD 1,737.5 mn in FY 2013, as compared to net profit of USD 1,677.4mn in FY 2012 • The company reported total Income of USD5,542.3 mn in FY 2013, registering an increase of 46 percentage points over FY 2012 • The company earned an operating margin of 33.36 per cent in FY 2013, a decrease of 13.30 percentage points over FY 2012

• The company reported debt to equity ratio of 0.42 in FY 2013, an increase of 18.96 per cent over FY 2012

Financial Summary Market Capitalization (USD)

Total Enterprise Value (USD) EPS (USD) PE Ratio (Absolute)

2013

Opera ting Ma rgin

-13.30

33.36%

46.66% 50.47% 49.10%

Net Ma rgi n Profi t Before Ta x Margin Return on Equity Return on Capital Employed

-12.79

31.35%

44.14% 44.22% 43.72%

-14.20 -12.55 -10.86

36.32% 25.87% 18.67%

50.51% 52.01% 50.37% 38.42% 40.66% 41.94% 29.52% 40.02% 46.59%

-6.82

34.98%

41.80% 66.22% 63.54%

-8.43

15.77%

24.20% 32.46% 35.83%

-75.85

208.40%

284.25% 281.24% 244.01%

14.51

64.96%

50.46% 47.75% 49.98%

4.98

16.20%

11.21% 11.67% 13.76%

0.92

1.40%

0.48%

0.57%

0.46%

Current Ra tio

-7.36%

3.90

4.21

3.60

3.44

Ca s h Ratio

-12.40%

3.54

4.04

3.38

3.32

18.96%

0.42

0.36

0.16

0.02

Value (05/06/2014) 6,983.1 mn

39,861.6 mn 5.50 39.17

2012

2011

2010

Profitability Ratios

Return on Working Capital Return on Assets Return on Fixed Assets

Financial Summary

Indicators

y-o-y change (2013-12)

Particulars

Cost Ratios

Opera ting costs (% of Sales) Admi nistration costs (% of Sales)

Interest costs (% of Sales) Liquidity Ratios

Leverage Ratios Debt to Equity Ratio Debt to Ca pital Ratio Interest Coverage Ratio

13.31%

0.30

0.26

0.14

0.02

-75.56%

25.05

102.48

91.75

109.17

Efficiency Ratios

Fi xed Asset Turnover As s et Turnover Current As set Turnover Worki ng Ca pital Turnover Ca pi tal Employed Turnover

3.68%

5.95

5.74

5.38

4.88

-7.87%

0.45

0.49

0.62

0.72

15.40%

0.74

0.64

0.91

0.90

18.33% -8.70%

1.00 0.55

0.84 0.60

1.27 0.77

1.27 0.92

Improved

E-COMMERCE MARKET IN CHINA 2014.PPT

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25

Public : Domestic Company – Player 1 (3/x) Key Business Segments

100%

100.0%

Key Geographic Segments The company operates through single reportable segment namely, Chinese Language Internet Search Provider

50% 0%

Due to lack of critical data, the graph could not be generated

2013 Chinese Language Internet Search Provider

Business Highlights Description

News

Overview

XX

Recent Developments

XX

Recent Launches

XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Public : Domestic Company – Player 1 (4/x)

XX

XX

S

W

O

T

XX

XX

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Private: Domestic Company – Player 2 (1/x) Company Information

Locations – China

XX Corporate Address Tel No.

XX

Fax No.

XX

Website

XX

Year of Incorporation

XX

Products and Services Category Services

Products/Services XX

Headquarters

Key People Name

Designation

XX

XX

XX

XX

XX

XX

XX

XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Private : Domestic Company – Player 2 (2/x) Financial Snapshot Total Income USD mn

Key Ratios

Total Income

5,000 0

Profit / Loss 3,750.3

10,000

671.0 3,270.9 2012

1,372.7 5,703.5

2014

Opera ting Ma rgin

5.71

46.36%

40.66% 24.99%

N.A.

Net Ma rgi n Profi t Before Ta x Margin Return on Equity Return on Capital Employed

17.14

41.21%

24.07% 20.51%

9,101.3

N.A.

18.50 -20.56 -0.85

47.01% 57.28% 35.37%

28.51% 26.72% 77.85% 12.30% 36.22% 14.52%

N.A. N.A. N.A.

2014

10.96

86.15%

75.20% 31.89%

N.A.

0.92

23.52%

22.60% 10.91%

2,000

N.A.

91.55

470.04%

378.49% 209.09%

N.A.

-8.21

50.04%

58.24% 74.28%

N.A. N.A.

-4.56

14.27%

18.84% 26.31%

N.A.

-0.37

4.18%

4.55%

N.A.

Return on Working Capital Return on Assets Return on Fixed Assets

Financial Summary • The company earned a net profit of USD 3,750.3 mn in FY 2014, as compared to net profit of USD 1,372.7 mn in FY 2013 • The company reported total Income of USD 9,101.3 mn in FY 2014 registering an increase of 60 per cent over FY 2013 • The company earned an operating margin of 46.36 per cent in FY 2014, an increase of 5.71 percentage points over FY 2013

• The company reported debt to equity ratio of 0.98 in FY 2014, a decrease of 63.82 per cent over FY 2013

2013

2012

2011

Profitability Ratios

4,000

0

2013

y-o-y change (2014-13

Particulars

Profit USD mn

Cost Ratios

Opera ting costs (% of Sales) Admi nistration costs (% of Sales)

Interest costs (% of Sales)

0.34%

Liquidity Ratios

N.A.

Current Ra tio

0.87%

1.81

1.80

2.37

N.A.

Ca s h Ratio

22.67%

1.76

1.44

2.01

N.A.

-63.82%

0.98

2.71

0.04

N.A.

-32.20%

0.50

0.73

0.04

N.A.

30.33%

11.95

9.17

75.68

N.A.

3.79%

9.41

9.06

8.13

N.A.

-13.02%

0.47

0.54

0.42

N.A.

-3.21%

0.77

0.80

0.72

N.A.

-4.25% -23.24%

1.72 0.65

1.80 0.85

1.24 0.56

N.A. N.A.

Leverage Ratios Debt to Equity Ratio Debt to Ca pital Ratio Interest Coverage Ratio

N.A.

Efficiency Ratios

Fi xed Asset Turnover As s et Turnover Current As set Turnover Worki ng Ca pital Turnover Ca pi tal Employed Turnover

N.A.

Improved

E-COMMERCE MARKET IN CHINA 2014.PPT

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29

Private : Domestic Company – Player 2 (3/x) Key Business Segments

Key Geographic Segments

The Provision of Online and Mobile Commerce and Related Services

100%

100.0%

The company operates through single reportable segment namely, The Provision of Online and Mobile Commerce and Related Services

50%

0%

People’s Republic of China (PRC) 100%

100%

The company’s geographic reportable segment is People’s Republic of China

50% 0%

2014

2013

Business Highlights Description

News

Overview

XX

Business Areas

XX

Some of the Current and Pending Investors

XX

Prior Investors

XX E-COMMERCE MARKET IN CHINA 2014.PPT

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Private : Domestic Company – Player 2 (4/x)

XX

XX

S

W

O

T

XX

XX

E-COMMERCE MARKET IN CHINA 2014.PPT

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Strategic Recommendations (1/X) : XX (1/X) XXXX

• XX • XX  XX1  XX2

XXXX

XXXX

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