Guolian boosts e-commerce investment even as domestic e-commerce sales lag

Chinese shrimp processing company Zhanjiang Guolian Aquatic is boosting investment in its e-commerce division, even as major Chinese e-commerce firms have seen domestic profits fall recently due to weaker consumer confidence and fierce competition.

After a difficult first quarter of 2024, Guolian is increasing its annual e-commerce investment from CNY2 million ($280,226, €253,760) to CNY60 million ($7.6 million, €8.4 million), the company recently announced. The company said the decision was prompted by intense competition in the domestic and international markets.

According to HSBC Bank statistics, 37 percent of Chinese retail spending is done through e-commerce channels, while In the US, the figure is 22%, and in Western Europe, 16% of retail spending takes place online.

According to HSBC, more than 60 percent of China’s 1.4 billion consumers shop online.

“This limits opportunities for further domestic expansion, especially when the domestic economy is relatively weak, which is why Chinese e-commerce giants have ventured overseas in search of faster growth,” HSBC said.

HSBC estimates that China’s cross-border e-commerce could reach $500 billion (€445 billion) by the end of 2025, up from $350 billion (€311 billion) in 2023 and just $155 billion (€138 billion) in 2019.

Guolian’s increased investment in e-commerce comes as it changes its business model, highlighted by its move away from shrimp farming.

But China’s largest online platforms are facing fierce competition in the domestic market, forcing leaders like Alibaba and JD.com to lower prices. Alibaba said its revenue fell 1 percent year-on-year to CNY243.2 billion ($34 billion, €31.6 billion) in the second quarter of 2024. Revenue at JD.com, which Walmart recently withdrew fromrose 1.2 percent over the same period, thanks to a focus on discounting.

To combat domestic woes, Chinese companies have focused on international markets – in part due to the success of Temu, an e-commerce platform owned by Shanghai-based Pinduoduo, which has invested heavily in marketing to gain market share in the EU and the U.S. The company said its net profit jumped 246 percent to CNY28 billion ($3.9 billion, €3.6 billion) in the first quarter of 2024 on revenue of CNY86 billion ($12 billion, €10.6 billion), up 131 percent year-on-year.