TV shopping increasing as sellers build trust with buyers

Growing mainland consumption has become a good enough reason for retailers, investors and media firms to consider expanding into television home shopping. But building trust between customers and retailers is crucial to whether television shopping succeeds or fails, industry watchers say.

Still in its developing stage, television shopping only makes gross sales of less than 7.02 billion yuan (HK$7.83 billion) per year, compared with the annual retail sales of 8 trillion yuan last year, according to research house Media Partners Asia.

But in terms of pace, television shopping is one of the fastest growing sectors in the mainland media market. In recent years several state-owned provincial broadcasters such as Shanghai Media Group, Hunan Satellite TV and even China Central Television have established ventures to offer home shopping service to audiences across the nation. An industry watcher estimated that should television shopping account for 5 per cent of total domestic consumption, its market size would exceed 400 billion yuan.

According to Euromonitor, a market research firm, sales from television shopping on the mainland increased at a compound growth rate of 19.5 per cent between 2005 and 2008. Media Partners estimates the market will grow to US$2.3 billion by 2013.

Customers of shopping channels are predominantly in the high-income bracket. More than 50 per cent of them have a car and an average monthly income of 10,000 yuan, according to Media Partners.

However, complaints of misconduct have been lodged against television shopping firms, including allegations of selling fake and low-quality products and poor after-sales service. This prompted the mainland media regulator in 2006 to impose a ban on television advertising in five categories, including health-related products, slimming services and medicine.