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CROSS BORDER E-COMMERCE IN CHINA

In China, thanks to the internet, the e-commerce market has grown rapidly reaching a value of 1.5 trillion dollars. Let’s find out what Cross Border e-commerce is.

Today, businesses can trade within their own country or other countries. E-Commerce cross-border is the sale of goods to a third party via a website of a national retailer in a different country. A cross-border transaction may consist of a retailer or brand selling to a consumer (B2C), a business selling to another business (B2B), or a private transaction between two individuals (C2C).

E-commerce through cross-border channels is a popular way for Chinese consumers to purchase goods from worldwide, products otherwise out of reach.

Why do Chinese buy abroad?

As cited in the report, a survey conducted by the Chinese Ministry of Commerce emphasizes, “safety, quality, and design are the most important factors that lead Chinese consumers to buy abroad.”

The Internet has accelerated the growth of global online shopping. The service allows customers from different countries to purchase products directly in a language and currency they are familiar with. Mainly, this is done to avoid problems such as universal payment insecurity, payment methods, logistics, reverse logistics, and the limitations of international languages.

How to sell in China through Cross Border E-commerce?

A key objective of the CBE is to assist small and medium businesses in understanding the unique Chinese e-commerce ecosystem and developing an appropriate e-commerce strategy for entering the Chinese e-commerce market.

E-commerce cross-border is comparable to traditional trade modes, in terms of efficiency, and it facilitates fast transactions. Transactions are usually settled over the Internet through an electronic payment that crosses space-time.

Cross-border e-commerce provides a fast and cost-effective means for small international companies who have limited resources to enter the China market.

Governments concession for Cross Border E-commerce

The government has developed a variety of services for cross-border e-commerce over the years, ranging from logistics, payments, legal compliance, taxation, and customs clearance. There are 132 special economic zones in China today, covering the entire country, from industrial areas in the center to coastal zones where cross-border e-commerce is promoted.

Over USD 780 billion worth of cross-border e-commerce was transacted globally in 2019 and is predicted to grow to USD 4820 billion by 2026. E-commerce in China has increased steadily since 2008. Chinese cross-border e-commerce transactions value grew to CNY 10.5 trillion in 2019 from CNY 0.7 trillion in 2008, according to the Chinese E-Commerce Research Center.

Main Chinese cross-border e-commerce platforms 

Tmall Global, What is Tmall Global?

According to Tmall Global, Tmall Global (www.tmall.hk) is Alibaba Group’s dedicated channel for cross-border e-commerce, according to Linkedin Tmall Global’s profile. Launched in 2014, Tmall Global is Alibaba Group’s dedicated channel for cross-border e-commerce. For Chinese consumers increasingly searching for top-quality branded products, Tmall Global offers a premium shopping experience.

Alibaba Global is China’s largest cross-border B2C online marketplace, providing brands and retailers without operations in China with the capability of building virtual stores and shipping products to China from their home countries. Currently, Tmall Global offers more than 29,000 brands from 87 countries and regions across 5800 categories.

Kaola, What is Kaola?

Kaola.com is a cross-border marketplace that sells western brands in China. This platform allows sellers to market their products across multiple online forums and portals. There are three ways to do business with Kaola: wholesale buying, an online marketplace, or integration with a seller’s own website.

According to recent reports, the Chinese e-commerce giant Alibaba announced that it had acquired Kaola.com, the second-largest cross-border e-commerce platform in China. Alibaba’s acquisition contributed to its dominance in cross-border e-commerce. According to Alibaba, as of 2021, Alibaba-owned online shopping platforms accounted for more than 50 percent of China’s cross-border import online retail market.

JD Worldwide, What is JD Worldwide?

Alibaba’s biggest competitor in China is JD.com, the second-largest B2C e-commerce marketplace. Millions of items are sold by over thousands of brand thanks to 170.000 sellers to over 471 million active users.

JD Worldwide, accepts only high-quality products on its platform and maintains strict quality controls. Because of JD’s end-to-end logistics approach, it is easy for the company to verify suppliers and distributors while preserving control over oversold items.

VIP International, What is VIP International?

The company VIPhop was founded in 2008. However, many foreigners are unaware of this giant market.

VIP International’s cross-border sub-platform, which was previously the largest E-Commerce website in China, is currently ranked third in terms of cross-border sales.

Unlike competitors such as Tmall and JD, this website has an entirely different sales model, using only flash sales.

Essentially, they pre-order your products (often from excess inventory), add a markup and resell them at a significant discount. Discounts typically range from 20 to 80% but can sometimes reach as high as 90% in times of tight supply.

Vipshop’s market share holds almost 40% of the flash sale market (which is highly underdeveloped and has excellent potential) and continues to overshadow Alibaba’s flash sale websites.

Xiaohongshu, What is Xiaohongshu?

Chinese social media platform Xiaohongshu offers users the opportunity to purchase products that appear in the app. Most users are female, and the brands specializing in fashion and cosmetics are well known.

For overseas brands seeking to break into the Chinese market, Xiaohongshu is an excellent choice, especially if the brand is aimed at young Chinese women.

Market share Cross Border B2C e-commerce in China

iiMedia’s report indicates that the market for cross-border e-commerce is quite fragmented.

Alibaba dominates the traditional e-commerce market (between 60-and 70% of the total market share). Still, cross-border e-commerce is much more fragmented, with no single player getting more than 38% of the full market share. Surprisingly, although Tmall and JD are significant players, they by no means dominate the cross-border game.

Quali sono i paesi che sfruttano il Cross Border E-commerce

The leading overseas countries that benefit the most from cross border e-commerce in China are:

  • Japan (Cosmetics, Nutrition & Healthcare)
  • South Korea (Cosmetics, Bags & Fashion, Food & Beverage)
  • USA (Nutrition &Healthcare, Bags & Fashion, and Childcare)
  • France (Cosmetics, Childcare, Nutrition, and Healthcare)
  • Germany (Cosmetics, Childcare, Nutrition, and Healthcare)

To make the shipping costs worthwhile, Chinese consumers are willing to spend 1,000 RMB or more on cross-border purchases. WeChat cross-border stores receive many orders between 1,000 and 5,000 RMB.

To better understand how to reach the Chinese market, contact us at info@longadvisory.eu

We will support you in creating a strong brand identity and success in the Chinese market.

Long Advisory agenzia di marketing in Cina

Long Advisory supports American and European companies in China through digital marketing. In fact, our experience has led us to believe that today, the best and most convenient approach to make your brand well-known in China is through a digital approach. Furthermore, thanks to our know-how we know how to make your brand known to potential Chinese consumers. With the effective coordination of Long Advisory, your company will see a new rise in the largest market in the world: China.

Interested in expanding your brand in China? Contact us for more info and details at info@longadvisory.eu

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