In an increasingly globalized world, cross-border e-commerce has emerged as a thriving sector, and China stands at the forefront of this digital revolution. With its massive consumer base, evolving purchasing habits, and growing appetite for international products, China has become a fertile ground for cross-border e-commerce opportunities.
This article explores the dynamic landscape of cross-border e-commerce in China, delving into the key drivers behind its rapid growth, the challenges faced by businesses, and the strategies they employ to tap into this lucrative market.
What exactly is cross-border e-commerce (CBEC)?
Cross-border e-commerce is defined as import and export activities of cross-border trade conducted through e-commerce methods by transaction subjects from different customs borders. It is mainly classified into B2B and B2C.
E-commerce in China has become part of Chinese consumer’s daily life. The demands for better, safer, and cheaper products grow at the same time as the purchasing power of the Chinese population. Possessing foreign items is no anymore just a symbol of wealth but is part of many people’s lifestyles.
The jurisdiction of cross-border e-commerce in China
Bonded warehouse: These warehouses are warehousing facilities dedicated to storing overseas goods. It allows sellers to send their products to China without being subjected to commercial import duties or quality control measures.
The consequence of this type of warehouse was the rapid growth of cross-border. Following this growth, the government announced it’s will want to close them, which had retailers very worried.
In the end, on January 1st, 2017, the government announced that they wouldn’t close the warehouses. Retailers would be allowed to continue their activities but a new tax on imported products was created.
The government allowed the creation of 5 new zones for these « bonded warehouses » in Dalian, Hefei, Chengdu, Qingdao, and Suzhou.
Who are Chinese cross-border shoppers?
The Chinese cross-border shoppers are mostly coming from the middle class. They are young, around 30 years old. A thing very astonishing: the largest portion of these shoppers are males. According to the report of the China E-commerce Research Center, males represent 62.6% of cross-border e-commerce shoppers. Your target lives mostly in big cities such as; Shanghai, Beijing, Hangzhou, Guangzhou, and Shenzhen. Growth is also present in smaller cities.
These shoppers spend an average of $473 each on cross-border purchases. This figure will considerably improve in the next 5 years. You have clearly a significant opportunity to do cross-border e-commerce in China.
What are Chinese consumers purchasing on cross-border e-commerce platforms?
Chinese consumers purchase a lot of goods on cross-border e-commerce but, several categories are clearly more popular than others.
The two most popular overseas goods are cosmetics and baby products (Baby formula for instance).
Why? Because many scandals have occurred in China (counterfeiting, dangerous goods, food scandals…). Domestic products are often considered to be inferior to foreign products.
Besides, the regulations of cross-border goods are stricter and retailers have to inform the consumer about all the characteristics of the products they sell.
Today, Chinese consumers want to know what they purchase. They have more money and are pickier with what they buy. They want better goods for their children and for them.
What are the main cross-border e-commerce platforms?
There are different CBEC popular among Chinese consumers with different challenges and benefits. Kaola.com. Small, the giant of e-commerce, JD Worldwide, Little Red Book, Yangmatou, Wechat store …
Tmall Global is the most important platform for cross-border in China, but it’s also reserved for the most successful players. In most cases, brands are rejected by Tmall (85%).
However, this is changing. Tmall has recently launched its Tmall Oversea fulfillment, especially targeting small and mi-size brands with low awareness in China and small budgets.
What is Tmall Oversea Fulfillment? Basically, a way for any brand to try out the market in China. To make it simple, it works a little like Kaola. If you register for this service, you send your product to Alibaba oversea warehouse and Tmall will take care of the rest.
Kaola.com, a website, launched in 2015, is one of the most important cross-border e-commerce platforms in China, recently purchased by Alibaba Group. In the beginning, the platform was open only to Australian retailers, so they could sell their products in China. Now, all foreign retailers are allowed to sell on that platform.
There are currently sellers from more than 40 nationalities selling their products through the Kaola platform.
XiaoHongShu (Little Red Book)
XiaoHongShu aka RED is a little different from the other platforms. The site is a mix between a social media app and an e-commerce platform. The platform is relatively new, it was launched in 2014, but, has already a user base of over 200 million people.
This app is a bit similar to Instagram with Chinese characteristics. It is more commercial. If you open the app, you have access to a store as well as visual, influencers, reviews, etc
80% of users on XiaoHongShu are women. Cosmetics and beauty products are very popular on this app.
This site is also quite accessible to smaller brands hoping to expand to China and is growing quite fast.
Another effective alternative to these platforms is WeChat Stores. The weChat store is the best and most effective tool. These are stores hosted within this app that is linked to an official account. Besides, payment is made extremely convenient and fast to encourage impulse purchases.
Cross-Border E-commerce Case Studies
Vitabiotics: Innovative Health Products
MartiDerm: Skin Problems and Anti Aging Specialists
ISANA: German affordable and vegan cosmetics and skincare products
Do you want to know more about the technicalities of operating on cross-border e-commerce in China? Here are the 14 most commonly asked questions (and answers) about cross-border e-commerce!
Do you need a partner to launch your brand in China? Contact us today!
We help companies wishing to sell on the Chinese market. We are specialists in:
E-REPUTATION: Primordial before launching, we work together on your unique selling point, then on the social networks, and with the help of PR, we make sure that your image on the networks is totally clean and reliable for the Chinese users.
SEO: The optimization of your reference will be essential, our team of specialists will take care of your e-reputation, and the management of your social networks while setting up an SEO / SEM campaign allowing you to gain places in the ranking of the Baidu Chinese search engine.
LEAD GENERATION: Our teams are professionals in lead generation. To optimize it, your e-reputation must be irreproachable. Investing in online advertising and creating quality content will help you develop your e-reputation. Finally, the evaluation of the results will be important to guide us in the next stages of your development.
DIGITAL SOLUTIONS: Website creation, development, and audit; social media marketing (including WeChat & Weibo); PR; monthly reports and analyses by our team of experts.