There is no other word to describe Chinese e-commerce than booming. The share of Chinese online business is 7.9% a lot more than the American online business that is only 5.7%. There are 400 million Chinese online shoppers and they are capable to generate 35 billion yuan worth of transactions in 24 hours in 2013, on the 11th of November the online shopping festival in China. Most of these transactions went to the Alibaba Group websites: Tmall (B2C) and Taobao (C2C), the group indeed holds over an 80% share of the Chinese e-commerce market. The founder of the Alibaba Group, Jack Ma even said last year that e-commerce has become a lifestyle in China.
Here is how the company found an answer to the growing demand for genuine foreign goods by Chinese online shoppers:
Chinese e-commerce market without legal red tape
At the end of last year, the Alibaba Group launched its new platform: Tmall Global that enables foreign businesses to directly sell goods to Chinese online shoppers. Allowing them to save some time and money by avoiding legal regulations difficulties since foreign merchants don’t have to have a real presence in China.
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Tmall Global is the international version of Tmall part of Alibaba’s International B2C Department. The new website ensures Chinese online shoppers that they are purchasing internal goods which quality is guaranteed and from foreign companies only, with facilities of domestic return.
Conditions to become a merchant on Tmall Global
Businesses must be registered outside of China with trademarks in any country but China. The merchants must be qualified to retail overseas and have good operating conditions. They must also be able to certify that their stock is located outside of China.
Foreign merchants have 3 different possibilities to open a store on Tmall Global. The first possibility for the foreign merchant is to open a flagship store if they are trademark brands. The second one is for merchants who possess authorization from the brand to distribute and sell their products in China; they can then open a specialty store. The third and last option is to open a franchise shop; this is possible for merchants who have brand licensed goods.
Products must be authentic, and provide origin and Chinese custom certificates. Products also have to be labeled with product information in Chinese. Their delivery should be completed within 5-8 workdays and their returns must be possible in mainland China.
Other differences between Tmall and Tmall Global International
As Tmall in mainland China takes a 2% to 5% commission per transaction, Tmall Global will apply a 3% to 6% charge on each sale. The fee applied for consumer protection on Tmall Global will be 25,000USD, a lot more expensive than the one required for the mainland China Tmall that is between 30,000rmb to 150,000rmb, however, this fee is applied just once. As for the yearly technical maintenance fee, it will also be more expensive for overseas merchants on Tmall Global than for domestic merchants on Tmall with 5,000USD or 10,000USD for the first one and 30,000rmb to 150,000rmb for the second one. Therefore foreign merchants have to support more charges than domestic ones. However, this balances with the fact that they will save time and money not having to register their brand in mainland China.
Alibaba found the perfect compromise between the growing demand of Chinese online shoppers to buy quality international goods and the will of overseas businesses to sell directly to the huge Chinese consumers without having to register in China. Since the opening of Tmall Global, More than 140 foreign companies already opened an online shop on the platform.
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