Are you planning to sell in China but don’t know where to start? China is the world’s second-largest economy and its online marketplace market is booming. Sixty percent of the Chinese population are online shoppers, making it a key market for brands and marketers looking to expand their business. However, with the plethora of Chinese marketplaces, it is overwhelming to find the best place to start. In this blog post, we will introduce you to some of the most popular Chinese online marketplaces for foreign brands.
2 Types of Chinese Online Marketplace
We first need to understand the two types of online marketplaces that are prevalent in China. This will help you decide which platform and eCommerce strategy to use if you want to penetrate the Chinese market.
1. China Domestic eCommerce Platforms
Local e-commerce is an e-commerce strategy that prioritizes getting inventories sold to local customers, including online stores. This is mainly used by brick-and-mortar stores as a way to connect with their local consumers who are mostly using the internet to browse and shop for items.
A lot of small, and even large, businesses are using online stores through social media or creating a website to build their local eCommerce strategies.
The Chinese marketplace abounds with these types of stores, but we are seeing a surge of the other type of online marketplace, cross-border eCommerce, forcing local eCommerce stores to jump the wagon and build their stores on cross-border eCommerce platforms.
2. Chinese Cross-Border eCommerce Platforms
Worth $60 billion, China’s cross-border eCommerce is one of the largest there is in the world. Cross-border eCommerce is the online trade of goods between businesses, consumers, and suppliers that reside in different nations. This means that a person can buy from a merchant that is beyond their country’s borders and is using a different currency.
Businesses who want to expand their operations should see cross-border eCommerce as an opportunity to tap and reach international markets that may have been inaccessible in the past because of logistics issues.
The Largest Chinese Online Marketplace
There is a plethora of Chinese marketplace that offers a unique experience to users and are designed for specific demographics. However, China has a few eCommerce platforms that dominate the market and are therefore great starting points if your goal is to reach as many Chinese consumers as possible.
1. Taobao: China’s “eBay”
Founded in 2003, Taobao is operated by China’s internet giant, the Alibaba Group, and is one of the largest Chinese eCommerce platforms. With a user base of about 755 million, Taobao is the go-to platform for small businesses, entrepreneurs, and customers to shop and sell a wide range of goods from electronics to beauty care and household equipment. Taobao is mainly a Customer-to-Customer eCommerce platform and is the giant for C2C eCommerce in the Chinese marketplace.
It also integrates social media features such as live streaming and even has its own social eCommerce platform called Weitao, which it shares with its sister platform, TMall.
Taobao only allows Chinese citizens and companies to sell on its platform. However, like most Chinese online marketplaces, foreign brands can still set up shop on its platform through a few steps.
First, you need to create a Taobao account and then create a registered joint venture with a Chinese company. If this is not possible, however, the best way to access Taobao’s ecosystem is to set up your store in TMall Global instead. We will explain how to do this later, but we see this method to be much cheaper compared to creating a whole new company in China.
2. Pinduoduo: Interactive & Social eCommerce
With over 500 million users in China, Pinduoduo is one of the fastest-growing eCommerce platforms in the Chinese marketplace. The way Pinduoduo operates is unique from the other platforms on this list since this app feels more like a game than a shopping platform.
Pinduoduo (or PDD) cemented its popularity in smaller cities, with its bargain deals and unique feature of awarding better deals with a larger group of shoppers.
PDD doesn’t have any commission on sales, bringing down the barriers of entry for new merchants, and gaining profit through advertising instead.
While it’s true that PDD is one of the most baseline and low-cost eCommerce platforms among Chinese online marketplaces, its fast and steady growth can be a reason for you to set up shop. A lot of global brands are actually using PDD for one of their eCommerce stores, including Apple and Chanel.
3. Tmall: China’s most trusted online marketplace
Originally named Taobao Mall, TMall is Alibaba Group’s answer to the growing counterfeit problem in Taobao. With a user base of about 100 million, TMall is more focused on selling branded consumer goods, as opposed to Taobao’s low-cost Chinese-made products.
In terms of transaction value, Tmall is China’s #1 marketplace with more than 64% of the market share for the year 2021.
Like its sister platform, TMall only allows Chinese businesses to sell on its platform. However, with its TMall Global program, international brands can now sell their products in this Chinese marketplace.
TMall Global’s fees are actually more expensive than its standard fees as a measure to provide more protection against counterfeit products.
4. JD.com: A Fortune Global 500 Company
JingDong.com or JD.com was formerly 360buy and was founded in 1998. This eCommerce platform is a member of the Fortune Global 500 club and is one of the largest eCommerce platforms in terms of transaction volume and revenue in China. JDcom has been experiencing quite the growth in 2021 with a net revenue reaching RMB218.7 billion, a 25% increase compared to 2020.
With a user base of 552.2 million active customers annually as of 2021 (a 25% Y-o-Y growth), JD.com specializes in the delivery of products through the use of high-tech and AI means, such as robots and drones.
Like Tmall, JD also has its own global eCommerce platform called JD worldwide which functions similarly to Tmall Global, offering foreign companies to reach out to Chinese consumers with no foothold in the country yet.
JD.com puts emphasis on partnering with only reputable and well-established brands. JD.com has also expanded beyond high-tech industries, touching market niches like the beauty segment and groceries.
With JD’s global platform, foreign brands can take full advantage of JD’s excellent logistics system, reaching numerous consumers in the Chinese marketplace.
Chinese Online Marketplace for Lifestyle and Fashion Brands
While the first four platforms offer access to significant demographics in China, businesses and brands will most likely be enticed with the more nuanced Chinese online marketplaces. One market niche includes lifestyle and fashion. In this market segment, there are 2 great Chinese online marketplaces that put emphasis on the youthful and luxurious demographics of China:
Xiaohongshu, or Little Red Book, or RED for short, is the pioneer for social shopping in the Chinese marketplace, with about 148 million active users (as of November 2021). 90% of RED users are under 34, and 64% of the user’s base is feminine for 33% of male users which is a significant increase compared to 2019 where most users were women (Nov 2021).
RED combines Instagram-like features, like layouts and filters as well as comments and other community engagement tools, with its shopping platform. Because of this, RED grew in popularity among the young users of the marketplace in China, where there is an emphasis on finding the best and must-products for fashion and lifestyle.
With its target market being young users, and men and women that are beauty-and-fashion-conscious, RED has made itself a home for wealthy users and individuals that are concerned with industry trends in the lifestyle and fashion segments.
Because of this, Xiaohongshu can be a great option for foreign brands that seek to penetrate a more affluent demographic of Chinese online marketplaces.
VIP.com for unsold products – benefits both buyers & brands
With over 43 million active users, VIP.com is also a great option for luxury and fashion-focused brands that want to enter the Chinese marketplace.
Unlike Xiaohongshu, though, VIP.com is more popular in smaller cities and uses discounts and sales as a primary promotion tactic in its platform. This means that VIP.com is a more preferred platform if you are looking for a Chinese marketplace that specializes in low-cost beauty and fashion products.
VIP.com also has a dedicated global platform like TMall and JD, called VIP International, which helps foreign brands to sell their products to users of the Chinese marketplace.
Chinese Marketplace to Sell Electronics Goods
The last market niche to discuss here is the electronics-focused segment. Aside from JD, Suning and Gome also offer a platform for electronics brands to sell their products in the Chinese online marketplace.
Headquartered in Nanjing, Jiangsu Province, Suning is one of the largest non-government retailers in China with the number of registered users reaching 600 million and covering 95% of China’s territory. They offer a myriad of products such as home appliances, general merchandise, books, televisions, IT products, and other electronic appliances.
Suning is an eCommerce platform that went into brick-and-mortar as well, operating franchises in retail shops across China. The Chinese marketplace also offers a cross-border option (read more about it here)
Gome is listed in the Top 50 Listed Enterprises of Asia and is a JD and Suning rival because of its emphasis on selling electronic appliances through retail shops all over China. Gome has been expanding in recent years and now operates throughout China. It’s the main rival to Suning, 360buy as they both sell electronics & electrical appliances retail shops
The e-commerce platform Gome started as a seller of 3C products but has since expanded into electronics, groceries, and more. They provide services in four major categories: maternal & baby supplies; health/medical items like prescriptions or asthma treatments for example.; home furnishings such as bedding & bathrobes while also offering gifts to match every occasion under its culture arts section which includes books volumes II
Gome has partnered with Pinduoduo for eCommerce because of the latter’s growing success.
In fact, if you are looking for the biggest chain store of household electrical appliances, then Gome is that. It’s also the largest private-owned electrical appliance retailer in China and Hong Kong combined.
Requirements To Sell on Chinese Marketplaces as a Foreign Brand
After learning about the best Chinese online marketplaces and deciding the best eCommerce platform to set up shop, what exactly are the steps to access this market?
Unless they offer a Global or International platform like TMall, JD, and VIP.com, foreign brands will have to create a Wholly Foreign-Owned Enterprise (WFOE) in China which entails a $25,000 deposit fee, annual service fees, and commissions of 1 to 5%. After creating a WFOE, you will then file for an Internet Content Provider (ICP) license which will allow you to work with the platforms that we have discussed above.
Are you ready to conquer Chinese marketplaces?
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