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Chinese consumers are eager to buy foreign goods

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China is the largest e-commerce market in the world. What is unique about Chinese cross-border e-commerce is that large quantities of purchases flow in both directions. Chinese consumers are major buyers of foreign goods, and Chinese merchants sell massive amounts of goods to international markets where people are looking for inexpensive items.

While Chinese companies sell large amounts of goods online in the B2B market, in this article I will focus on B2C sales.

The total business turnover of Chinese e-commerce (domestic and cross-border) rose to $ 1.2 trillion in 2017, an increase of 32% over 2016, according to the Chinese Ministry Trade. The ministry predicts that e-commerce will grow at an annual rate of 30% over the next few years. Much of the growth will take place in cross-border sales.

Merchants selling abroad

Cross-border e-commerce sales based in China to 200 countries were worth $ 140 billion in 2017, according to Azoya Consulting, China's provider of e-commerce solutions.

Tens of thousands of China-based vendors sell their products internationally via Amazon Global Selling, a mechanism that operates online market branches in 10 countries, including the United States, the United Kingdom , Germany, Canada and Japan. Australia. The most popular products are smartphones, computers and electronic accessories.

JD.com, a Chinese e-commerce giant – and recipient of a recent $ 550 million Google investment – has rolled out its cross-border B2C platform in 2015, with Spanish, English and Russian versions .

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Consumers buy foreign currency

Chinese consumers are eager to buy foreign products because they believe that foreign products are of better quality and are less likely to be counterfeited. This is especially true for cosmetics, baby products and food. In the past, the Chinese baby formula has caused the death of some babies. As a result, Chinese consumers do not universally trust local brands.

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Chinese buyers will conduct extensive online research on foreign products before purchasing them and will also consult family and friends who may have purchased similar products abroad.

The top five countries for Chinese consumer sales are Japan, the United States, South Korea, Germany, and Australia. Japanese and Korean exports mainly include cosmetics and beauty serums. The Chinese often turn to Western countries for their baby products, food, vitamins and supplements.

Chinese consumers bought $ 100.2 billion worth of goods from sellers in other countries in 2017, the average spend per buyer (for the year) going to 882 dollars, according to research firm eMarketer. The company estimates that in 2018, 249 million Chinese consumers will buy products via cross-border e-commerce, known locally as "haitao" or "overseas purchase".

According to Azoya Consulting, cross-border e-commerce buyers in China come from large cities and are well educated and well off. They are relatively young – 36% are between 19 and 29 years old and the remaining 64% are between 30 and 40 years old.

Sell in China

Online traders who want to sell to Chinese-based consumers should use a Chinese market specializing in cross-border sales versus selling from the merchants' own e-commerce sites.

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This is especially the case for small unbranded sellers. Millions of Chinese consumers know the national online markets. But they may have difficulty finding smaller sites. They also have greater confidence in the markets. Chinese consumers rarely buy overseas products from stand-alone websites or third-party platforms located outside of China. More importantly, the marketplaces are in Chinese and sales are in local currency, renminbi – RMB.

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It is usually necessary to employ a Chinese third-party service provider, called "TP" for "Tmall Partner" or "Trade Partner". These agencies provide foreign companies without a business entity in China with access to cross-border Chinese e-commerce. platforms. Major platforms such as Tmall Global and JD Worldwide only accept foreign traders who work with TP certified by these ecommerce platforms.

Chinese Market Places

The main Chinese e-commerce marketplaces that host foreign sellers are:

Tmall Global is the cross-border version of Tmall, China's leading national online marketplace. Owned by Alibaba Group, it was launched in 2014 and only sells goods imported through the intermediary of foreign trade shops hosted on the Tmall website. Tmall offers country flags grouping products from the same country on one page. It uses Alipay Alibaba owner for payments.

JD Worldwide operates the second largest cross-border online shopping mall in China, established in 2015. JD dominates in home appliances and consumer electronics. For its market model, JD Worldwide hosts flagship stores of foreign brands. JD uses Tencent's online payment escrow service, Tenpay, to conduct transactions in US dollars.

<img class="wp-image-154679 size-large" src="https://www.practicalecommerce.com/wp-content/uploads/2018/06/JD-Worldwide-570×385.png" alt=" JD Worldwide operates the second largest cross-border online market in China. "Width =" 570 "height =" 385 "/>

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JD Worldwide operates the second largest cross-border online market in China.

Suning Global. Launched in 2014, it is the cross-border online shopping mall of the largest Chinese trading company, Suning. It includes about 300 foreign showcases and provides support services to store operators and financial support. The most popular category of products is electrical appliances. He uses his own online payment escrow service, Yi-Pay, to make RMB or currency transactions.

Amazon China World Store. This is the haitao platform of Amazon China for Chinese customers. He uses Alipay, Tenpay and UnionPay to transact in RMB or foreign currency.

<img class="wp-image-154680 size-large" src="https://www.practicalecommerce.com/wp-content/uploads/2018/06/Amazon-China-570×465.png" alt=" Amazon China uses Alipay, Tenpay and UnionPay to transact in RMB or foreign currencies. "Width =" 570 "height =" 465 "/>

Amazon China uses Alipay, Tenpay and UnionPay to transact in RMB or foreign currencies.

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All these markets require security deposits and commission fees. All except Amazon China also collect annual platform fees. They also offer different business models – either by allowing traders to do the logistics themselves, or by carrying out warehousing and delivery for them.

Hypermarkets

"Hypermarkets" directly purchase large quantities of goods overseas. There are no showcases. Overseas traders sell their wares to hypermarkets at a negotiated wholesale price. Hypermarkets then charge a supplement.

Kaola is a cross-border e-commerce hypermarket with the largest bonded warehouses in China. Merchants from around 40 countries sell their products on the Kaola platform.

JD.com also operates a business in hypermarkets. For this model, JD Worldwide acts as an intermediary, buying stocks from foreign companies and selling them to Chinese consumers.

Suning also offers a hypermarket model stocked with direct supply.

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