见解

Key 5 misunderstandings on Cross-Border E-commerce to China

Date: 30-10-2017
Source: Mains-International

 

Lately, many stories have been published about Western companies that are suspending their online
activities in China. This is not surprising. The Chinese (Cross Border) E-commerce market is complex.
Hereby a list of misunderstanding that help you sell into China. The 5 key misunderstandings:

 

1. Alibaba is the largest player in China, and therefore, Tmall is the best place to sell our products online in China.

 

2. It is possible to sell online in China from behind your desk at the other side of the world without any problems.

 

3. (Cross-Border) E-commerce in China is the same as in the US or Europe. I open my shop and start
selling, easy as that.

 

4. Having an online store will result in guaranteed sales as China has 1.3 billion people.

 

5. I have visited China for business and the meetings went very well and the Chinese counterpart
wanted to buy several containers of my products.

The Netherlands still world leader in e-commerce

Date: 9 October 2017
Source:
emerce.nl
 

The Netherlands still has one of the world's most developed e-commerce markets in the world, much higher than for example Germany and England. This can be read from the new B2C E-Commerce Index of the United Nations Conference on Trade and Development (UNCTAD), published annually. Nowadays, the Netherlands is in fourth place, just behind Luxembourg, Switzerland and Norway.
 

The research from UNCTAD analyses e-commerce markers in 143 countries on segments like internet usage, secure server density, bank accounts and mail system reliability. The Netherlands has a high rank partly because almost everybody above 15 years has a bank account, broadband is nationwide and because 79% of the population made an online purchase in the last year.
 

Seven out of the top 10 countries are from Europe. The other three countries are South-Korea, Japan and New Zealand. You would think America would be close to the top 10 too, however, America is number 26 on the list. 

Cross-Border E-commerce trade in China gets impulse from the government

Date: 21 September 2017
Source: Chinasquare.be

 

China is getting more pilot zones for cross-border e-commerce. These extra zones must promote online transactions and therefore strengthen China’s competitiveness worldwide.
 

At this moment, there are 13 pilot zones in China located in Hangzhou, Shanghai, Tianjin and Chongqing. These zones are now being expanded and new zones will be build. Prime minister Li Keqiang thinks these new pilot zones are important for China to keep up with the times of the rise of e-commerce. Because of the cross-border e-commerce, consumers are able to buy goods from international wholesalers safely. The transactions are supervised by the Chinese customs. Companies who have a license can store their goods in bonded warehouses located in the pilot zones. Goods which are not cleared yet, can be stored in these warehouses.
 

Some products like cosmetics and health products, can be bought online and offline in the bonded warehouses. At this way, you pay no or very little import duties. In April 2016, the Chinese government wanted to end this to make the competition between online and normal importers fairer. However, this plan has already been postponed twice.

Cross-Border E-commerce (CBEC) China: what’s the trend in 2017?

Date: 6 August 2017

Source: walkthechat.com

 

iiMedia just released a new report about the Cross-Border E-commerce in China.  Some of the key points:

 

- CBEC keeps growing and is expected to reach a volume of €1.000.000.000.000,00 (1 trillion)

- 58 million online CBEC transactions

- Frequent purchases between €40,00 and €130,00

 

Biggest E-commerce players in China:

 

- Kaola

- Tmall Global

- Vip.com

- JD Worldwide

- Red Book

- Mia.com

 

Want to read more. Click the button below. 

 

Insight of China's E-Commerce

Date: 4 August 2017
Source: TMOGroup

 

Nowadays, retail is evolving because of e-commerce. Yet, this is not simply the result of going ‘electric’ or going ‘online’. The basic components for retail are People, Products and Places, and these elements are changing.

 

In the 2000s, Places replaced the Products. Companies had to find a way to stand out from the crowd by selling in shopping malls, offline stores, and even pop-up stores. Also, the rise of the internet contributed to an increase in online stores and e-commerce (Taobao & T-mall in China).  The change of retail brings a new challenge: find the hidden consumers. Consumers are shopping online more than ever, companies are therefore now forced to integrate and upgrade their products, membership, channels and interface to grasp their customers.

 

What should companies focus on?

Peoples values and perception keep changing, and therefore, the consumers habit too. These days, consumers are attracted to good-looking and social websites. Thus, brands should do the following things:

 

  • Make an attractive User Interface (UI). The UI for online websites and platforms is literally the first impression for consumers, this has to look attractive because this increases the shopping experiences and trustworthiness of the consumer.

  • Enhance the user experience. It is very important for Chinese consumers to have a pleasant experience. Things as easy mobile payment options and user-friendly designs are a must. Localization is also very important for an e-commerce platform.

  • Interact with users. Chinese consumers like to interact, therefore it is important to offer an interactive buying procedure. Coupons, writing recommendations and referral bonuses can attract more and even new customers.

  • Data and customer management. It is very important to analyze the complete journey of a purchase. This gives a clear portrait and insight information about the customer which can be used for purchase predictions and marketing.

  • Repurchase.  Acquiring new customers costs a lot more than maintaining current customers. Therefore, it is very important to maintain customer relationships to ensure repurchases.

Aptamil/Nutrilon update!

Date: 13 July 2017
Source: Mains-International Newsletter

 

The market for Baby Formula is never boring. Every year this market develops and changes: under influence of the producer (Danone), the strategy and/or market changes and government policy changes. We have seen the rise of the CBEC in the past few years and the change towards parcel shipments from Europe to China in the recent 12 months. This has a quite huge impact in the market at this moment. In the past 5 years we have seen the price decrease during every summer. Now, due to the better control and production planning of Danone and next to that, the giant increase of Direct Injection (parcels from Europe to China), the prices of the bulk market are only increasing. Our expectation is that the quantities for the bulk will decrease more the coming months. At the same time, the prices of Aptamil and Nutrilon will increase more too. The market is quite stable, the demand is high and will only get higher from September 2017.

 

We will promote the Direct Injection more and more, as we are convinced that this is the way to go forward. With and through our partner Holland at Home, who is officially endorsed partner for Nutrilon by Danone we can offer stable quantities, stable pricing and long term contracts.

Vreugdenhil

Date: 13 July 2017
Source: Mains-International Newsletter

We are very proud to announce that we will be the official distributor of the Dutch dairy company Vreugdenhil. We will start with our marketing and promotion strategy for the full cream milkpowderbrand “Two Cows” within the coming weeks.

Vreugdenhil is active in the dairy market since 1954. Gradually they have become Europe's largest producer of full cream milk powder. Vreugdenhil has three factories, and 900 Dutch farmers who deliver the raw product. They produce milk powders for the food industry and for millions of consumers worldwide. Vreugdenhil is also known as one of the most progressive sustainable dairy companies in the world.

Why do Chinese people buy a lot across the border?

Date: 6 July 2017
Source: twinklemagazine.nl

 

Since 1978, China opened its border for foreign investors. Back then, the total import and export of China accounted for 20.6 billion US dollars, accounting for spot 32 on the global trading list. However, nowadays, China accounts for more than 16 percent of the world trade, leaving only the US on number 1.

 

According to the National Bureau of Statistics in China, online retail sales reached 752 billion US dollars in 2016, making China the largest online retail market in the world.

 

Instead of mass products, Chinese people are more looking for first-class quality products. One of the reasons for this change is that Chinese people feel that western products have a certain amount of quality which they can not always find in the domestic market. Another reason for the increase in online shopping is the increase of online shoppers in the rural area of China. Furthermore, the Chinese government has taken a number of measures to make it easier for consumers to buy overseas products. For example, the government reduced the import tax on a large number of items which makes it particularly attractive to order online foreign products.

 

Western companies noticed the increase in online shopping. Therefore, large companies like Philips, Heineken and G-star started selling products online on Chinese platforms like Alibaba and Tmall.

 

The demand for Western products is growing, therefore, this is the right time for the Dutch entrepreneurs to connect with China and to fully exploit the potential of the Chinese consumers.

Cross Border E-Commerce in China: the basics of TPs

Date: 27 June 2017

Source: Webpower China

 

If an international brand wants to establish online business in China, Tmall is the marketplace it can almost never avoid. To make things easier, brands can work with Tmall Provides (TPs).

 

What exactly is TP?
TPs are agencies certified by Tmall to help sellers with their marketing, logistics, IP protection, IT development and more. In fact, Tmall global accept foreign merchants ONLY if they work with a TP.

 

Why should I work with TPs?
Besides the mandatory part, one of the biggest reason for collaborating with TPs is that they speak the local language. They are able to assist international brands with quick responses to consumer demands. They are the expert of the local market – knowing exactly how Chinese consumers are like.

 

How does it work?
In general, TPs charge brands in 3 ways: 1) fixed monthly service fee; 2) commission based on sales; or 3) mix of 1) and 2). Working with TPs could be pricy. Typically, a resourceful TP charges anywhere between 20,000 to 100,000 RMB per month (fixed fee); or a 5% – 10% of revenue share. Note that this cost is only going for TPs, excluding platform fees and commissions.

 

Is there any risk working with TPs?
Yes, there is. Despite that TP could be a great help for new comers in China, it can also bring additional challenges. First off, cross-border ecommerce is still a relatively new business in China. Secondly, being certified does not guarantee quality.

 

What should I look out for when working with TPs?

Select on service expertise
TPs usually offer one-stop solution, even though they may have limited experience in some regards. Determine what specialties are most important to you, and make the selection accordingly.

 

Select on product category
Tmall often classify TPs by product category, so as to better assist its vendors. For instance, TPs dealing with food & beverage would have different expertise than those handling baby care products.

 

Select on geographic location
Apart from national regulations, cross-border e-commerce pilot zones may have their specific procedures. Therefore, selecting the right location may give you easier access to online business in China.

Cross-Border E-Commerce in China: Marketing and Localization

Date: 19 June 2017

Source: Webpower China

 

For international companies in China, MNCs and SMEs, localizing marketing strategy is hard. First, it’s a big challenge to sell almost anything in the (over-) saturated market. Second, find the right proposition is also tricky. Resting on the laurels of ‘foreign heritage’ is no longer the way out. With millions of foreign brands flooding into the market, the only way to differentiate yourself is to demonstrate your product value and the unique brand story behind. 

 

Similarly, pricing also matters when it comes to positioning your brand. Most of the international brands believe that their foreign nature allows them to ask for premium price – yet this is only partially true.  Besides, mid-income consumers are increasingly interested in purchasing quality and affordable products directly from cross-border platforms.   Furthermore, unique consumer psychology is one of the most drastic difference between China and the western world. It’s fundamental for foreign companies to get through some key points before rolling out any online activity in China.

 

Purchase Cycle
In most of the European markets, consumers start their online purchase by searching through a search engine – even if they know what they want. In China, this is not the case. A typical online purchase path is: discover a product on social media like Weibo or WeChat and place an order from there.

 

Marketing Strategy
Words from peers and influencers are important references when buying online in China. Therefore, KOL marketing is incredibly effective in boosting brand exposure. KOLs usually operate their own account on social media, and collaborate with brands to deliver promotional content.

 

Social Branding

By using a master App such as Wechat, companies are able to both sell and engage their audiences via content marketing. Moreover, Wechat also enables brands to embed loyalty programs into their official accounts. While social media such as Wechat is for making a social blast, when it comes to personal communication, email and SMS are still dominating in China.

 

Customer Service
Local consumers are used to immediate and personal assistance. In China, customer service across different platforms is available 7 days a week, 16 hours a day, at least. Meanwhile, more than 80% of the service takes place via Wechat/live chat/phone.

Alibaba expects annual turnover of 34.3 billion US dollars

Date: 9 June 2017
Source: twinklemagazine.nl

 

This year, Alibaba expects to get a 10 percent higher revenue growth, topping consensus analysts forecasts. Their annual revenue is likely to increase from 45 percent to 49 percent, which, most preferably, results into an annual turnover of 34.3 billion US dollars.

 

In 2016, the growth was approximately between 44 and 45 percent. Especially the takeover of Lazada, a large e-commerce company in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, has stipulated the growth. According to Alibaba, Alibaba became a part of the daily life in China.

 

10 billion cash flow
Maggie Wu, CFO of Alibaba, reported that they had a free-cash flow of 10 billion us dollar last year. “Where are we going to invest that money? We are going to invest that to gain B2C market share,” Maggie Wu said. “This is a company that always invests for the longer term, for the future.”

 

Chinese economy slowing down
According to analysts, the fast and big growth of the Chinese economy is slowing down, despite the strong revenue- and profit figures. However, Alibaba’s sales have grown approximately 60 percent per quarter.

Cross-Border E-Commerce in China: Platforms & Entry Strategy

Date: 08 May 2017

Source: Webpower China

 

If you are still only thinking about Tmall & JD when it comes to cross-border ecommerce in China, then you definitely need to catch up. In recent years, many western players, especially fashion retailer, have tapped into the Chinese ecommerce market. These platforms offer custom clearance and free shipping services, so that cross-border purchase is almost as convenient as buying from local marketplaces. Meanwhile, local internet companies such as NetEase also established its own cross-border platform, directly competing with Tmall and JD in global business.

 

Types of cross-border platforms

Chinese consumers almost exclusively shop on online marketplaces, instead of stand-alone sites from brands. In general, there are 5 different types of 3rd-party platforms in China:

 

Online malls

In online malls, customers are able to directly purchase items from independent merchants. The most famous examples are Tmall Global and JD Worldwide.

 

Hypermarkets

Hypermarkets adopt a B2B2C model, which is fundamentally different from online malls. Such markets (e.g. Jumei and Koala) purchase from foreign brands and sell in on the platform. Consequently, hypermarkets charge a markup from wholesale price to retail price.

 

Specialty marketplaces

Such marketplaces also buy goods directly from overseas suppliers. However, specialty markets only focus on a specific product category (e.g. fashion; baby care), target audience (e.g. young female; new mothers) or geographic location (e.g. Korean; Japan). Although traffic is lower, specialty marketplaces usually generate more qualified prospects and thus higher conversion rate.

 

Flash sales websites

Flash sales sites offer high discounts for brands that just entered China, or excessive inventories from high-end brands. Such websites can be an effective tool for foreign brands to test their product in the Chinese market, before investing substantially on ecommerce activities. Meanwhile in general, flash sales can be used as a marketing tool to boost brand exposure in China.

 

 

Wechat stores

Such stores operate on Wechat – the #1 killer messaging App in China. Verified merchants can open an in-app store and sell to millions of Wechat users. Wechat also offers its own payment system for customers and merchants to pay and collect money.

 

How should I choose the most suitable platform?

As with many other marketing tools in China, no single platform fits it all. Hence, it’s always beneficial to adopt a multi-channel approach. In general, there’re 2 ways to enter China through cross-border e-commerce platforms:

 

1. Fast growth strategy (high cost, fast growth)

Under such model, companies usually start by establishing a flagship store on online malls/hypermarkets. By doing so, brands are able to quickly boost traffic & brand visibility. Also, they are able to gather first-hand consumer feedback and optimize future plans. Nonetheless, setup cost and regulatory barriers are high, and brands need to invest tremendously to fight against competition within each online mall/marketplace.

 

2. Organic growth strategy (low cost, slow growth)

Smaller brands often follow the path of Wechat store (market test) → Specialty market/hypermarket (exposure) → online mall (stable business). Under this model brands face less financial risks, and are able to use social marketing to target their audience. However, initial sales volume will be low and heavy investment on branding is needed to attract prospects.

 

As cross-border e-commerce is booming in China, it’s critical for foreign companies to evaluate your goal and budget etc. before settling down for any platform.

 

Ali Express to Guarantee 1-Week Delivery Time With PostNL Deal

Date: 04 May 2017

Source: PostNL

 

The Hague - Chinese AliExpress, part of the Alibaba Group, selected PostNL as the delivery partner for a majority of its packages to the Netherlands. Sellers of the popular platform get direct access to the PostNL distribution network. Through this collaboration, AliExpress is able to offer its customers faster delivery, namely within 5 to 7 business days.

 

AliExpress is one of the world’s leading online marketplaces. The platform enables consumers from around the world to buy directly from Chinese manufacturers and distributors. More than 100 million customers already use AliExpress to buy a large variety of products at competitive prices. Over the past few months, the Netherlands have grown out to be one of the key destinations.

 

“We want to offer our customers the best local experience, and therefore we have chosen for PostNL in the Netherlands. They have the number one delivery network in the Netherlands, and offer reliable services. Moreover, with Spring as their exclusive sales agent in Asia, we have our contacts nearby. This means that we can easily get together and monitor the processes and developments here, and adjust when needed. Their Asian team is very flexible and customer driven, and collaborates very well with our logistics platform Cainiao. This is key to us.”; says Leo Shen, General Manager AliExpress.

 

Spring Global Delivery Solutions are fully part of PostNL, and as such Spring is able to offer businesses in Asia, and beyond, logistic solutions. Spring offers AliExpress direct access to the Dutch distribution network of PostNL. Affordable and reliable distribution are key for customer satisfaction. That is why AliExpress have chosen PostNL as their exclusive distribution partner for a majority of their orders to the Netherlands. Through direct access to the Dutch local network orders are delivered faster. It allows AliExpress to provide affordable delivery of its orders to the Netherlands within 5 to 7 business days.

 

Tijs Reumerman, Managing Director PostNL Cross Border Solutions: “In the last year we have grown rapidly in Asia. Increasingly, consumers in the Netherlands and beyond are buying from Chinese online shops. It is a great achievement that one of the largest online platforms in the world have chosen PostNL for its direct distribution. Our team in Asia knows the market like no other. They speak the language, know the culture, and know what the customer wants. This local link has been essential in being able to welcome AliExpress as our customer.”

Cross-border E-Commerce At A Glance

 Date: 20 April 2017

Source: Webpower China

 

We are living in the best era for cross-border e-commerce in China (CBEC). Dispensable income has been increasing; the (upper) middle class are seeking for niche and the latest items that are not yet available at home; consumers are shifting focus from price to quality & brand story… In 2016, the market size was estimated at $86 billion, while abundant foreign companies are planning to tap into this field. Let’s explore some basic facts behind the market!

 

Who are the customers?

A quarter of the consumers of CBEC belongs to the mid-upper class, with an average income of 10,000 RMB/month. Surprisingly, more than half of them are male (normally we associate female more with shopping). These people dwell in the South & east part of China, mostly Canton area & Shanghai.

 

What do they buy?

The most welcomed products on cross-border platforms are cosmetics, seconded by bags and baby care items. The main reasons include:

  1. There is a big price difference in cosmetic/luxury products between China and western countries, due to the heavy customs in China;

  2. Many brands are not yet available in the domestic market;

  3. Previous food scandals disappointed Chinese consumers, therefore they are seeking food with trusted quality – especially for babies.

 

Why do foreign companies love cross-border platforms?

Traditionally, only big multinational brands can afford to enter China. You need to establish a physical entity within the country and go through customs and legal process – this is both time & money consuming. Now, all the tedious work are gone with cross-border platforms! Because of this, many startups and SMEs are now flooding in the Chinese market. In short, overseas companies now have the chance to access China directly and quicker, with less financial risks.

 

How should I set up my cross-border business in China?

1. Rule and regulations: This could vary based on industries. The latest rules were stipulated in 2016, make sure what is allowed and what is not before you start.

2. Online sales channels: There are hundreds of different platforms available for use, each with its own different targets.

3. Entry strategy: There are 2 ways – fast growth vs. organic growth, depend on your goals and budget.

4. Payment solutions: Mobile/online payment in China is revolutionary. Forget about Paypal or bank transfer, everything here has to go through local payment systems.

5. Logistic solutions: Chinese consumers hate waiting. If your product is not in their hands within 1 week (2 max), they will probably turn their back against you.

6. Marketing & localization: Chinese consumers behave drastically different from westerners. You have to adapt your marketing strategy to the local mentality.

7. IPR protection: Counterfeit is still a major issue regarding e-commerce in China. Make sure that you know how to protect your IP when the issue comes to you.

8. Third party service providers: External vendors could help with your marketing strategies in e-commerce platforms. 

Cross-border E-commerce in China

Date: 30 March 2017

Source: BriefingWire

 

Alibaba Group, which has become a household name thanks to its ubiquitous online services, invited over 100 companies to visit Hangzhou, including the Dutch Consulate in China and RaboBank. The purpose of the delegation visit was to discover new opportunities in China's cross-border e-commerce business.

 

As a dominant e-commerce provider, Alibaba’s portfolio includes platform solutions, finance and payment, digital marketing, logistics and more. Now, Alibaba is going beyond local market by enabling foreign brands to sell to Chinese consumers via Tmall Global (Alibaba’s cross-border platform for foreign brands in China).

 

Customers of Tmall Global demographics:

  • Middle class

  • Age of 24 to 32

  • Annual income of above RMB 100,000 ($14,400)

  • From first- or second-tier cities (Beijing, Shanghai, Guangzhou, Shenzhen, etc.)

 

During this event, Mr. Jack Ma, CEO and Founder of Alibaba Group, and The Prince of the Netherlands Constantijn van Oranje welcomed the Benelux delegation at Alibaba’s headquarters in Hangzhou. Over the course of 2 days, experts from different industries provided insightful analysis of e-commerce in China.

 

Informative sessions

Experts from DigiDutch addressed topics on how to establish a business in China from A to Z: market entry strategies, choices of different online platforms, online communication strategies and so on. The speech aroused active discussions afterward.

 

The majority of the delegation were from apparel and food & beverages industries. In China, it is forecasted that the market size for apparel will grow at a rate of 20 % through 2020, while electronics and appliances market will grow by 13 %. Additionally, China’s total online and offline FMCG market is expected to reach $2 trillion by 2020.

 

In conclusion, the mission revealed ample opportunities and promising future of the local e-commerce market. Under the right guidance and support, more and more international brands would thrive in China!

 

Did you miss the event?

If you couldn’t join this trip, don’t worry, you didn’t miss out entirely. The Dutch Consulate General in Shanghai published a guidebook of how to get your business in China up and flying! This guidebook provides detailed out regulations, online landscape, marketing strategies and more to prepare foreign brands for their ‘China adventure’.

 

Do you want to set up and improve your business in China? Get started with DigiDutch!

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