Chinese Consumers Are Happy to Purchase Australian Goods

China is the world’s largest ecommerce marketplace. What’s unique about Chinese cross-border ecommerce is that large amounts of transactions flow both ways. Chinese consumers are heavy buyers of foreign products, and Chinese merchants sell enormous quantities of products to international markets in which people are searching for inexpensive items.

While Chinese businesses sell considerable quantities of products online in the B2B marketplace, in this column I will concentrate on B2C sales.

Total Chinese ecommerce sales (domestic and cross-border) amounted to $1.2 trillion in 2017, an increase of 32 percent over 2016, according to China’s Ministry of Commerce. The ministry predicts ecommerce will expand at an annual rate of 30 percent during the next few decades. Much of the growth will happen in cross-border sales.

Merchants Sell Internationally

China-based cross-border ecommerce sales to 200 nations were worth $140 billion in 2017 based on Chinese ecommerce solution provider Azoya Consulting.

Tens of thousands of China-based vendors now sell their goods internationally online through Amazon Global Selling, a mechanism that leverages the internet market’s branches in 10 countries, including the USA, the United Kingdom, Germany, Canada, Japan, and Australia. Most popular products are smartphones, PCs, and digital accessories.

JD.com, a Chinese ecommerce behemoth — and receiver of a current $550 million investment from Google — rolled out its own cross-border B2C platform in 2015, with Spanish, English, and Russian versions.

 

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Consumers Purchase Foreign

Chinese consumers are happy to purchase foreign products because they believe that foreign goods are of a high quality and are less likely to be counterfeit. This is particularly true of cosmetics, baby products, and meals. Before, tainted Chinese infant formula led to the death of some babies. Consequently, Chinese consumers do not universally anticipate local brands.

Chinese shoppers will run extensive online research on overseas products before buying and will also consult with family and friends who might have bought similar goods overseas.

The top five countries for sales to Chinese customers are Japan, U.S., South Korea, Germany, and Australia. Korean and japanese exports include mostly cosmetics and beauty serums. Chinese frequently turn to Western nations for their infant goods, food, vitamins, and nutritional supplements.

Chinese consumers bought $100.2 billion on products from vendors in other countries in 2017, with the average spend per purchaser (for the year) at $882, according to research firm eMarketer. The organization estimates that in 2018, 249 million Chinese customers will buy products through cross-border ecommerce, known locally as”haitao,” or”buying abroad.”

In accordance with Azoya Consulting, cross-border ecommerce shoppers in China come from big cities and are well educated and more affluent. They are rather young — 36 percent are 19-29 years old and the remaining 64 percent are 30-40.

Selling in China

Online merchants that would like to market to China-based customers should use a Chinese market that specializes in cross-border earnings versus selling from the merchants’ own ecommerce websites.

This is particularly true for smaller sellers with no name brand. Countless Chinese shoppers are knowledgeable about domestic online marketplaces. But they might have difficulty finding smaller websites. They also have greater confidence in the marketplaces. Chinese users rarely purchase overseas products from standalone sites or third party platforms situated outside of China. What’s more, the marketplaces are in Chinese and earnings are in the local currency, the renminbi — RMB.

It’s usually necessary to hire a Chinese third-party service provider, known as”TP” for”Tmall Partner” or”Trade Partner.” These agencies provide foreign companies without a business entity in China access to Chinese cross-border ecommerce platforms. The larger platforms like Tmall Global and JD Worldwide only accept overseas merchants working with TPs that are certified by those ecommerce platforms.

Chinese Marketplaces

Prominent Chinese ecommerce marketplaces that sponsor overseas sellers include the following.

Tmall International is the cross-border variant of Tmall — China’s leading national online market. Founded by Alibaba Group, it had been established in 2014 and sells just imported merchandise via overseas merchants’ shops hosted on Tmall’s website. Tmall offers country pavilions that package products in the same country on a single page. It utilizes Alibaba’s proprietary Alipay for payments.

JD Worldwide operates China’s second largest cross-border online mall, established in 2015. JD dominates in home appliances and consumer electronics goods. For its market model, JD Worldwide hosts foreign brands’ flagship stores. JD utilizes Tencent’s online payment escrow service, Tenpay, to complete transactions in U.S. dollars.

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

Suning Global. Launched in 2014, this is the cross-border online mall of China’s biggest commercial firm, Suning. It features roughly 300 overseas storefronts and provides store operator and financial aid services. The most popular product class is electric appliances. It uses its own online payment escrow service, Yi-Pay, to complete transactions in RMB or foreign currencies.

Amazon China Global Store. This is Amazon China’s haitao platform for Chinese clients. It utilizes Alipay, Tenpay, and UnionPay to complete transactions in RMB or a foreign exchange.

Amazon China utilizes Alipay, Tenpay, and UnionPay to complete transactions in RMB or foreign currencies.

All these marketplaces require security deposits and commission charges. All except Amazon China also collect an annual platform charge. They also provide different business models — allowing merchants to do logistics themselves or doing the warehousing and delivery for them.

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Hypermarkets

“Hypermarkets” directly buy large amounts of overseas goods. There are not any branded storefronts. Overseas merchants sell their merchandise to hypermarkets in a negotiated wholesale price. The hypermarkets then charge a markup.

Kaola is a cross-border ecommerce hypermarket with the biggest bonded warehouses in China. Merchants from roughly 40 countries sell their products on the Kaola platform.

JD.com also operates a hypermarket business. With this particular model JD Worldwide acts as a middleman, buying inventory from foreign companies and reselling it to Chinese customers.

Suning also provides a hypermarket version carried by direct sourcing.

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