China eCommerce Market

 

  • Over 600 million internet users and an annual e-commerce revenue growth rate of 120%, makes China the fastest growing and soon-to-be the largest ecommerce market in the world.

 

  • Chinese e-commerce market is estimated to reach USD300b in 2015.

 

  • China’s online e-commerce landscape looks fundamentally different from most other countries, with a few key players dominate the e-commerce market. The Alibaba Group holds the largest local online e-commerce platforms, namely Tmall (B2C) and Taobao (C2C).

 

  • Although more and more smaller e-commerce platforms are popping up, these new platforms merely own a small percentage of the online market and are risky to invest in due to their often short-lived nature. However, some e-commerce platforms such as YHD.com and JD.com are steadily gaining more market share.

 

  • Taobao and Tmall together own about 80% of the total e-commerce market in China and receive 100,000,000+ daily visitors a day.

 

Demands of Overseas Merchandizes

 

  • Chinese online buyers shop frequently for overseas merchandise.

 

  • Online purchases made via websites outside of China have doubled annually over the past three years, according to Bain, while the value of cross-border transactions reached US $510b in 2012, up 31.5% over the prior year.

 

  • This demand is fueled in part by the cachet of foreign brands, but is also driven by Chinese consumers’ inherent distrust of certain domestic products. Chinese shoppers want to make sure that what they’re buying is genuine, and that it is safe to use.

 

  • For example, Chinese buy 10% of their baby formula and 7% of their make-up and skincare products through overseas websites. 

 

 

 

 

 

 

 

 

Source: Fleishman Hillard China report July 2014

 

Shanghai Pilot Free Trade Zone

 

 

  • The establishment of SHPFTZ, initiated by China’s new administration, has been recognized as a crucial economic reform.

 

  • The pilot will include reforms in the following areas:

    • Financial reform

    • Upgrading of customs supervision framework

    • Simplification of administrative systems supporting the further opening up of the services sector, and

    • Creation of a competitive regulatory and tax environment for businesses.

 

 

Free Trade Zone eCommerce

 

  • Kuajingtong (aka “Buyeasi.com”) is an e-commerce platform maintained by state-backed Orient Electronic Payment Co. for the online purchasing of imported goods in China. Based in the Shanghai Free Trade Zone, the site allows buyers to avoid the import duties that would otherwise apply to their purchases.

 

  • Chinese consumers’ demand for imported goods has fueled a boom in cross-border e-commerce, which has created some grey economies, including smuggling, the use of purchasing agents, and outright counterfeiting.

 

  • The government pilots FTZ E-Commerce in an effort to bring more order and consumer safety to the chaotic imported goods market in China.

 

  • Unofficially, the government is also promoting more local competitions to combat the Alibaba e-commerce dominance in China.

 

  • Even though the pilot result of Kuajingtong hasn’t been a overwhelming success, however, this type of FTZ e-commerce sites are well-situated to eventually claim a larger portion of China’s e-commerce market, owing to its unique channels for direct access to Chinese consumers.

 

New Free Trade Zones

 

  • In December 2014, China’s State Council said in a statement: China will create 3 new free trade zones modelled on one established a year ago in Shanghai, but will also include “local characteristics”.

 

  • The 3 new zones will be established in the southern and eastern provinces of Guangdong and Fujian and in the northern port city of Tianjin.

 

  • Earlier in 2014, Xinhua cited its official source saying: "China sets no limits on FTZ numbers and no timetables on building them, as long as they meet the requirements of an FTZ".

 

  • He said other candidates included Zhejiang's Zhoushan, which consists of several islands with a focus on the shipping business; Qingdao, an important port city; Chengdu, a southwestern business hub; Wuhan, a central province; and Hangzhou, where e-commerce giant Alibaba is based.

 

  • Learning from the less than successful Kuajingtong pilot, local governments are now wisely partnering with experienced operators to launch e-commerce platforms inside their FTZs. 

InnovBA China eCommerce Service Offerings:

 

1. Test Drive - China eCommerce Market

  • Clients' product assessment program for China eCommerce market

 

  • InnovBA will

    • Work with Client to complete a) competitor profile, b) market profile, c) product profile, and d) questionnaire for potential target consumers

    • Conduct a) online research and competitor profile

    • [Optional] conduct b) mobile survey, c) live survey, and d) test sale survey

    • SWOT analysis of both client's and competitor's product

    • Product assessment conclusion

    • Market entry recommendations

 

2. China eCommerce Partners Group

 

  • China eCommerce Partner Group (CEPG) is a FREE-TO-JOIN international products consortium group whose member companies are interested to enter and/or expand into the China e-commerce market.

 

  • InnovBA will:

    • Provide experienced manager(s)

    • Provide regular China e-commerce market updates

    • Identify opportunities for group offerings to potential e-commerce partners in China

    • Prepare complementary products with competitive pricing as well as appropriate variety of choices from interested companies to formulate respective group offering for each potential e-commerce partner

    • Provide business development

    • Provide “No Sales, No Fee” services

    • Provide other fee-based consulting services to individual company when requested​

 

© 2014 by Innovation Business Accelerator

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