As demand for quality foreign products grows, Chinese consumers are using overseas websites more frequently for their online shopping. The value of such e-shopping transactions is expected to reach 1 trillion yuan (US$157 billion) by 2018 from 150 billion yuan last year.
But not all such websites are reliable. To better monitor product safety and also safeguard tax revenue, the Chinese government has introduced a cross-border e-commerce pilot scheme.
Kxg is an early mover that has so far reported encouraging results.
In slightly over one month, sales of the cross-border e-commerce platform, which lists all sorts of infant food and baby care products, passed the one million yuan mark.
Kxg management attributed the initial success to a number of things.
Quality assurance is the most important factor, the company told the Hong Kong Economic Journal Monthly.
Set up in Qianhai’s free trade zone, the company operates under the supervision of the Shenzhen customs bureau and the General Administration of Quality Supervision, Inspection and Quarantine.
As such, Chinese e-shoppers have huge confidence in the products they buy on Kxg.
Kxg’s price competiveness is also crucial. The company directly imports products from foreign producers in large quantities. Its ownership of a warehouse in Qianhai cuts logistics expenses while the lower tax regime in the free trade zone also helps keep the costs down.
Typically, imported goods are subject to customs, value-added tax and consumption tax. Kxg’s Qianhai setup only has to pay postal articles tax.
The company is also investing in an experience shop to draw customers to its online platform.
The number of cross-border e-commerce firms in China is mushrooming. Retail giant China Resources Vanguard, for example, has launched its ewj.com. A number of small and medium-sized companies have also jumped into the fray, not to mention the top e-shopping platforms such as Tmall, Amazon and JD.com.
Kxg’s biggest challenge now is to strengthen its child care product niche, expand its offerings and maintain its early-mover advantage.
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