Date
24 March 2017
Mainland consumers have preconceptions about products made in different countries. This is something that cross-border e-commerce operators must bear in mind.
Mainland consumers have preconceptions about products made in different countries. This is something that cross-border e-commerce operators must bear in mind.

Why cross-border e-commerce will keep expanding in China

Despite the deceleration in China’s economy, importing goods from overseas and selling them on the Internet under a cross-border e-commerce trial scheme continues to be a fast-expanding business.

Customers in the mainland typically prefer imported goods as they are perceived to be safer and are of better quality.

The traditional way is to import them under general trade category and sell it in brick-and-mortar shops. However, companies going through this channel will have to put up with time-consuming approval, inspection and quarantine procedures.

On top of that, you have to pay import tariffs and VAT, which could push the product prices much higher compared to levels abroad. (This is also one of the reasons why Chinese tourists have been storming the world with their shopping suitcases in recent years)

But if foreign goods are imported under the cross border e-commerce channel, companies only need to file records with China’s customs.

The approval process takes less than 20 days, versus six months in the case of the traditional import channel, according to a Hong Kong Trade Development Council report.

Because it is much faster and far less cumbersome, costs are reduced greatly.

The growing trend of consumers seeking foreign goods is also keeping those in the trade bullish.

“Take imported skincare products and cosmetics, for example. Although the major force of consumption is from first-tier cities at present, it is believed that the market in second and third-tier cities will gradually expand,” Frank Huang, chief executive of Shenzhen Zhixintianxia Technology told HKTDC. 

“Rapid spread of information on the Internet and the growing brand awareness of consumers in the (smaller) cities” will help expand spending, he said. 

For those interested in tapping the cross-border e-commerce market, the report has a number of suggestions. Here are a few:

1. Using multiple e-platforms is usually a good idea.
2. Availability of physical stores as a display center will definitely help.
3. If you want to find a partner to help sort things out, make sure the counterparty has enough operational experience with different platforms and has rich experience in price setting as well as fighting fakes.

Eight pilot cities are now involved in the cross-border e-commerce scheme, namely Shanghai, Hangzhou, Ningbo, Zhengzhou, Chongqing, Guangzhou, Shenzhen and Tianjin.

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RC

EJ Insight writer

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