While attending the latest edition of Cross-border E-commerce Conference in Shanghai, China, I was reassured by the boundless potential of the Chinese ecommerce market and the rhythm of its fast-paced growth. To give you some numbers in this sense; in 2014, 3.65 million new companies were established in China, meaning 46% up compared to the year before. Moreover, since March 2014, 10.6k new companies are established each day, and the new companies totaled a registered capital of Rmb19.05tr (USD3.11tr), a 99% increase from 2013.
In China, cross-border ecommerce is highly important from an economic growth point of view, so the government is directly involved in allowing international players to access the Chinese market. Compared to relatively slow traditional trade, cross-border ecommerce is booming. Overseas sales reached 76.7 billion RMB in 2013 with a growth of 58.8%; the number exceeded 100 billion in 2014 and is estimated to reach 247.8 billion RMB in 2015. With such great market potential and a huge population base, along with increasing consumption power and taste, Chinese domestic products are far from meeting consumer’s growing need. More and more customers are looking at imported products. Western ecommerce companies entering the Chinese market will not only drive Chinese domestic consumption need but also accelerate the development of relevant industries, such as international and domestic logistics, training of skilled people with ecommerce knowledge etc. This forces domestic companies to take action on internal optimization in order to achieve sustainable growth.
What barriers are merchants facing when entering Chinese market?
Payvision, one of the main collaborators of the CBEC, has invested in a global survey on cross-border ecommerce barriers that American and European merchants consider when entering Chinese market. The report will provide deeper understanding of the whole ecosystem, I would only mention here four of the most important barriers identified during the survey; logistics, language, culture and legislation. Thanks to the past experience and flexibility of Western merchants to adapt to other cultures and localize their businesses, of the four barriers only legislation could actually be a real issue. However, the Chinese government has invested in creating better conditions for international players to enter the market. An example is Shanghai Free Trade Zone (FTZ) or the QCITY in Hangzhou, an industry park where American or European merchants can bring in their goods and store them. QCity promotes these products, creates a local website, translates and locally adapts all the necessary items, taking care of the custom clearance, and displaying the products to visiting consumers.
Furthermore, China’s latest announcement that fully-owned foreign ecommerce companies can operate in the FTZ is a milestone for the Chinese government in opening up to international trade. This also paves the way for a smoother entry for foreign companies to the Chinese market, with a simplified custom management procedure. The end-to-end custom supervision guarantees the legitimacy of order and traceability of products, so Chinese customers can purchase imported products in a more comfortable and safe environment.
Chinese merchants and payment service providers are very eager to learn from experts on how to expand their business internationally. There are about 20 million people involved in ecommerce today, and it is forecast that by 2020 there will be a gap of 23 million skilled people. China’s main challenge is to educate these people and engage them with communities such as Cross-border eCommerce Community (CBEC) that share knowledge and best practices, connecting them to the outer world.
Together with Payvision, CBEC created a report on cross-border ecommerce in China, also translated in to Chinese. This report offers insight to merchants around the world on taking advantage of the cross-border ecommerce explosion in China, and doing profitable overseas business. CBEC can help to educate both Chinese and Western merchants by bridging the gap between the countries, connecting communities across the world, and offering merchants an end-to-end solution to expand globally. CBEC can also facilitate delegations and business trips from the US to China, where key decision makers are speeding up the expansion process. Almost every top company in China wants to partner with CBEC to ensure their future international growth.
The European-sponsored project, dubbed PECOS4SMEs, is also important for the education of merchants worldwide. CBEC is the main contributor of this platform – The Ecommerce Genie where merchants can log in and find cross-border ecommerce information relevant to their business and international point of interest. I have to mention that out of the 150 project requests registered in 2014 at the European Commission, only three of them received the Commission’s endorsement. PECO4SMEs was one of these three.
By collaborating with CBEC you become part of a global ecosystem that boost cross-border ecommerce for the benefit of all the players and the growth of the international ecommerce market.
Source: QCity; AMCHAM CHINA – American Chamber of Commerce in Shanghai