China's e-commerce makes global waves

Does a company need to operate overseas offices to be considered "global"? The rapid development of China-US e-commerce is challenging traditional assumptions about how international business is conducted, as cross-border e-commerce allows American retailers and entrepreneurs to sell products directly to Chinese consumers online.

This burgeoning market is expected to increase from $40 billion in 2014 to more than $240 billion in 2020. Fascinating dynamics are at play through the Chinese diaspora's active participation in this market, along with international companies that may be competing with their existing local outlets in China through a legalized "gray market". How did this multi-billion-dollar market emerge in the first place?

Chinese consumers have long been accustomed to buying foreign products within the country. Many used a common practice known as daigou. Daigou describes the phenomenon when a Chinese consumer pays a friend traveling overseas or an international agent to purchase products on his/her behalf. These "personal buyers" use individual mail or personal baggage to avoid hefty import duties. Traditional daigou is illegal, when the items being purchased are not for the bearer's own use.