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China's cross-border e-commerce takes off

By Fan Feifei | China Daily Europe | Updated: 2018-06-10 12:57

Sales soar, quality improves as global consumers take a shine to Chinese brands

Here's a somewhat under-appreciated China story: The rest of the globalized, digitalized world can't get enough of domestically made goods, thanks to the planet-wide reach of cross-border e-commerce platforms, including those based in the country.

This story is not exactly a sequel to the one about China having been the world's leading factory for manufactured goods over the past few decades.

It is not about leading Chinese tech brands such as Xiaomi, Huawei, Vivo and Haier that are well known outside the country, either.

Instead, this story is about little-known but globally successful Chinese brands and companies such as Ecovacs.

This story is also about the virtual Silk Road, a digital highway that enabled China-based cross-border e-commerce platforms in multiple languages to export Chinese goods worth 903.5 billion yuan ($140 billion; 120 billion euros; £105 billion) in 2017 to more than 200 countries and regions, serving more than 100 million consumers.

It is about ambitious business targets where a single e-commerce platform expects to serve 1 billion overseas consumers and 1 billion domestic buyers by 2025.

Welcome to the amazing, efficient, logistically wondrous world of Chinese cross-border e-commerce.

In this world, local brands may not boast glamour, but they command reach and sales that could stoke both envy and awe in marketing giants.

Ecovacs illustrates the point nicely. The company makes robot vacuum cleaners. It is reaping handsome gains from overseas markets.

It receives orders from US consumers via Amazon, the global e-commerce titan. On Nov 24 last year, during the Black Friday shopping carnival, hourly sales reached a staggering 1,000 units. That record earned Ecovacs a fourth-place ranking among overall household product sales.

David Qian, president of Ecovacs' international business department, says: "We're building our own brand and investing 10 percent of our annual revenue in research and development. We have over 1,000 patents both at home and abroad."

Qian says Amazon offered Ecovacs helpful guidance on consumer demand analysis based on accurate data. It also imparted professional training in operations and taught market expansion strategy. Like Ecovacs, tens of thousands of China-based vendors can sell their products globally through Amazon Global Selling, a mechanism that leverages the online marketplace's branches in 10 countries, including the United States, the United Kingdom, Germany, Canada, Japan and Australia.

This helps build visibility for their brands globally. A virtuous cycle ensues: Brighter brands generate higher sales, and then greater consumer expectation prompts the brands to invest in research and development and improve the quality of their products; this, in turn, encourages companies such as Amazon to launch plans like "service+", a program to impart to Chinese sellers lessons in the art and science of cross-border e-commerce.

Thanks to e-commerce, small and medium-sized Chinese companies now receive consulting services for enterprise development strategy and operating models, as well as tailor-made solutions for business expansion at different stages.

"China's cross-border e-commerce is thriving, which brings about huge opportunities for Chinese enterprises. But it also brings about new issues and challenges. By leveraging Amazon's global network and resources, we could provide customized solutions to meet the needs of Chinese sellers and cultivate cross-border e-commerce talent in China," says Dai Jingfei, vice-president of Amazon China.

In 2017, sales revenue from third-party sellers on Amazon's online marketplace accounted for 50 percent of global sales, among which the small and medium-sized enterprises accounted for over 25 percent of Amazon's overall third-party businesses.

"Amazon's global logistics network across 185 countries and regions has helped to establish an effective 'Online Silk Road' for Chinese enterprises going global," Elaine Chang, president of Amazon China, said in an earlier interview with China Daily.

It is not just that overseas consumers are smitten by Chinese goods. In China, e-commerce is also shining, and domestic consumers buy foreign goods.

More than 15 percent of Chinese consumers made purchases worth $85.76 billion from abroad in 2016, according to consultancy eMarketer.

By 2020, a quarter of the Chinese population, or more than half of all digital buyers, will be shopping either directly on foreign-based websites or through third parties.

Meanwhile, China-made smartphones, PCs, electronic accessories and household supplies are proving to be the favorite products among overseas buyers, industry reports say.

For instance, Chinese headphone maker Bluedio sells its products worldwide via AliExpress, Alibaba Group Holding Ltd's business-to-customer, or B2C, website that serves foreign users.

"The sales on Singles Day (on Nov 11, or 11/11) last year surged by about 120 percent compared with the previous fest. AliExpress is a good starting point," says Li Jiacheng, marketing head of Bluedio. He says the company set up a 30-member task force to pursue R&D for crucial technologies.

At present, AliExpress serves 224 countries and regions around the world, with more than 100 million overseas buyers. Its content is available in 18 languages, including Russian, Spanish and French.

"In the past, Chinese merchants were serving intermediates and had no say in key matters like pricing power, but now they can participate in international competition under a transparent and fair environment created by cross-border e-commerce platforms," says Shen Difan, general manager of AliExpress.

Overseas consumers, especially those living in smaller cities or towns, have access to a vast selection of products, such as clothing and car parts, at low prices through AliExpress, including many items that they cannot find in their local markets.

By 2025, Alibaba expects to serve 2 billion consumers worldwide, among whom 1 billion would be overseas users, according to Shen.

Launched in 2010, AliExpress has become the No 1 online retail site in Russia in terms of sales, followed by Russian e-commerce site Ozon and a web shopping mall operated by US-based eBay Inc, according to research company TNS Russia.

The top three countries ranked by total spending on AliExpress are Russia, the US and Spain. AliExpress hopes to foster 1,000 merchants whose monthly sales in cross-border deals surpass $500,000 each.

Meanwhile, Cainiao Network Technology Co Ltd, Alibaba's logistics arm, is reshaping the logistics landscape in Russia, through its first international air freight service from Hangzhou to Moscow, which was launched in March.

Shen says Cainiao is on course to help reduce delivery time worldwide to 72 hours within the next five years.

According to China's E-Commerce Research Center, the export volume of Chinese cross-border e-commerce reached 503.2 billion yuan in 2016, up by 60 percent year-on-year. The figure is expected to rise to 2.16 trillion yuan in 2020., another e-commerce behemoth, rolled out its cross-border B2C platform in 2015, with Spanish, English and Russian versions. The platform aims to help Chinese companies' quality products and well-known brands to reach international markets.

JD opened its Spanish website in April to target Spain and Latin America, serving 400 million Spanish-speaking people. JD said it will enter the markets through investments in logistics, goods and services, and by integrating its capabilities in China's commodity supply chain, to provide quality products to Spanish customers.

JD will offer 100,000 popular items in partnership with 1,000 partners, including smartphone maker Nubia, electronics manufacturer Rappo and robotic vacuum cleaner maker iLife to expand in the Spanish-speaking markets, said Liu Qiangdong, chairman and CEO of the company.

It also promised a two to three-day delivery time frame for premium packages and seven to 20-day delivery for economy packages in Spain, with a plan to set up local warehouses within this year.

By the end of 2017, JD had customized solutions for more than 300 Chinese brands to go overseas, including full support in payment, logistics, operations and zero-commission policy.

"Electronic devices, digital gadgets, household supplies and clothing are favored by foreign buyers. However, domestic cross-border e-commerce platforms may face some difficulties in logistics, delivery service, local laws and regulation restrictions when exporting products," says Wang Xiaoxing, an analyst with the Beijing-based internet-driven consultancy Analysys.

Zhang Zhouping, senior analyst with the China E-Commerce Research Center, says cross-border e-commerce greatly reduces the cost of communication between sellers and buyers, lowers commodity circulation and improves efficiency.

"With the rapid development of e-commerce in some emerging countries such as Russia, Brazil and India, new consumption demand is emerging. China's strong support for cross-border e-commerce comprehensive experimental zones, and the gradual improvement of taxation and regulatory policies, greatly boost the growth of the industry," Zhang says.

Zhang adds that emerging markets represent a new opportunity for Chinese enterprises to develop cross-border e-commerce.

China's cross-border e-commerce takes off

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