In recent years, the demand for online shopping has been higher than ever, partly due to the “stay home” effect caused by the new coronavirus. In this issue, we will focus on China’s cross-border EC and explain the market size of China’s cross-border EC from FY 2019.
In addition, we will introduce what sales methods can be used to expand cross-border EC for China, and will also briefly introduce famous cross-border EC sites in China.
目次
The Scale of China’s EC Market
In this section, we will explain the size of the EC market in China. We will focus mainly on the following items.
- Is China’s EC market the largest in the world?
- What kind of products are popular in China?
Let us look at them one by one.
Is China’s EC market the largest in the world?
China has what has been called the world’s largest e-commerce market.
According to the Ministry of Economy, Trade and Industry’s “FY2020 Market Survey on Electronic Commerce,” the size of the Chinese market in FY 2019 was $1.93 trillion. 1.93 trillion dollars is equivalent to approximately 208 trillion yen when converted to Japanese currency at the rate of 1 US dollar = 108 yen.
The Chinese market is about 10 times the size of the Japanese market.
China’s Cross-Border EC Users Reach 158 Million
The total value of China’s cross-border EC imports and exports in 2020 will be worth as much as 28.7 trillion yen, of which 9.7 trillion yen will come from foreign countries.
A study by the Ministry of Economy, Trade and Industry shows that of the 9.7 trillion yen, 1.94999 trillion yen is imported from Japan, an increase of 17. %の増加率が認められています。そして、9.7兆円のうち2兆3119億円をアメリカから輸入していて、2019年と比べて15.1% compared to 2019. And of the 9.7 trillion yen, %の増加率が認められています。そして、9.7兆円のうち2兆3119億円をアメリカから輸入していて、2019年と比べて15.1% compared to 2019.
The total number of people using cross-border ecommerce in China in 2019 rose to roughly 154 million, and 158 million by 2020.
The number of cross-border EC users in China exceeds the population of Japan.
About “Bachelor’s Day” in China
Every year when November 11 arrives in China, an oversized EC sale is held as “Bachelor’s Day,” where a historic and record-breaking business transaction takes place.
In addition, the impact of e-commerce malls is very strong in China, and sales through in-house websites are extremely low.
China is still the world’s largest e-commerce market, and the fact that the number of users is still growing means that there are prospects for further growth in the future.
Simply by developing cross-border e-commerce for China, there are hidden opportunities for business development.
What kind of products are popular in China?
What kinds of products are popular in the Chinese e-commerce market?
According to research firm iiMedia Research, the main categories of cross-border e-commerce purchases by consumers living in China as of 2021 are as follows
Makeup and beauty products were the most purchased products in the survey, accounting for 35.8% of the total.
Health food and supplement products” came in second, accounting for 31.2% of the total.
Products related to shampoo, body soap, and toothpaste” came in third, accounting for 24. %を占め、第4位には「食品・飲料商品」が全体の20.5% percent of the total, followed by %を占め、第4位には「食品・飲料商品」が全体の20.5%, accounting for %を占め、第4位には「食品・飲料商品」が全体の20.5%.
As you can see from the above, cosmetics are quite popular in China.Japanese brands such as Shiseido have attracted particular attention.
Reasons for this include the high level of trust in Japanese companies and the extremely high quality of their products.This is a unique Chinese perspective, as fakes are easily leaked.
Considering the expansion of cross-border EC for China
This section describes how to expand cross-border EC for China.
The following sections will focus on the following topics
- Open a store in an e-commerce mall
- Create your own e-commerce site
- Wholesale.
- Exhibit as C to C
Let us look at them one by one.
Open a store in an e-commerce mall
The general method of selling products in cross-border EC is to “open a store in an EC mall.
In China, the influence of platforms is quite strong. Therefore, they are not accustomed to trading off-platform.
Therefore, opening a store in an e-commerce mall is the quickest way to buy and sell.
There are various e-commerce malls for cross-border e-commerce to China, and it is necessary to decide which mall to open your store on.
As China is one of the largest EC markets in the world, there are many EC malls that are considered major players. We will discuss China’s famous e-commerce malls in more detail later.
When opening a new store, it is also necessary to consider whether to adopt a policy of operating the store completely in-house or to entrust the management agency with some or all of the operations.
Screening for Store Openings
Some malls have strict screening procedures for opening a store, so it is not easy for any store to open a store.
Recently, it has become especially difficult to open stores that sell products from various brands and manufacturers.
Even if it were possible to open a store, it is necessary to submit a “Sales Authorization Form” issued by the manufacturer of the goods to be sold or traded.
Since merchandise can be placed on the store shelves only after submitting a sales authorization form, it is advisable to confirm in advance whether a sales authorization form can be issued.
Also note that some malls may only accept certain categories of products.
Create your own e-commerce site
There are also ways to sell products on your own website with your own domain without opening a store in a mall.
In China, stores are basically mainly opened in e-commerce malls, so even if you create an e-commerce site completely on your own, it will be quite difficult to achieve success.
Of course, there are some success stories, so if you value your company’s branding, you may want to try your hand at creating your own e-commerce site.
If you are dealing with products that are not sold in malls, or if your products deserve a genre that is difficult to sell in a mall store, you can increase your chances of success by creating an e-commerce site operated by your own company.
However, if you want to set up a server in China and operate an e-commerce site, you must first establish a Chinese corporation and then prepare a very large amount of capital, making this a high hurdle to overcome in terms of product sales.
When creating an in-house website, it is more effective to locate the site on a server in Hong Kong or elsewhere.
Wholesale.
Wholesale refers to the method of asking a local Chinese company to sell products for you, or asking a company that has already opened a store that is already developing cross-border e-commerce or a Japanese company that exports products to China to conduct wholesale sales transactions.
However, negotiations may be difficult as we negotiate wholesale prices, or we may be asked to bear the cost of advertising.
Even if a wholesaler is found, when an exclusive distributor contract is signed and sales are consigned, the contract may be terminated without any increase in sales.
On the other hand, when the products are offered to numerous wholesale customers, price competition may start and large profits may not be achieved, so care must be taken in how products are sold through wholesale.
Recently, there are many e-commerce malls that are making efforts to operate directly managed stores. If you can wholesale your products to such directly managed stores, you will have the opportunity to earn a large profit through product sales.
Exhibit as C to C
Opening a store in a mall as a company places a heavy burden on the company in terms of cost, time, and human resources.
If you have something you want to try without going into too much depth, listing your products on a C-to-C site called “Taobao” can be effective.
Since Taobao’s main focus is on sales transactions between individual consumers, simply opening a store does not require much effort or expense.
Note, however, that if you want to open a store, you will need to have a local address in China and a bank account at the same time.
A brief introduction to China’s famous cross-border e-commerce malls!
Here are some of the most famous e-commerce malls in China.
The following sites are the main e-commerce malls in China.
- Kyoto East International
- The Little Red Book Mall
- Kaola.com
- Tmall Global
The last one, Tmall Global, is the most famous cross-border e-commerce mall among those listed above and is the largest one operated by the Alibaba Group.
By 2021, there will be 979 million active users, and most of China’s online users will be using Tmall Global.
Tmall Global offers brands from all over the world, and since a wide variety of stores have opened stores on Tmall Global, competition is fierce due to the large number of users.
The second largest e-commerce mall in China is a cross-border e-commerce mall called “Jingdong,” which will have approximately 570 million active users in 2021.
summary
In this issue, we have introduced the scale of the China cross-border EC market and what sales methods should be taken to expand cross-border EC for China.
With a population of 1.3 billion, China is one of the largest markets in the world.
There are no small number of cross-border cultural gaps, with income differences varying widely from region to region, differences in lifestyles, and differences in the platforms used.
Therefore, decide in advance the target market for your product sales and develop a business strategy that will allow you to sell products that will be in reliable demand.
