Overseas goods have been reaching China via a network of merchants and shoppers through the hand-carried products-based Dai Gou system and then sold on Taobao for the domestic Chinese market.
The trend is supported, in large part, by a government aim to increase domestic consumption and the Shanghai Free Trade Zone is a materialization of this opening up strategy. Additionally, the overall maturity of ecommerce in China, the growth of payment solutions (including Alibaba’s ePass) and a growing curiosity for what the outside world holds add to the growing demand of online shoppers for overseas goods.
32% of Chinese respondents said they had experience purchasing overseas goods online, according to research data from market research agency Nielsen, whereas cross-border shopping will grow to 130 million consumers by 2018, including 36 million from China, according to research data issued from PayPal.
Most brands entering the ecommerce market in China prioritize the setup of a Tmall shop over a direct branded .cn site, knowing that a large percentage of ecommerce sales will move through the online marketplace Taobao. Taobao has launched a payments and logistics solution for international ecommerce websites, called ePass, which allows Chinese consumers to pay through their Alipay accounts.
Payment solutions, or the lack of them, have been the most significant factor supporting/limiting the growth of overseas ecommerce from China. A savvy online shopper from China can navigate to find ecommerce shops online from around the world even if they do not understand the language, but it is payment methods that are becoming the defining obstacles.
The proliferation of online payment options - Alipay, China UnionPay and Tenpay, among others, has grown steadily since 2004. The number of international credit cards held by Chinese shoppers has been slowly increasing, but should speed up as the Chinese government has recently announced eased restrictions on Visa and MasterCard. While the total penetration rate of international credit cards in China is still very low, the younger, more affluent shoppers with Visa and or MasterCard are influential.
There are a number of global ecommerce players who have been selling directly to China, including iHerb, Revolve, COSME-DE.COM, Shopbop and Ashford. These sites have added a few key elements, which make them accessible and appealing, such as the implementation of Chinese language interfaces, Chinese international payment systems (Alipay, Tenpay, China UnionPay) and optimised deliveries for China (for drop shipping and/or local deliveries).
Websites like SMZDM.COM and 123HAITAO.com provide listings of international websites and tips on how to shop and pay for products overseas. These websites are helping to solve a basic problem of awareness for global merchants, but the marketing needs are much more extensive, requiring an approach which resonates locally and ultimately creates a sense of closer engagement.
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