In Trends

Cross-border e-commerce, a win-win situation for both China and western brands

Alibaba’s Jack Ma recently boasted to Trump that his company will create one million jobs in the US via increased access to Chinese customers through its e-commerce platform. While this statement could probably at least partially be written off as hyperbole, e-commerce has gone global.

Marketplaces like Amazon, Taobao, TMall, and JD are eroding the boundaries of political geography, as merchants in countries like China are being given access to customers in places like the USA while US merchants are being granted a direct link to end buyers in China.

“As shipping costs decrease and as technology advances, selling all over the world is becoming easier,” said Joe Kaziukėnas of Marketplace Pulse. “As far as I can tell, this is inevitable, because the customer wins – they get cheaper products and better selection because of the reduced number of middlemen.”

While Amazon opening the pathways for Chinese e-commerce merchants to flood into their US and European marketplaces has been well documented, there is an emerging trend of sales flowing the other way as well. China’s booming e-commerce platforms are being increasingly penetrated by foreign brands and merchants looking to directly access the world’s largest consumer market, who also happen to be the world’s most voracious online shoppers.

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Chinese e-commerce has become an incredibly bright beacon for the brands and merchants of the world. Online shopping has a far larger presence in China than anywhere else, accounting one out of every two e-commerce transactions worldwide. Upwards of 12% of all domestic retail sales in China are via e-commerce platforms, amounting to nearly $752 billion in sales in 2016, as Marketplace Pulse pointed out.

This colossal movement towards e-commerce in China has potentially opened up some big opportunities for foreign brands and merchants looking to get in on the action: Alibaba’s Tmall Global and JD Worldwide launched in 2014 and 2015, respectively, provide foreign sellers direct access to Chinese consumers.

Although currently a relatively small player in Chinese e-commerce, Amazon launched Prime for Amazon China in October 2016, which provides international sellers with the same benefits as anywhere else and includes free shipping from the Amazon Global Store.

According to China Skinny, the number of international brands on Tmall Global skyrocketed 169% to 14,500 in 2016, up from 5,400 just a year before. Overall, cross-border e-commerce in China grew by 86% last year, and by 2020 it is expected that a quarter of the Chinese population will be shopping on foreign or third-party sites.

Cross-border e-commerce is increasingly being viewed as the wave of the future in China, and the government has jumped in to support the movement.

(Source: Forbes)

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