Breaking into the Chinese eCommerce Market

Cross border eCommerce is a trendy phrase in 2015, and no country has been in the news more than China lately, for good reason.  The numbers associated with the Chinese eCommerce market and the economy in general are almost staggering if you are not familiar with the country.  Merchants intrigued by the thought of accessing the world’s second largest economy and biggest population should consider some recent facts and statistics:

• China’s middle class is currently bigger than the entire population of America, and is expected to eclipse 600 million people in the next decade
• According to a report by Accenture and AliResearch, cross border online purchases are growing 28% a year and should reach $1trillion annually by 2020, with the majority of those purchases coming from the Asia-Pacific region, and more specifically China
• On June 1, 2015 China’s government reduced import tariffs by an average of 50% on certain categories of products, including beauty and cosmetics, shoes, clothing and diapers to name a few

With numbers like that and a government increasingly willing to open their borders to online commerce, you can see the appeal for western retailers.  Based on the sheer scope of the country alone, if you can carve out just a small niche in China, you could bring tremendous growth to your business.  You won’t get there overnight, but here are a few big items to start thinking about if a China strategy is right for you.

Top 3 Things to Consider

Logistics

Shipping internationally may seem complicated and costly. But as the logistics industry evolves domestically, and increased competition lowers rates for consumers, we are seeing a similar development with international logistics. Chinese shoppers in particular buy from overseas as a way to ensure they are receiving authentic goods, and understand that shipping times will be longer.

This is quickly improving as cross border volume increases. The Chinese logistics company SF Express has expanded its operations stateside, putting pressure on American companies to keep up. SF aggregates packages from a number of retailers and ships them out in bulk via air, getting customers better rates and faster delivery times. SF can get packages to the customer’s doorstep in as little as 5 days. I-Parcel, an American logistics firm, also saw the needs of smaller firms early on in the emergence of cross border shopping. Their international logistics platform integrates with Magento to give merchants complete control over international shipping to nearly 100 countries.

Payments

When thinking about foreign customers, a retailer must consider foreign currencies. While the thought alone might be enough to turn you off, major platforms like Shopify and Bigcommerce are actively pursuing solutions. Magento already offers an Alipay integration to merchants. Alipay is China’s leading third party payment provider with an active user base over 300 million Chinese consumers and growing.  Western brands and retailers want access to these potential customers and Alipay, which allows the buyer to checkout in their currency and then converts to the seller’s currency, is going to be a big player here. Alibaba’s founder, Jack Ma, made a recent tour through America and Europe touting Alipay as one of the biggest factors in gaining the trust and attention of Chinese shoppers.

Language

Of course, it’s not as simple as finding a shipper and integrating a new payment gateway to win the business of shoppers on the other side of the world. Language and other cultural differences are going to play a big role as well. It helps that China’s huge middle-class, and more specifically the upper middle class, are better educated than in the past. An estimated 26% speak or understand English. Even so, it helps to accommodate the customer as much as possible, and there are tools merchants can use to speak the language of foreign customers without ever knowing a word of it on their own. Our partners at Global Nimbus offer a simple and affordable solution to website translation, helping clients communicate with global audiences. Not all translation tools work perfectly, and they don’t have to yet. Remember that Chinese shoppers have landed on your site because they trust your products are authentic and fairly priced, and they understand that you may not speak their language fluently.

I have only briefly touched on the potential of the Chinese market in this article, and the three factors I described are only the beginning of any cross border strategy. The point is that global markets are more accessible than we thought possible even a month ago. In the case of China and other Asian countries, there is a real hunger for western brands and products, born out of the belief that “Made in USA” means higher quality and safer to consume. If you dream of selling internationally, it is time to start developing that plan.