Cross Border E-Commerce for Food in China — Update 2020
China Cross-border e-commerce market overview
Since 2013, political reforms have promoted the sale of foreign products online in China. These changes involve many economic aspects such as the reduction of the tax on cross-border electronic commerce, which has largely eliminated the main obstacles for foreign online retailers and suppliers in China. The demand of Chinese consumers online is growing. Indeed, in 2015, Chinese consumers bought foreign brand products worth 118.43 billion yuan (17.22 billion US dollars) thanks to cross-border e-commerce, an increase of 112% compared to previous years.
The growth of cross-border e-commerce has slowed slightly in 2016, with an annual growth rate of 86%, and 219.8 billion yuan (31.99 billion US dollars) in sales. however, Cross-border electronic commerce remains an important category not to be neglected in e-commerce in China.
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In 2018, the Chinese cross-border e-commerce retail transactions exceeded 100 billion yuan. In 2019, this volume reached 186.21 billion yuan, five times that of 2015, with an average annual growth rate of 49.5% and it is expected to reach 280 billion yuan in 2020.
The main players in cross-border e-commerce in China
The main players in cross-border e-commerce in China are e-commerce companies as follows:
- Alibaba Group Holding Ltd,
- Suning. COM,
- JD Global
- VIP Global
- Koala.com
Those cross-border platforms continue to improve their international transport operations and payments to enable Chinese consumers to more freely buy products from retailers abroad.
According to Alibaba, operator of Tmall Global, the number of Chinese consumers who bought imported products on Tmall Global, an online market for imported products, has increased significantly.
Recently, China’s National Bureau of Statistics said online retail sales in China reached 5.16 trillion yuan ($ 752 billion) in 2016, 26.2% from 2015, more than double the rate of growth in total retail sales, which increased by 10.4% year-on-year. In 2020, 35.3% of the online retail
In addition to the presence of some e-commerce giants in cross-border e-commerce, the launch of applications such as the RED (Red Little Book) mobile shopping application also played a crucial role in promoting overseas products.
The sale of fresh products online in China: a market diversified
Another important aspect of e-commerce in China is the sale of fresh products online, which reached nearly 100 billion yuan ($15 billion) in 2016. Online sales would represent about 7% of total product sales in China, and it is increasing by about 82% per year.
The scale of fresh food e-commerce transactions has increased in 2019, and it surged in the first half of 2020 because of the COVID-19. It is expected that by 2023, the market size will reach 800 billion, and the potential of fresh food e-commerce is very large. In China, the current market is diversified and not monopolized. There are many fresh food selling platforms to share the market.
Fresh and high-quality products are highly in demand in China
The taste of Chinese consumers for fresh food continues to grow. A recent survey conducted by the consultancy firm showed that fresh food is now the most requested product category. 63% of consumers in the survey say they intend to buy more and more fresh, high-quality food over the next few years.
With the growing demand in the future, this sector is already attracting the attention of many new players online and offline, and it is expected to increase sales in the coming years.
Chinese consumers are also more likely to buy fresh products online. A survey found that 24% of consumers were satisfied with fresh food purchased online, compared with 17% who were more satisfied when shopping in stores. Price is not the only online sales engine in this category, as the Internet also offers convenience and a better selection of products for Chinese consumers.
Nowadays, manufacturers and merchants focus on the presence of many channels and platforms; Online, offline, mobile, social. This makes the landscape very fragmented and pushes traders to multi-vendor operations.
China Cross-border sales channels
In recent years, with the rising affluence in China, people tend to buy more premium imported products because they are perceived as reliable and fashionable.
Foreign products are usually sold in China, but not always on official B2C channels. In general, when Chinese consumers fail to buy the desired foreign products by themselves or through friends, they often make use of purchasing agents who sell through platforms such as Taobao, JD. channels through which many foreign products enter China, generally do not pass customs inspections. However, those agents are not really trustable because they may sell fake products.
With the current development of cross-border e-commerce, channels quickly replace purchasing agents. All online trading giants currently have a b2c (business to consumer) segment for foreign products. The products displayed on the b2c platforms are sent directly to the client from abroad or transferred to the customs warehouse in China. Traders on these platforms must be allowed to receive products from outside and be considered trustworthy. In addition, the import procedures and customs duties for postal items have been largely attenuated by the government.
Tips for foreign brands who want to sell on Chinese cross-border channels
Indeed, selling through cross-border platforms can save not only money but also time for foreign brands. Companies don’t have to have warehouses in China and take care of the international logistics. Moreover, brands have even no need to have a legal license and legal entity in China. All they have to do is to be accepted by those Chinese cross-border platforms. But how?
Branding is the key for selling to Chinese
Well, this question can be complicated, because if you want to choose those reliable and efficient cross-border platforms, you have to prove that you have already brand awareness in China. Because platforms like Tmall Global only accept popular foreign brands.
Besides, Chinese customers only pay attention and give confidence to brands that are recommended by their friends or family, and those brands that have a good e-reputation in China. Therefore, if you want to sell through cross-border platforms, branding is essential.
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