Enter Chinese market via ecommerce: JD and Tmall Global

China is the largest e-commerce market in the world. With more than $ 458 billion in sales in 2014 and a global e-commerce site with a market share of over 92%, foreign participation in China’s online retailing industry is very high. This article compares the leading e-commerce platforms Tmall Global, JD, and Yihaodian to see how they value foreign investors looking to sell to China’s lucrative markets.

Tmall Global

Tmall is the largest online market in China dedicated to domestic and international branded products. Tmall is owned by Alibaba Group and provides a market for foreign brand stores. Tmall International launched in 2013, selling only imported goods and allowing international brands that are not in China to sell directly to Chinese consumers.

However, Tmall Global is currently operated by invitation only and only qualified merchants are invited to join or can be accredited by a third party (TP). Therefore, the need for TP cooperation complicates the process of setting up a store on Tmall’s global platform. JD Worldwide is an increasingly attractive option for foreign companies looking to build an online store without a physical presence.

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Eligibility requirements

1. Registered legal entity outside Mainland China
2. Have overseas retail and trade qualifications
3. Become a brand owner or authorized agent or have proof of purchase
4. Hold the relevant certificate

Tmall Global target

• companies operating for more than two years with annual sales of more than $ 10 million;
• Brand B2C overseas business; and
• Brand owner or authority.

Selling Points: Tmall Global provides businesses with an e-commerce platform and marketing tools to help increase traffic and generate sales.
Warehouse: Tmall Global cooperates with certain FTAs ​​in China to provide bonded warehouses for some merchants.

Logistics: Businesses must ship packages directly from overseas or ship their products to a bonded warehouse in China for delivery to consumers. China’s address is mandatory to promote product returns.

Cost

• Margin – $ 25,000.
• Technical costs – $ 5,000 or $ 10,000 a year.
• Commission – 0.5% -5% plus 1% Alipay fee.

Applies to: Large international brands with the potential to achieve substantial sales or high revenue.

Hypermarkets, such as JD and No. 1, allow independent merchants to list products or run stores. Online hypermarkets are vertically integrated multi-category markets that are purchased directly from suppliers through their own network. These large supermarkets operate a proprietary online e-commerce platform and an in-house logistics network to deliver same-day deliveries.

Negotiate with the purchasing manager for sales to the supermarket. Exporters do not need to manage distribution or storefronts but must provide official marketing collateral to promote their products.

 JD

Jingdong is China’s largest online direct sales company. Jingdong owns and operates seven compliance centers and 166 warehouses in 44 cities and 4,142 shipping stations in 2043 counties nationwide. JD allows merchants to set up personal stores and get permission to import food, beverages, clothing, and shoes directly from overseas. Jingdong’s cross-border services – JD Worldwide, allow merchants to sell directly to Chinese consumers without the need of Chinese.

JD stands out from Tmall Global by actively promoting JD Global around the world, particularly in the United States and Australia, as well as providing leading in-house logistics services. In addition, Jingdong imposes a zero-tolerance policy on counterfeit products.

Entry Requirements

1. Registered in mainland China outside the company, the registered capital of more than 500,000 yuan;
   2. Have overseas retail and trade qualifications;
   3. Become a brand owner or authorized agent or have proof of purchase; and
   4. Have the relevant stock certificate.

JD advocates three modes of operation

Licensed Business Partners – This module allows merchants to set up stores in JD and gain access to facilities using the JD Warehouse to store their products. JD is responsible for providing warehousing, distribution, and customer service.

Licensed Business Partners – Merchants can set up stores and complete packages to deliver orders. JD will oversee customer service and process invoices.

Self-employed partners – merchants can sell on the JD platform, but warehousing and distribution must be handled by the merchant

Selling point: JD also provides an e-commerce platform and integrated logistics and warehousing services suite. JD’s second-quarter net income of 7.4 billion US dollars, an increase of 61%.

Yihaodian

Use: Merchants have access to warehouse services provided by JD, through selected packages. Logistics: Merchants can use the logistics services provided by JD through selected packages. Jingdong 211 project day and next day delivery plan covers 135 and 951 counties and districts. Costs:

• Margin – RMB 10,000 – 50,000 depending on product category
• Technical costs – RMB 6,000 per annum.
• Commission – 5-7%, plus 0.85% if using JD Transportation Services.

Applies to: JD dominates China’s household appliances and consumer electronics products, therefore advocating 3C products.

Related information: How to open an online store on YIhaodian (YHD) is China’s largest online retailer of food and beverage with more than 8 million stockpiles. The platform is wholly owned by the U.S. retail giant Walmart and is allowed to import food and beverage products directly from overseas. In 2013, the No.1 store exported about 250 million pieces of imported products, of which one-third were imported into China for the sale of UHT milk.

One with Jingdong’s similar logistics system, with seven warehouses, in 40 cities with more than 200 distribution centers. No.1 stores allow foreign enterprises to pass the “cross-border” e-commerce duty-free and exempt China’s domestic product standards.

Businesses often do not pay VAT, licenses/permits, and Chinese label requirements. This platform offers an exciting opportunity for fresh food and beverage exporters. Entry Requirements

1. Applicants must be registered in Mainland China;
2. Hold the relevant tax registration certificate (national tax or local tax);
3. Passed the annual inspection of the current business license;
4. Hold the trademark registration certificate or trademark registration application acceptance notice
5. China Customs declares declaration of imported goods within two years; Special Service: Cross-border e-commerce model of Yihaodian store to realize tax exemption and exempt overseas sales of domestic product standards in China.

One store this year created the Guinness Book of World Records, which imported 100 containers (2 million boxes) of imported milk in 51.5 minutes.