June 08, 2016

Ecommerce in China - 2016 Ebrun Cross-Border Ecommerce Summit

By Meredith Sun
The outlook for the import cross-border ecommerce industry was a matter of debate at the Ebrun Summit last week because of uncertain policies, while the export side of the industry was highlighted by international companies showing strong interest in working with Chinese vendors to supply global consumers.

Import Cross-Border Ecommerce
All speakers at the Ebrun Cross-Border Ecommerce Summit were positive about importing foreign goods into China because of consumers’ rising demand for better-quality foreign products, but the outlook for import cross-border ecommerce as a separate industry was mixed. An official who was one of the early creators of the imported cross-border ecommerce industry was positive about future trends, even after the one-year suspension of the ‘positive list’ (see OTR Global’s May 16 snapshot). She said cross-border ecommerce will be the most effective way to fight the Trans-Pacific Partnership (TPP). She believed the central government implemented this one-year suspension to allow time for customs and dozens of other government departments to figure out a better model to supervise and regulate the industry, not to resume the same policy. However, she also urged cross-border ecommerce vendors and platforms to form an industry association and to keep lobbying. Vendors at the summit said cross-border ecommerce imported goods sales on major platforms decreased around 50% after the new policy went into effect April 8, followed by a slight recovery since the positive list suspension on May 25.

Speakers who were positive about the industry said it will become an increasingly important supplement to the traditional import model and that the new tax shows the government’s endorsement of the industry. China’s current regulations on traditional imports make it nearly impossible for many international companies to sell into China, while cross-border ecommerce lowers requirements on licenses and registration, so it should continue to grow, despite rising taxes. Speakers said vendors or platforms in this industry should focus on getting authorization from brands directly (not collecting goods from outlets or retail stores) and improve user experience with better logistics solutions. Representatives from Vipshop Holdings Ltd.’s Vip Global and Amazon.com Inc.’s Amazon Overseas were positive on the direction of the industry; Vipshop speakers said overseas products will represent an increasingly higher portion of overall products on Vip.com in 2016. Amazon representatives said their Chinese imported cross-border ecommerce business was shielded from the impact of the April 8 policy because of Amazon’s strong, global product supply and strong presence in all types of logistics, including direct mailing, overseas warehouses, bonded zone warehouses and the traditional import channel.

Speakers who were not positive about the outlook of this industry said imported cross-border ecommerce would eventually lose all tax and regulation advantages compared with the traditional import model because those advantages were ‘unfair’ in the first place. The head of Alibaba Group Holding Ltd.’s Tmall Global said the current cross-border business model is not sustainable and said Tmall Global was actively looking for a new model to bring in more overseas product to consumers. The company is working on price-equalizing globally by getting international brands’ official sites on Tmall Global in 2016. Consumers would be able to order the same product on a brand’s official site via Tmall Global at the same retail price plus the required tax and delivery fee. On logistics, Tmall Global reps said they planned to lean more on traditional import this year.

Popular products purchased through cross-border ecommerce have changed quickly; infant formula, healthcare and cosmetics were the dominant categories in 2015, but demand for handbags, shoes, apparel and small electronics has ramped in 2016. Demand has become increasingly fragmented in terms of categories and brands; smaller but niche brands were popular. Amazon said the top 10 categories selling into China through Amazon Overseas in 2016 have been kitchenware, cosmetics, outdoor, office supplies, computer components, athletic shoes and apparel, cellphone accessories, healthcare supplies, apparel and baby products. (Amazon Overseas consumers are usually middle-class or higher).

Export Cross-Border Ecommerce
Exported Chinese products sold on ecommerce worldwide in 2015 totaled 4 trillion yuan ($609 billion) (vs. 560 billion yuan, $85 billion, for all imported ecommerce). Overseas cross-border ecommerce companies were actively recruiting vendors from China at the summit. One new trend involved such apps as ContextLogic Inc.’s Wish, a shopping platform to help Chinese vendors sell directly overseas. Wish, eBay Inc., and Rocket Internet SE’s Linio and Jumia focused more on providing technology, data analytics and marketing support to help Chinese vendors understand consumer demand in the global market. Wish emphasized its personalization and precise targeting and said 95% of sales generated are from ‘data push,’ not through search or advertising. Facebook Inc.’s largest Chinese marketing agency, www.meetsocial.cn (affiliated with Shanghai TianQing Info Tech Co.), pointed to the importance of marketing though social media such as Facebook and Instagram when selling to overseas consumers directly.

Representatives from eBay said the traditional strong area of made-in-China products such as apparel, shoes and toys were losing momentum in export ecommerce, but Chinese vendors have plenty room to improve in hot new areas, including household products, auto parts and accessories and outdoor but said quality matters more than anything else. 

What: Ebrun Cross-Border Ecommerce Summit
Where: Hangzhou, China
When: June 2-3