E-Commerce in China: The $589 Billion Market!

Workers sort parcels for their customers near the JD.com delivery bikes during the "Singles' Day" online shopping festival, in Beijing, China, (AP Photo/Andy Wong)

Workers sort parcels for their customers near the JD.com delivery bikes during the “Singles’ Day” online shopping festival, in Beijing, China, (AP Photo/Andy Wong)

Chinese consumers are relying more and more on the internet to purchase products which has made the Chinese e-commerce market skyrocket. The possibilities are vast if you know how to take advantage of them!

China, as the world’s second biggest economy, is an important market to be present in. Luckily, reaching the many millions of customers in China is becoming easier. Through some clicks on their cellphone a Chinese customer can order anything from Chinese medicine to cat food, from beer to designer bags – all delivered to their homes.  In other words, most products can be purchased online and the Chinese sure love doing so. During “Singles Day” in 2015, the 11th of November, Taobao had sales worth USD 14.3 billion, more than ten times the sales of the biggest online shopping day in the US, Cyber Monday. The Chinese market amounted to USD 598,6 billion in 2015.

Cross-border E-commerce Pilot Zones

Across China there are 12 cross-border e-commerce pilot zones, which make e-commerce from abroad to China simpler. These zones are beneficial for retailers for several reasons:

  • 24 hours custom clearance: All year round the custom clearance will be finished within 24 hours once goods enter local customs.
  • Tax rebates:  When the customers place orders with transaction values under RMB 2,000 and accumulatively under the annual quota of RMB 20,000, there are several tax rebates. There are no customs duties and there is a 30 % rebate on both import VAT and consumption tax.
  • Different legal framework: The goods that are in the zones are, on paper, not technically in China before they leave the zone. As a result, companies that sell through these zones do not need to register as a company in China.

These perks make settling into the Chinese e-commerce market easier. All the big e-commerce platforms are also located in these zones; they often help you with customs and have warehouses located in these zones.

Import Modes of Cross-border E-commerce

There are currently two ways of importing through the E-commerce Pilot Zones:

  • Bonded Import (B2B2C): Large quantities of imported goods are stored in special customs supervision areas, so when a Chinese customer places an order with a cross-border e-commerce platform linked to the zone, the e-commerce platform will make a real-time declaration to Customs based on the order, payment and logistics. When all three are confirmed the products will be delivered to the consumer.
  • Direct Purchase Import (B2C): When a Chinese customer has placed an order with a cross-border e-commerce platform linked to Customs, the platform will submit all the details to Customs in real-time. In the meantime, the product will be dispatched from an overseas warehouse, and goes through customs clearance, inspection and quarantine procedures, before it is delivered to the customer.
Illustration - E-commerce in China, Credit: Innovation Norway

Illustration – E-commerce in China, Credit: Innovation Norway

Opportunities for Norwegian companies

There are several Norwegian products for purchase online in China, including Møller’s cod liver oil, Voss mineral water and Laban Seigmen. These products are just some of the many Norwegian products that could be sold in the Chinese market. Nordic design is seen as both luxurious and trendy in China – products like furniture and fashion clothes could therefore succeed in China. Local breweries and specialized beer shops have become increasingly popular in the tier-1 cities, which also is an area where Norwegian breweries could do well. Foreign chocolate is also popular in China. Although it’s not as famous, Norwegian candy and chocolate have a high quality and could become popular in the Far East.

As the e-commerce sector is so large, the range of products sold is incredible. This means that far more products than suggested here can be sold through e-commerce in China.

For more information contact:

Alex Jian Wu, Senior Adviser, Innovation Norway in China
Telephone: +861 0853 19670
E-mail: alex.jian.wu@innovationnorway.no

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