Back in July, Premier Li Keqiang of China’s State Council upgraded China’s Opening Up policy, increasing the number of cross-border e-commerce and opening up more opportunities for British businesses.
In less than three years, China has announced the third phase of its comprehensive pilot zone developments, now totalling 35 cities.
Premier Li highlighted the boost that this would bring for international trade for China: “Cross-border e-commerce has made rapid and notable achievements since the pilot zones were established and has become a new area of growth for imports and exports.”
“We should facilitate domestic consumption and at the same time improve export quality in the global market.”
The new pilot zones involve 22 cities - prioritising central and western regions, as well as North-eastern China.
Previously established zones have already made significant progress, providing the Chinese government(and businesses with invaluable feedback and data.
The cross-border e-commerce turnover in these pilot zones has doubled year-on-year.
Building on previous experience, China’s trade departments and city-level government aim to streamline approval, upgrade administrative procedures in logistics and storage, and speed up customs clearance for e-commerce exporters.
It will further facilitate international trade, stimulate business innovation, and encourage healthy competition.
More zones will boost the volumes of imports and expand the range of competitive foreign products available to Chinese consumers.
Why export through cross-border e-commerce?
According to iiMedia Research, Chinese cross-border e-commerce transactions reached 6.7 trillion yuan ($1.01 trillion) in 2016; soaring past 7.6 trillion yuan in 2017.
The overall transaction scale is growing considerably. In 2018, e-commerce transactions volume is expected to jump to 9 trillion yuan.
As of 2017, there are 65 million regular online shoppers in China who are making purchases via overseas shopping platforms.
The big spenders are the 80s and 90s generations; more internet and technology savvy, consumption upgrade is symbolic of this consumer group.
In 2016 and 2017, the best-selling foreign product categories were baby, mum & children products, shoes & clothes, cosmetics, health products, accessories, and suitcases.
Consumers buy goods online from merchants located in other countries in two ways: bonded import, where foreign products are stored in bonded warehouses in China and dispatched to consumers, and direct purchase import, where products are shipped directly to consumers from overseas locations and fulfilment centres.
While this isn’t a new trend in China, it’s one that’s rapidly growing and innovating. Consumption upgrade is evolving faster and on a large scale.
China's market is already responsible for 40% of overall e-commerce transactions globally.
Standardising cross-border e-commerce, and launching 22 new experimental zones, will only propel consumption.
Consumers are becoming more sophisticated shoppers due to wider availability of imported goods; increasing competitiveness between brands as customer experience becomes a deciding factor.
For businesses wanting to ride that wave there are many challenges (local regulations, business customs, consumer preferences, and cultural differences to name a few).
So cross-border e-commerce can be a low-risk strategy to test China’s market demand. There are less administrative burdens, and more relaxed regulations.
As new e-commerce platforms emerge, more opportunities will arise for foreign brands not yet widely known in China.
Targeting upcoming, regional platforms offers a competitive edge bolstered by a unique selling point.
There are over 100 Chinese cities with a population of over 1 million. While rural China (with a population of almost 600 million) outpaces urban retail consumption.
This is good news for foreign businesses. With the Chinese government’s support, and strong demand from domestic consumers, the future development of cross-border e-commerce will be unbeatable.
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