China embraces Cross Border E-Commerce

Five keys to connect with China’s wired consumers
April 30, 2017

China embraces Cross Border E-Commerce

By 2020, more than a quarter of the population will shop digitally for foreign products.

Cross-border e-commerce is growing in popularity in China. In 2016 it is estimated, more than 15% of the population made purchases from abroad worth $85.76 bn. While cross-border ecommerce is not a new trend in China, it is spreading to a much wider population base. By 2020, a quarter of the population, amounting to more than half of all digital buyers, will be shopping either directly on foreign-based sites or through third parties.

Digital shopping in China grew by more than 70% in 2015. This rapid surge in adoption is in part thanks to a higher standard of living in China combined with a greater exposure to, and knowledge of, foreign products. Last year’s intense growth is also attributable to Alibaba launching Tmall Global in 2014, and JD launching JD Worldwide in 2015, enabling overseas brands to sell their goods directly to digital shoppers in China. In addition, in some categories, such as infant products, consumers in China perceive overseas goods to be higher-quality and more trustworthy.

While the new cross-border e-commerce tax implemented in April this year negatively affects some categories of goods, the demand for foreign goods via the cross-border e-commerce channel is still expected to remain strong due to better prices compared to offline retailers, perceived quality and better variety. Furthermore, cross-border e-commerce goods sold via the business-to-consumer (B2C) channel are expected to take up a growing share of the total cross-border e-commerce market in 2016 as consumers shift to platforms that are more professional and organized. Since the merchants selling on these B2C platforms have to be authorized, they are considered more trustworthy.

Cross-border buyers in China are expected to spend an average of $473.26 each this year on cross-border purchases. This represents 4.2% of the total retail e-commerce market and will amount to a spend of $85.76 bn this year.