Region/Countries: Asia, China Industry: Multiple Sectors, Other Date: September 2020

Why this is important to Wisconsin businesses: International sales on Chinese e-commerce platforms are growing rapidly, creating opportunities for Wisconsin companies.

In June, a well-known e-commerce think tank in China released the 2019 Annual Data Monitoring Report on China's international e-commerce market. In 2019, the market size rose to ¥10.5 trillion ($1.6 trillion) from ¥9 trillion ($1.4 trillion) in 2018, with a year-over-year increase of over 16%. In addition, the total value of China's international e-commerce retail imports and exports continued to rise, topping ¥186 billion ($28 billion), with a 38% increase over the previous year, within which the total value of cross-border e-commerce imports topped ¥91 billion ($14 billion). Data shows that the penetration rate of international e-commerce in China also steadily improved. The rate was 33% in 2019, an increase of 3.8% over 2018. It shows that international e-commerce is playing an increasing role in boosting China’s foreign trade.

The market size is expected to continue to grow due to policy changes and increasing consumption. In April, the executive meeting of China’s State Council issued relevant measures on the development of international e-commerce. After the results of 59 experimental zones for cross-border e-commerce, 46 new zones will be created. In addition, a series of supporting policies have been introduced for enterprise taxation, supervision and facilitation. For example, enterprises are taxed at the lowest income tax rate of 4%; cities within the experimental zones are available for bonded goods and are able to supervise imported goods as personal goods, hence adopting a preferential rate within the transaction limit. Increasing consumption is another major issue that drives the future development of cross-border e-commerce, especially the import market. For the past five years, the continuous growth of per capita disposable income in China has greatly boosted consumption, leading to personalization, diversification and quality improvement. In 2018, China had 88.5 million frequent users of international online shopping; by the following year, this number had jumped to 125 million, indicating that international online shopping is becoming a new shopping behavior with huge growth potential.

It goes without saying that it is extremely important for foreign companies to choose a reliable platform to promote and sell their products. According to iMedia Research (a leading Chinese data report and analysis agency), China's e-commerce platforms for international imports can be divided into three echelons. The first echelon is head platforms including Koala, JD Global and Tmall Global. These platforms are diverse brands with large scale, high revenue, high popularity, good reputation and abundant cash flow. The second echelon includes platforms such as Foreign Wharf, VIPShop International, Xiaohongshu and Jumei Express duty-free shops. The third echelon includes platforms such as Honeybud, Beibei, Baobaoshu, Baobao Grid and other maternal and infant product platforms. Survey shows that Koala, Tmall Global and JD International are the top three most trusted platforms for Chinese users.

iMedia reveals that the top 10 categories of international online shopping in China are beauty care, shoes and clothing, jewelries and bags, maternal and infant products, household products, sports and outdoor products, food, digital home appliances, fresh fruits and health products. Data shows that younger generations and nursing parents are the main consumers. Although consumer goods are still the majority, with the development of international e-commerce platforms, logistics and related industry supply chain, the variety of products is expected to be further expanded, more and more foreign companies will be able to sell products to China via international e-commerce platforms.

International e-commerce is growing in popularity among Chinese consumers and is showing no signs of slowing down. Customs data shows that the U.S. was the third-highest source of international e-commerce imports to China in 2019. Products from the U.S. are favored by Chinese consumers, and U.S. brands (including small and midsize brands) should consider international retail sales as a crucial channel for export opportunities.