E-commerce « cross border » : an opportunity to access the Chinese market!

Cross-border e-commerce now offers the possibility for large French groups and SMEs to access the Chinese market in BtoC at a lower cost: no subsidiary or store need, 1 billion potential Chinese consumers are within easy reach! Not so simple, however, to seize this opportunity successfully: the approach is strongly framed and, despite everything, it remains international trade...

For five years, the Chinese e-commerce market experienced a very strong growth. It was estimated in 2015 at 16.3 trillion RMB, and is currently continuing its dizzying growth: +26% in 2016!

Opening up cross-border online commerce (e-commerce) « cross border »), was established in China in 2012, and extended to private companies in 2014 by the Chinese authorities for « ensuring the origin and authenticity of imported products to the consumer« . Immediate success since in 2015, online sales of products manufactured abroad already accounted for nearly one third of the e-commerce market in China!

Chinese consumers are particularly interested in Western productsin clothing and fashion accessories, maternal and child care, health care and cosmetics.

To such an extent thatChinese online sales platforms now seek to attract French companies: theAlibaba groupwho can already boast about hosting on his platform « Tmall Global » several e-shops of major French brands opened an office in Paris to convince SMEs to do the same. Pursuing the same objective, its challengerJD.comopened its « France Pavilion » Last February...

Among the weight arguments likely to seduce French brands, adirect access to Chinese consumers: speed, simplicity and relatively modest entrance ticket (around 20,000 USD/year for Alibaba) !

So ready for the big jump? Not so simple...

First we have toadapt to moving Chinese legislation, of which the last modification dates from April 2016: registration of certain products, labelling rules, taxation on purchase on the platform,...

Then,access to Chinese e-commerce platforms is not also « free » in Europe: Alibaba requires, for example, the use of a « Tmall partner », local operator or « third party » in charge of the online shop and able to provide after-sales service... How to choose and pilot it on a daily basis despite distance and cultural differences?

It will also be necessary toeffective marketing strategyto be visible and differentiated, with a suitable or even aggressive pricing positioning, to hope to seduce demanding consumers in terms of value for money. From this point of view, it may be preferable to choose a less prominent but more specialized online sales platform with a good reputation... Among the thousands that already exist on the Chinese web!

In addition to the additional cost of using intermediaries,remote monitoring of commercial and communication operationsin a very different trading environment from the European ecosystem is likely to mobilise significant internal resources.

Initiatives have recently been launched topooling the approachby bringing together several brands in the same e-shop: theFédération Française du Prêt-à-Porter Femininhas for example recently opened a « French boutique » on Tmall Global to host a dozen hexagonal claws that will share the costs and constitute a homogeneous offer.

What about logistics?

Stay here.management of logistics operationswho, once the sale has been made, have to activate with fluidity to deliver the product as soon as possible and in the best conditions of customer satisfaction!

JD.com, the other large generalist Chinese platform whose concept is strongly inspired by the US giant Amazon, has storage infrastructures and can perform order preparation and distribution for its customers.

Because if it is quite possible to consider itdirect delivery of individual packages to Chinese customersfrom France, it is necessary to ensure that the consignments are properly taken over by an air carrier (deadline of delivery required!), pass without shadow the customs on departure and arrival, then be transported to the home... Nothing is impossible, especially in China, butat what actual cost and under what conditions of operational control ?

Other solutions exist, such as the use of awarehouse in Free Trade Zone(cf.International atmosphere of April 2014) on Chinese territory or Hong Kong, supplied with conventional freight (sea transport), and serving as a command management platform:a much more optimized and secure approach, which allows in particular to considerCross trade scenarios (direct delivery)to supply the logistics platform from other manufacturing, assembly or packaging countries.

To be studied from the design of the project in order to anticipate the possible rise in charge of the flows linked to the success of the online sale!

To go further...

Our experts insupply chain management and cross-tradeare at your disposal to help you design, deploy and pilot solutions and schemes adapted to your development objectives: do not hesitate to consult them within the framework of our diagnostic, consulting and hotline support services !