E-COMMERCE IN CHINA A GUIDE FOR AUSTRALIAN BUSINESS
Using ChAFTA to sell premium Australian products JUNE 2015
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 1 DISCLAIMER
This report has been prepared as a general overview and is intended to be a guide, providing a starting point for exporters. It is not intended to provide exhaustive coverage of the topic. The information herein is made available on the understanding that the Australian Trade Commission (Austrade) is not providing legal, financial or any other form of professional advice. Therefore, while all care has been taken in the preparation of this report, Austrade does not accept responsibility for any losses suffered by persons relying on the information contained in this report or arising from any error or omission in the report. Any person relying on this information does so entirely at their own discretion and risk. Austrade strongly recommends the reader obtain independent legal, financial and any other form of professional advice prior to acting on this information.
Austrade assumes no responsibility for any company, product or service mentioned in this document, for any materials provided in relation to such products, nor for any act or omission of any business connected with such products and services.
Currency conversions from Chinese Renminbi to Australian dollars ar e historical and should be considered indicative only. The Reserve Bank of Australia provides data on current and historical Australian dollar exchange rates with major currencies at http://www.rba.gov.au/statistics/frequency/exchange-rates.html
Austrade gratefully thanks the e-commerce marketplaces and experts who provided information for this report and acknowledges the assistance and contribution of Dezan Shira and Associates.
Copyright Commonwealth of Australia 2015
Publication date: June 2015
2 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS CONTENTS
FOREWORDS 04 MINISTER FOR TRADE AND INVESTMENT MINISTER FOR SMALL BUSINESS EXECUTIVE SUMMARY 06 INTRODUCTION 10 THE E-COMMERCE MARKET IN CHINA DRIVERS OF GROWTH UNDERSTAND CHINA’S ONLINE CONSUMERS 12 WHO IS BUYING GOODS ONLINE AND WHY? WHAT IMPORTED PRODUCTS ARE ONLINE SHOPPERS LOOKING FOR? GET YOUR PRODUCT READY FOR THE CHINESE MARKET 19 PRICING PACKAGING UNDERSTAND CHINA’S ONLINE MARKETPLACES 22 ONLINE MALLS HYPERMARKETS AND SPECIALTY MARKETPLACES CONSUMER-TO-CONSUMER: ONLINE BAZAARS AND SOCIAL SELLING FLASH SALES STAND-ALONE E-COMMERCE WEBSITES PROTECT AND MANAGE YOUR INTELLECTUAL PROPERTY 29 IDENTIFYING IP VIOLATIONS REGISTERING A TRADEMARK REMEDYING IP VIOLATIONS GET YOUR GOODS TO CHINA 30 CROSS-BORDER SALES CONVENTIONAL DISTRIBUTION ONLINE VERSUS OFFLINE: MARKET ENTRY FOR AUSTRALIAN FOOD SALES VIA THIRD PARTIES DISPATCHING YOUR GOODS IN CHINA E-COMMERCE MARKETPLACES WITH INTEGRATED LOGISTICS THIRD-PARTY LOGISTICS PROVIDERS STORAGE, WAREHOUSE AND ORDER FULFILMENT COLD-CHAIN LOGISTICS REVERSE LOGISTICS UNDERSTAND KEY REGULATIONS 40 PRODUCT REGISTRATION, INSPECTION AND QUARANTINE PROCEDURES TARIFFS, DUTIES AND OTHER REGULATORY PROCEDURES COMPANY TAXES CHINA’S CONSUMER PROTECTION LAWS ESTABLISHING A LEGAL ENTITY IN CHINA CHINA-AUSTRALIA FREE TRADE AGREEMENT 45 SECURED OUTCOMES AUSTRADE CHAFTA OUTREACH PROGRAMME BUILD AND MANAGE YOUR ONLINE BUSINESS 47 BUILDING A SHOPFRONT GETTING PAID ATTRACTING AND RETAINING CUSTOMERS COMPANY WEBSITE ONLINE ADVERTISING MARKETPLACE PROMOTIONS SEEKING ASSISTANCE 55 HOW AUSTRADE CAN HELP AUSTRADE IN CHINA WHAT IS EMDG? EFIC THIRD-PARTY SERVICE PROVIDERS 57 USEFUL TERMS: FROM ALIBABA TO ZHUIZONG 62
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 3 FOREWORD BY MINISTER FOR TRADE AND INVESTMENT
THE HON Selling products in China via an online marketplace is a relatively ANDREW ROBB AO MP easy, low-cost and low-risk MINISTER FOR TRADE alternative for Australian exporters. AND INVESTMENT In 2014, China’s online retail market grew by 50 per cent to reach the equivalent of half-a-trillion Australian Since concluding the landmark dollars1, creating vast possibilities China-Australia Free Trade for our home-grown businesses. Agreement (ChAFTA), the government has been focused on Access to comprehensive, ensuring Australian businesses – unbiased information and in-market large and small – understand how assistance is vital to success to make the most of the enhanced in China’s e-marketplaces, so access the agreement delivers this E-commerce in China: A in this lucrative Asian market. Guide for Australian Business is an invaluable resource. Australia’s high quality goods and services are in strong demand in Produced by Austrade, the guide China – particularly among the explains in simple terms how rapidly growing middle class – China’s e-marketplaces work and given ChAFTA provides the and how to access them. Other best market access any foreign practical information includes country has achieved to date, the explanations on market regulations openings Australian businesses and export pathways, how to can seize upon are significant. manage an online store, managing intellectual property, as well as In fact, on full implementation of profiles on Chinese consumers the agreement, 95 per cent of and Australian companies already Australian goods exports to China enjoying success in Asia. will be tariff free, which is why it’s important that businesses are The export opportunities into China equipped with the right know- are certainly there for the taking and how to take full advantage of the this guide, along with Austrade’s opportunities which includes an network of contacts and market understanding of e-commerce. intelligence – both here in Australia and overseas – are vital tools when Online sales of consumer products building your brand and expanding in China represent an exciting your business into Asia and beyond. pathway to trade for Australian exporters, who in the past, may have found it difficult to break into this market due to cost, cultural or regulatory barriers.
1 Ministry of Commerce, China
4 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS FOREWORD BY MINISTER FOR SMALL BUSINESS
THE HON offers these businesses access to over 300 million customers. BRUCE BILLSON MP MINISTER FOR The market is growing rapidly. China’s National Bureau of Statistics SMALL BUSINESS estimates it expanded by 50 per cent in 2014 to be worth around half a trillion Australian dollars. The hard working women and men of Australian small business are This guide is free and is published the engine room of our economy. in conjunction with a series of Small businesses and family roadshow seminars the government enterprises employ over four is conducting across our country. and a half million Australians and produce over $330 billion of our We are committed to ensuring nation’s economic output each Australia is the very best place year. Small business drives growth to start and grow a small and creates jobs for our country. business. To do this we know it is important to provide practical Small businesses are often among information and support to help the first to adapt to changes in small and medium enterprises technology and resulting effects be export ready, establish a on consumer demand – at the presence and build their sales. coal face they are identifying new trends and opportunities This guide provides a clear in Australia and offshore. explanation of the key concepts and regulations businesses will need to This publication, E-commerce understand. It also includes case in China: A Guide for Australian studies and a list of useful contacts. Business, is designed to help harness the historic opportunities I would urge all Australian business, available through our Free no matter how small, to consider Trade Agreement with China. the huge potential e-commerce in China presents. This guide For small business and family is a great starting point. enterprise there is no substitute for customers. The development of a sophisticated online market for consumer products, to such a big export destination as China,
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 5 EXECUTIVE SUMMARY
Despite a macroeconomic slowdown in China, online costs, minimal risks and easier market access consumer spending is growing at close to 50 per compared to traditional exporting. cent a year, particularly in fast-growing second and third-tier cities like Kunming, Wuhan and Shenyang. While buying quality overseas-made goods is an These cities – often overlooked by the physical outlets unrealised aspiration of many of these consumers, of foreign brands – are where online hypermarkets at least 18 million are already paying premium prices such as JD.com and Yihaodian (YHD) dispatch for foreign products like food, cosmetics and luxury hourly deliveries on fully laden electric bikes from items. These are directly imported through ‘cross- thousands of distribution centres across China. border’ e-commerce trading platforms in seven cities. The reduced import taxes and simpler quarantine E-commerce brings China’s 332 million and inspection procedures within these pilot online consumers within the reach of even business-to-consumer (B2C) gateways are stirring the smallest Australian producers, with lower up much excitement among buyers and sellers.
6 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 7 DIVERSE ONLINE SELLER AUSTRADE: MARKETPLACES BEWARE HERE TO HELP
For the Australian exporter, However, any form of international Austrade has identified a suite selling online in China can be as marketing is not without its of useful reference materials, straightforward as shipping your challenges, and selling online in including this guide, to help goods through Australia Post, China is no exception. Information you learn more about key areas or to the procurement centre of on e-commerce in China is affecting China’s changing business an affiliated e-commerce market dense, complex and prone to environment. More information place in Sydney or Melbourne. contradictions and frequent change. is available from our website2. Professional third-party service providers, online merchants and With more technology comes more For some producers, selling to e-commerce marketplaces have buyer discretion. Simply being China’s online consumers will quickly moved in to offer Chinese- ‘Australian’ or having a reputation for bring welcome but modest gains. language storefront design, ‘safety’ will not guarantee success For others, China’s e-commerce customer service, importation, in the long term. To stand above the market may be revolutionary. warehousing and last mile delivery. noise, products need a persuasive story and attractive and culturally This guide has been prepared Established brands may choose to relevant design and packaging. with the advice of e-commerce follow in the path of companies like and marketing professionals to Blackmores and Bellamy’s Organic Doing business in China – like all provide essential information to by establishing ‘flagship’ shopfronts international commercial activities – assist Australian companies make on popular online malls. Such an carries certain risks that Australian informed decisions on commencing approach brings added costs, but companies might not be aware of. on the path to their first online sale also adds credibility in a market Australian companies should spend in China. Austrade wishes you where barriers to entry are low and time investigating the market, obtain every success on the journey. concerns about product authenticity professional advice and conduct are paramount. Alternatively, online thorough due diligence before hypermarkets offer upfront terms for establishing business relationships. the most popular branded goods.
For emerging brands looking to win market share, media-rich online storefronts – complete with product reviews – are an unrivalled way to receive consumer feedback and tell a brand story at lower costs compared to paid advertising or in-store displays.
2 http://www.austrade.gov.au/export/export-markets/countries/china/doing-business/Doing-business
8 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Credit: Alibaba
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 9 INTRODUCTION THE E-COMMERCE MARKET IN CHINA
The online retail sector in China and social fabric. By June 2014, the to China’s National Bureau of continues to attract the world’s China Internet Network Information Statistics4, it is a sector with sales attention for its headline growth Center (CNNIC) estimated that of more than half a trillion Australian and transformative effects on the more than 300 million Chinese dollars in 2014, a 50 per cent country’s business environment were shopping online3. According increase on the previous year.
Figure 1: China e-commerce total sales value
3000.00
2500.00
2000.00
1500.00 100 million Yuan million 100 1000.00
500.00
0
2009 2010 2011 2012 2013 2014
Source: National Bureau of Statistics Annual Online Retail Sales, January 2015
Exemplifying this growth, China’s evolution in other markets. In China due to its low costs and accessibility biggest business-to-consumer it is driven not by PC shoppers of information. In 2013, sales in (B2C) platform, Tmall, created but by consumers using mobile China’s online B2B market reached the popular Singles’ Day on 11 devices. More than 40 per cent of RMB 7 trillion (US$1.2 trillion) with November 2009 (written out with Tmall’s transactions are made by a year-on-year growth rate of 19.7 the lonely call sign of ‘11/11’). With mobile consumers. According to per cent8. Alibaba’s 1688.com much anticipated discounts on the CNNIC, 520 million Chinese remains the prevailing platform offer, subsequent Singles’ Days access the internet via a smart for such transactions, spanning have broken consecutive world phone, from a total population of 16 industries including food, raw sales records for a single day. 632 million internet users6. The materials, clothing and accessories, On 11 November 2014, sales on Chinese Government’s target is and furniture. The site controls over Tmall reached RMB 116 million in to connect 1.2 billion people – 85 40 per cent of the B2B market, the first minute of the day and by per cent of the population – to 3G followed by Global Sources (a Hong midnight exceeded RMB 57 billion5. or 4G mobile internet by 20207. Kong-based B2B media company) and HC360 (a comprehensive The uptake of e-commerce in Business-to-business (B2B) B2B platform covering more China is significantly different to its e-commerce is also growing rapidly than 70 industrial clusters).
3 China Internet Network Information Centre, Statistical Report on Internet Development in China, July 2014 4 National Bureau of Statistics, Total Retail Sales of Consumer Goods in December 2014, January 2015 5 Xinhua News Agency, Singles’ Day sales boom breaks records, November 2014 6 Ibid CNNIC 7 Dezan Shira and Associates, Trends in China’s E-Commerce Market, June 2014 8 China Internet Watch, China Online B2B Market Update in 2013, May 2014
10 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS DRIVERS OF GROWTH
The pervasiveness of technology Uber delivered a lion dance troupe Another key factor underpinning across China’s cities is having to perform in a subscriber’s office the growth of e-commerce is rising profound effects on the market for for less than RMB 200. This is a incomes. McKinsey estimates that goods and services. A 2014 survey reason why more than 200 million 14 per cent of China’s households conducted by product research consumers used their mobile can be defined as mainstream, company Psyma showed 75 per phones to make purchases in with annual incomes of between cent of phone users have made 2014. According to Dezan Shira US$16,000 and US$34,0009. These online food or beverage purchases. and Associates, approximately families display more willingness to Daily necessities such as rice and 70 per cent of all e-commerce pay for quality imported products, drinking water, as well as taxis, related payments in China are often as a result of first-hand movie tickets, haircuts, holidays now electronic, a reversal from experience during overseas work and meals can be purchased via a five years ago when around 70 and travel. By 2022, the upper mobile phone. During Chinese New per cent were cash-on-delivery. middle class will account for 54 Year in 2015, transport company per cent of all households.
Figure 2: Penetration of chained convenience stores – Number of outlets/million people
140
National Average: 22
16
Non-Tier 1 Tier 1 Cities Cities
Source: Euromonitor International, Cites in China: Economic and consumer dynamics for successful business, 2015, p.8
The shortcomings of traditional shipment of goods to China’s rice. For time-conscious consumers, retail are another factor. Despite inland provinces is often the only online shopping is a necessity. having more wealthy households means of purchasing certain than Australia, China’s consumers goods at affordable prices. Furthermore, well-publicised concerns are comparatively underserved over unsafe and counterfeit products by local retail channels Meanwhile, in China’s first tier cities have undermined trust in many of Beijing, Shanghai, Guangzhou locally produced products, pushing As shown in Figure 2, the availability and Shenzhen, congested traffic consumers towards goods with a of branded products has not means it is often more convenient to strong reputation in overseas markets kept pace with the demand from purchase online, especially for heavy and to reputable sales channels. second and third tier cities. Online bulk goods like water, cooking oil and
9 McKinsey and Company, Meet the 2020 Chinese Consumer, March 2012
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 11 UNDERSTAND CHINA’S ONLINE CONSUMERS SHOPPER PROFILE WHO IS BUYING GOODS ONLINE AND WHY?
CHRISTY According to Nielsen research, the more than RMB 11,000 per month typical online buyer of imported (A$2,150 a month or A$25,800 a PUBLIC SERVANT products in China is female, younger year)10. Frequently cited reasons than 30 and with an income of for shopping online include: Christy is a 29-year-old public servant and mother of an 18-month-old boy. She spends two to three hours every day looking for food, household Accessibility: online shopping is available anywhere, any time. items and baby or toddler products on Taobao, JD.com, Yihaodian and WeChat. She Convenience: most major sites offer free delivery, which estimates that she has spent helps to avoid crowded traffic and public transport. over RMB 15,000 on infant formula, baby food and toys in the past 12 months. Low prices: online prices are typically 10-20 per cent lower than in-store, with sales events like ‘I don’t fully trust domestic Singles’ Day offering even bigger savings. brands. When available, I always choose imported products for my child. I usually Greater choice: a typical Chinese supermarket carries upwards buy from trusted e-commerce of 15,000 stock keeping units (SKUs), whereas online supermarket sites because I know that I Yihaodian stocked up to eight million SKUs by the end of 2014. can trust the importer. I take product safety issues seriously.’ Detailed product information: online stores are rich in the type of details sought by consumers, such as country of origin, production method and customer reviews.
Confidence: consumers place higher levels of trust in the authenticity of purchases made on major B2C platforms such as Tmall, JD.com and Yihaodian.
Given these factors, it is of little by PwC shows that the number of surprise that Chinese users are Chinese consumers who report some of the most regular online making daily or weekly online shoppers in the world. A global purchases is double and triple the online commerce survey conducted global average, respectively. 11
10 Nielsen, China sees more sophisticated online shoppers, September 2014 11 PwC, Total retail 2015: Retailers and the age of disruption, February 2015
12 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Credit: Amazon China
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 13 WHAT IMPORTED PRODUCTS ARE ONLINE SHOPPERS LOOKING FOR?
Credit: JD.com
Nielsen research estimated Chinese In 2014, Austrade analysed the toys, beer and honey. The figures online shoppers would spend average daily frequency of Taobao also revealed significant buyer RMB 100 billion (approximately shopper keyword searches interest in furniture and home US$16.3 billion) in 2014 on imported performed over three months for improvement products: categories products.12 Apparel, accessories 25 types of product which could be where Australian products are and handbags are the most supplied by Australian companies. under-represented in China. popular imported items sold in The most sought-after categories China, followed by cosmetics were packaged snacks, children’s and personal care products, and mother-and-baby products.
12 http://www.nielsen.com/us/en/insights/news/2014/consumers-without-borders--chinese-shoppers-present-a-key-growth.html
14 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Figure 3: Frequency of Keyword searches on Taobao for a selection of 25 products
Cheese
Olive oil
Pet care
Pet food
Packaged snacks
Jewellery
Home improvement
Outdoor and sporting equipment
Beauty and personal care
Toys
Clothing and accessories
Furniture
Vitamins and supplements
Honey
Juice and other beverages
Beer
Spirits
Wine
Seafood
Fresh and frozen meat
Fruit and veg
Yoghurt
Infant formula
Fresh milk
UHT milk
0 10000 20000 30000 40000 50000 60000 70000
Source: Austrade/Taobao, November 2014
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 15 In November 2014, Ben Sun of terms. The results in Figure 4 SHOPPER PROFILE ThinkChina, a Sydney-based show that skincare, food and e-commerce data analytics wine, and milk powder were the company, studied the product Australian products most sought LUCY categories of Tmall and Taobao after by China’s online shoppers. searches where the keyword DESIGNER AND OWNER ‘Australia’ was part of the search Lucy is a 59-year-old designer and small business owner from Guangzhou. She recently renovated her office and bought almost everything for the project Figure 4: Search volume (%) of Australian products online, from hardware to furniture on Taobao and Tmall, November 2014 and construction services.
‘Interior design and construction Fur products services are all available online. 2.40% I renovated my office with just Others a few clicks of a button and Health supplements 2.8% 5.41% minimal leg work,’ she says.
Lucy spent around RMB 280,000 Food & wine on renovating her 500 square-metre 18.64% office through online purchases – a huge saving over traditional methods. Skincare 39.86% ‘I was able to get quality pieces without having to bargain. A secure escrow account allowed me to view Shoes & clothing 15.14% the product first before confirming the order, and returning it for a refund was easy when the product Milk powder didn’t meet my expectations.’ 15.75%
Source: Think China, November 2014
‘To sell in China successfully, you need to leave your Australia hat at the door and understand the Chinese consumer.’
Chris Morley, E-commerce Director, Premium Australia Foods
16 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Credit: VIP.com
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 17 18 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS GET YOUR PRODUCT READY FOR THE CHINESE MARKET
Successful exporting requires optimising brand messages and designing products to cater for subtle but important differences in consumer behaviour across international markets.
Austrade has more than a dozen business development managers working in the food and beverage, consumer and agribusiness sectors in China. Their experience suggests Chinese buyers look for products that:
• have strong brand heritage outside of China • replace local brands that are not trusted (particularly if the end user is an infant or is elderly) • are innovative and novel • are lifestyle products (e.g. healthcare, vitamins and education) • are ‘natural’ alternatives to artificial products.
Andrew Kuiler, a Shanghai-based Australian branding and packaging expert and founder of the Silk Initiative, advises that for food exporters, just being ‘foreign owned’ is no longer good enough for Chinese consumers. ‘Success requires a strategy supported by a strong understanding of consumers and how they will use a product and respond to brand narratives,’ Kuiler advises. ‘Grounds on which Australian manufacturers can compete in China include innovation, natural and functional ingredients, safety and technology,’ he says.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 19 PRICING
Exporters need to allow for Food Co., notes that ‘pricing is one A simple online search will show sufficient margins to cover duties, of the biggest issues Australian prices for competing imported tariffs, storage and delivery, brands face in China. Prices goods. Table 1 compares the marketing and discounting. must be comparable with similar Australian and Chinese prices for a imported products from Europe sample basket of goods sold online. Margaret Harris, co-founder and and the US to be competitive.’ joint managing director of The Clean
Table 1: Prices of Australian-branded consumer goods sold online in China, December 2014
PRODUCT VOLUME PRICE IN A$ PRICE IN CHINA (A$ equivalent)
SPF 30+ sunscreen 40ml 19.95 56.41
Face cream 125ml 32.95 52.48
Age-Defying Ultra Firm and Lift Cream 50ml 90.00 138.09
Cheese slices individually wrapped 12 pack 216g (AU) - 250g (CN) 3.30 5.83
Full cream Long Life milk 1 Litre x 10 15.80 30.00
Tasty cheese block 250g 5.70 8.77
Famous brand Shiraz 2013/14 vintage 750ml 8.99 28.79
Smooth peanut butter 500g 5.38 22.95
Australian squeezable honey 500g 7.30 19.06
Source: Austrade in-house research, 2015
Chinese consumers have shown a success over the past decade, driven buyer’s personality and travel willingness to pay premium prices by China’s economic rise and a desire history. This is creating a good for quality products. Australian for status-confirming products. market for well-crafted, Australian manufacturers should prioritise their ‘affordable-luxury’ brands and efforts to develop products that As the middle-income segment products, especially in the lifestyle have high quality and brand appeal. and consumer tastes become and fashion segment, where well- more nuanced, many shoppers designed and creative alternatives Luxury brands from Europe and are looking to more modest, are increasingly popular. the US have enjoyed tremendous unique brands that reflect a
20 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS PACKAGING
Because imported items packaging is consistent with this adopted by competing imported are considered a luxury, perception. Searching for your products. Consideration manufacturers need to product on any major platform should also be given to: ensure the standard of their will reveal the form of packaging
Purpose: many imported goods are gifts to friends and family. Specialised ‘gift packs’ are popular options
Unit volume: for some products, larger-sized products help absorb ‘last mile’ delivery costs and make better gifts. Many consumers order large quantities of a single SKU when shopping online
Authenticity: use features that are hard to replicate, such as holograms and logos
Traceability: use features such as barcodes and QR codes to demonstrate product provenance
Labelling: all food and imported products sold in China are required to have a Chinese-language label explaining product contents and origin.
Credit: YHD.com
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 21 UNDERSTAND CHINA’S ONLINE MARKETPLACES
Exporters are not required to build Figure 5: China’s top B2C websites, market and operate a stand-alone website share by total transactions, Q2 2014 in order to sell online to Chinese consumers. Approximately 90 Yixun.com per cent of online transactions in 1.40% China occur on open, third-party Yhd.com e-commerce marketplaces. Amazon 1.4% 1.50% These sites can display products, Dangdang Others receive orders and handle payments 1.50% 7.41% on behalf of merchants located in China and abroad. They operate Gome.com.cn 1.90% under one or more of the following five main types of e-commerce Tmall VIP.com 57.36% marketplace models in China: 2.80%
• online malls Suning.com 3.50% • hypermarkets and specialty sites • flash sale sites • C2C ‘online bazaars’ and social selling • Stand-alone websites.
JD.com 21.22%
Source: iResearch, China Internet Watch July 2014
22 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS ONLINE MALLS
Online malls are a collection Shoppers can purchase items operated by brand owners or of independently managed from multiple shopfronts in a their licensed agents, who are shopfronts operating under the single convenient transaction. required to pay an anti-counterfeit banner of a larger marketplace. security deposit of US$25,000. Tmall Global allows foreign In exchange for a shopfront set- merchants to establish an official Site design, inventory management, up fee, yearly ‘rents’ (commonly shopfront without requiring a warehousing, order fulfilment, known as technology fees) and a business licence in China. Sellers customer service and delivery sales commission of two to five will need to open an account with remain the responsibility of the per cent, merchants benefit from Alipay – China’s equivalent of shopfront owner, assisted by the the reputation and visitor traffic PayPal – to receive RMB payments marketplace’s proprietary back- associated with the marketplace. from Chinese customers. To end platform. The marketplace For example, Tmall has more ensure consumer confidence in does not purchase, store or than 255 million registered the authenticity of merchandise, deliver merchandise. users and 70,000 shopfronts. shopfronts on Tmall can only be
HYPERMARKETS AND SPECIALTY MARKETPLACES
Hypermarkets, such as JD.com, within their marketplaces to sell onto the vertically integrated Yihaodian and Amazon, also allow speciality or low-turnover items. hypermarket model (see page 25). independent merchants to list High-performing brands have products or operate shopfronts the opportunity to be ‘graduated’
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 23 Amazon China (Z.cn) is Amazon’s online shopping platform in China, which provides over 25 million products spanning 32 categories. Amazon China has 13 fulfilment centres across the country offering premium delivery service including same day delivery and next day delivery in more than 1400 cities/ counties and more than 5000 pick-up points, and provides a convenient and swift online shopping experience to Chinese customers. With the unique advantage of rich global vendor resources and logistic network, Amazon China today already hosts the largest international brands and high- quality authentic international products among online retailers in China.
JD.com is China’s largest online direct sales company. JD.com owns and operates seven fulfilment centres and 143 warehouses in 39 cities, with a further 3,539 delivery stations in 1,961 counties and districts across China, 134 of which offer same-day delivery. JD.com allows merchants to open individual shopfronts and is also licensed to import food, beverage products, apparel and shoes directly from Australia. A cross-border service, JD Worldwide, was also recently launched, enabling merchants who don’t have a China presence to sell direct to Chinese consumers.
SFHT.com is part of SF Holdings (Group) and is a cross-border marketplace for sought-after foreign goods using the international logistics network for SF Express to provide customers with a fast end-to-end import and online retail service. For brands, distributors and foreign retail partners entering China, SFHT offers a complete solution including international logistics, customs entry, domestic delivery and omni-channel promotion plans, both offline and online. SFHT has marketing partnerships with third-party sales channels and offers Online-to-Offline (O2O) integration with retail chain stores in Taiwan and Japan.
Tmall.com is China’s largest online marketplace dedicated to domestic and international branded merchandise. Owned by Alibaba Group and launched in April 2008, Tmall provides a marketplace for foreign brands or their approved partners to open exclusive shopfronts. Tmall Global, launched in 2014, only sells imported goods, and allows international brands without physical operations in China to sell directly to consumers. More than 600 foreign merchants benefit from exposure to the hundreds of millions of Chinese consumers who frequent Alibaba’s marketplaces daily. Tmall Global has English-speaking support staff.
VIP.com was founded in August 2008 as an online special offers retailer offering authentic, competitively priced and popular branded products to consumers in China. VIP was listed on the New York Stock Exchange in 2012 and has more than 100 million registered members. Merchant support provided by VIP’s end-to-end online cross-border solution includes receiving merchandise in Australia, customs clearance, translation, design, segment analysis and delivery in China. Sales commissions start from 20 per cent.
Womai.com is a Beijing-based specialty B2C e-commerce website created in 2009 by state-owned food giant COFCO. It is focused on staple foods, snacks, beverages and wine, which it purchases directly from suppliers and can deliver nationwide from three distribution hubs to its 15 million registered users, including refrigerated goods.
Yihaodian (translation: Number One Store) is China’s largest online retailer of food and beverages, selling around 250 million imported items in 2013, including one-third of all imported UHT milk sold online in China. Co- founded by Chairman Yu Gang and Flinders University alumnus Junling Liu, Yihaodian operates 17 warehouses and has 10,000 employees across China. Yihaodian is 51 per cent owned by US retail giant Walmart and is licensed to import food and beverage products directly from overseas.
24 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Online hypermarkets are vertically delivery stations in 1,961 counties required to manage distribution integrated, multi-category and districts across China. or a shopfront, but are typically marketplaces that purchase directly • Yihaodian stocks up to eight asked to provide official marketing from suppliers for sale through million SKUs, with a focus on collateral to promote their goods. their own network, much akin to a fresh food and beverages. traditional ‘bricks-and-mortar’ retail • Amazon China offers same- Smaller specialty marketplaces, in store. Core to this model is the day shipping in major cities and most cases, also purchase directly operation of a proprietary online access to popular imported items from suppliers, but focus on a e-commerce platform and self- listed on its US parent site. particular product line, region (e.g. owned distribution network offering Shanghai), need (e.g. food safety) Selling to a hypermarket is same-day delivery. For example: or community (e.g. paid-members, done through negotiation with expatriates). The following tables a procurement manager. Both • JD.com processes tens of outline some of the many specialty JD.com and Yihaodian are licensed thousands of orders per day through marketplaces that sell imported food to import directly from Australia. seven logistics hubs and 143 and beverages, fashion, accessories Exporters or their agents are not warehouses, with a total of 3,539 and general merchandise.
Table 2: Specialty marketplaces selling imported food and beverages
Shanghai-based seller of fresh food and beverages run by Shanghai www.962360.com Bright Food, targeting everyday Chinese consumers.
Beijing-based online fresh food supermarket with national reach through its www.benlai.com own online portal and shopfronts on Tmall, YHD and JD.com.
Online supermarket focused on offering same-day delivery to www.epermarket.com Shanghai’s expatriate community. Own cold-chain delivery.
Online supermarket established in Shanghai in 2009 focused www.fieldschina.com on quality and safety. Own cold-chain delivery.
New member-based online supermarket offering Shanghai residents a select www.freshfresh.com range of imported staples ‘at cost prices’. Own cold-chain delivery.
www.fruitday.com Highly popular membership-based store selling premium boxed fruit. Established in 2009.
www.kateandkimi.com Shanghai-based seller of gourmet food and wine, operated by two expatriates. Own cold-chain delivery.
Beijing-based ‘fruit fan’ established in 2014, with own online portal www.okshuiguo.com and shopfronts on Tmall, JD.com and WeChat.
www.pinstore.cn Japanese-operated seller of food and general merchandise.
www.sfbest.com Food and consumer product retail marketplace owed by SF Holdings (Group).
www.yiguo.com National seller of imported and domestic food and wine with one million users. Established in 2005.
www.youanxianpin.com National B2B-focused platform selling premium domestic and imported food.
www.yummy77.com Amazon-invested seller of imported and domestic foods with 500,000 registered users in Shanghai.
www.yesmywine.com One of China’s largest online wine stores with 6.6 million registered users.
Source: Austrade in-house research, 2015
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 25 Table 3: Specialty and wholesale marketplaces selling fashion, accessories and general merchandise.
www.amazon.cn Official Chinese site of US e-commerce giant, also known as z.cn
www.dangdang.com China’s largest online retailer of books.
www.gome.com.cn National home electronics and appliances store that has expanded into fashion and lifestyle products.
Online seller of imported luxury fashion, homewares, accessories and www.iluxday.com packaged foods. Handles importing, warehousing and logistics.
www.lamall.com Mother-and-baby speciality site.
Shanghai-based Glamour Sales is a membership-based website that offers daily flash www.mei.com sales of more than 1,500 luxury international fashion brands to loyal fashionistas.
www.shangpin.com National flash sales e-retailer of fashion, jewellery and accessories with five million users.
www.suning.com One of China’s largest brick-and-mortar home electronics stores and a leading e-retailer.
An online channel for merchants doing business on Alibaba Group’s retail www.1688.com marketplaces to source products from domestic wholesalers.
CONSUMER-TO-CONSUMER: ONLINE BAZAARS AND SOCIAL SELLING
Consumer-to-consumer (C2C) Because establishing a store on Merchandise listed on JD.com marketplaces operate under Taobao is effectively free, this can also be accessed through a business model similar to marketplace is dominated by small Tencent’s popular social media eBay. Alibaba’s Taobao C2C sole traders who compete fiercely platform WeChat (otherwise marketplace was the pioneer of on price, leading to concerns known as Weixin). Merchants China’s e-commerce sector, and among discerning shoppers on JD.com can set up their own remains the most popular with a about product authenticity13. ‘micro-stores’ to sell socially to 90 per cent market share in the Delivery times vary according to friends and contacts on WeChat, C2C segment. Today, Taobao has the seller’s location and preferred with the option to use JD.com’s eight million sellers and over 200 courier, and payment options vary nationwide fulfilment infrastructure million active users. It is estimated from store to store. Establishing and Tencent’s finance tools. that 50 per cent of China’s total a shopfront on Taobao requires online sales occur on Taobao. registration with a Chinese ID card.
FLASH SALES
Flash sale sites specialise in selling appeal for consumers familiar means for exporters to ‘test’ the new-to-market, discontinued or with overseas brands. Because market for new products before surplus branded stock at discounted flash sale sites deal with discrete establishing a more substantial prices. They hold particular quantities, they can be an effective online or offline sales presence.
13 Xinhua News Agency, Watchdog finds fake goods in online malls, January 2015
26 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS STAND-ALONE E-COMMERCE WEBSITES
Given the popularity and exporters. Any company seeking to receive payments in RMB. convenience of third-party to sell products through its own Engaging in-house delivery requires marketplaces, building a stand- site is required to register a establishing a separate wholly alone transactional website for business and follow a lengthy foreign-owned enterprise and China is typically considered too record-filing procedure. A third- acquiring a transportation licence. difficult and costly for inexperienced party payment solution is required
Table 4: Select marketplaces compared
Alibaba Group Marketplace name
Taobao Business model Marketplace Tmall.com (B2C) Hypermarket Online mall Hypermarket Online mall Flash sales (C2C)
Estimated number 350 million 105.2 million 90 million 100 million of users
Products for General merchandise General merchandise Food and beverage Focus women
Number of N/A 50,000+ 1 100,000 1 N/A 1 shopfronts
Estimated number More than 1 billion product 40.2 million 8 million Rotational of products and service listings
A$3,000 – $33,000 A$2,000 A$2,000 N/A Not required Not required Nil Shopfront deposit (depending on - $19,500 - $20,000 store type)
A$6,000 – Annual marketplace $12,000 N/A Not required A$1,300 Not required A$1,130 Nil fee (approx.) (depending on categories)
Commission N/A 2-5% 1-10% 1-10% 20-35%
Yes China ID / business Yes (Tmall.com) Yes No (JD worldwide No Yes No No (Tmall Global) registration required No)
In-house delivery No No Yes Yes Yes No Yes and logistics
Australian-based By individual By individual By individual By individual No No Yes procurement? shopfronts shopfronts shopfronts shopfronts
By individual By individual No No Yes Yes Yes Direct import shopfronts shopfronts
Yes (by Yes (by Cross-border Yes (Taobao Yes (Tmall Yes (JD approved Yes approved Yes International) Global) Worldwide) capable shopfronts) shopfronts)
Ownership Alibaba Alibaba Publicly listed 51% share by Walmart Publicly listed
Payment methods Alipay Alipay Tenpay, JD pay Alipay Alipay, Tenpay
Source: Austrade in-house research, 2015
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 27 28 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS PROTECT AND MANAGE YOUR INTELLECTUAL PROPERTY
The first step for any company considering selling Australian merchandise in China is to register their trade mark immediately
IDENTIFYING IP VIOLATIONS
Common types of intellectual Whether outsourced or conducted Companies can also pay RMB property (IP) violations in China in-house, most companies adopt 800 to Chinese Customs include infringement of copyrights, measures to proactively search to have them monitor their trademarks, patents and design. the internet for all known kinds trademarks and contact them if Specifically, similar domain names of violations, including domain any violation is discovered. It is and website styles are among name squatting, unauthorised increasingly common to send the most frequent complaints sales, look-alikes, free-riding or staff to corporate functions and made by foreign companies trying actual sales of counterfeits. trade fairs, where infringements to enter the Chinese market. are commonly spotted.
REGISTERING A TRADEMARK
In China, a trademark (except adequate protection under relevant of the application within nine for very well-known ones) offers Chinese trademark classes. months from the date of receipt of little protection without pre- the required documents. Further, registration. It is therefore essential Registering a trademark costs RMB companies should ensure that to register any key trademarks 800. However, foreign companies they have documentation (such and logos with the trademark are required to entrust a trademark as an international trademark bureau of the State Administration agency to handle the registration, filing certificate, in both English for Industry and Commerce which means there is an additional and Chinese) showing that they (SAIC) as soon as possible and agency charge ranging from RMB own their registered IP in China. seek the advice of a lawyer or 500 to RMB 1,000. The trademark trademark agent to guarantee bureau will complete examination
REMEDYING IP VIOLATIONS
In response to a violation, will be applied to vendors of businesses within China can call the counterfeit merchandise. National Copyright Administration at 12390 or the Intellectual Property Prior to taking any formal legal Office at +8610 6235 6655. At action, a company must first contact present, these hotlines do not offer SAIC, then hire a specialised an English-language service. lawyer who can analyse the case ‘Never go into battle to determine whether the defence before casting weapons’ Brands and merchants who find is sufficiently justified. Litigation Chinese Proverb offending products or content costs can run up quickly, depending on any of Alibaba’s platforms on the type of infringement, may submit their findings via its and employing an international IP infringement complaint and IP firm tends to be costly. take-down system. Penalties
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 29 GET YOUR GOODS TO CHINA
The four main pathways to export merchandise to China for sale on e-commerce marketplaces are summarised in Table 5. The optimal pathway is influenced by the regulatory procedures that apply to a product, nature of the product (e.g. size, value and freshness) and business model of the selected e-commerce marketplace.
Table 5: Export pathways
Customs Pathway to Shipping Consignment Consignee Marketplace and product Suitable for market method size clearance
• New to market products International Approved Direct to • Small items postal and Individual End user cross-border Cross-border consumer • Low turnover, high courier marketplace value items
Consolidator managed • New to market products Bonded shopfront Consolidated Local agent • Large items warehouse + Sea or air freight Cross-border or small or partner • Medium turnover, drip-shipping Approved medium value items cross-border marketplace
Online • Established brands Distributors hypermarkets Conventional All duties, VAT • High turnover, low to Sea or air freight Bulk Online Cold-chain distribution and quarantine high value items hypermarkets equipped • Fresh and frozen food specialty sites
Australia- Sales via third Consolidated based agents All duties, VAT Domestic Any Any parties or bulk of marketplace and quarantine or distributor
Source: Austrade in-house research, 2015
30 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS CROSS-BORDER SALES: DIRECT-TO-CONSUMER AND BONDED WAREHOUSE DRIP-SHIPPING
Cross-border sales are defined Shanghai, Hangzhou, Ningbo, certain products under China’s as the direct import of goods Zhengzhou, Chongqing, Guangzhou Luggage and Postal Tax Policy. from outside the customs territory and Shenzhen Qianhai.14 of China, utilising special pilot Under this policy, combined total channels, known as cross-border The primary advantages of cross- import taxes (import duties, value- e-commerce platforms, and border sales are the reduced added tax and consumption tax) based on the preferential policies import taxes and product apply to personal purchases15 of bonded zones in seven cities: compliance checks applied to of the following products:
Table 6: Import taxes on cross-border sales (personal purchases)
10% Food (including healthcare products), underwear, shoes
20% Suitcases, leather products, electrical appliances
30% Watches, golf-related products
50% Cosmetics, skincare products
Source: General Administration of Customs, 2015
The calculable luggage and (see pages 40-41) are exempted directly to Chinese consumers. (A postal duty is not charged if under the following conditions: range of third-party service providers the cost of goods is less than are listed on pages (58-61). • The exported product conforms RMB 50. By comparison, regular For example: import duties, value-added tax with domestic product and consumption tax applied to standards applicable in the exporter’s home market. • healthcare products are not merchandise imported through required to carry China’s mandatory traditional means can add up to • The exporter possesses a retail ’Blue Hat’ certification. 150 per cent, especially for luxury or trading licence in its country of origin, and either owns the brand • infant formula does not need to be items. (Information on the taxes manufactured by a Certification and other regulatory procedures or is an authorised distributor of the products in question. and Accreditation Administration applied to regular exports of a (CNCA) accredited factory. range of popular Australian items • The exporter complies with Chinese can be found on page 42). consumer laws, offers Chinese- language customer support, provides Furthermore, normal quarantine a way to handle customer returns in and other compliance testing China and arranges overseas shipping
14. Shenzhen Qianhai is yet to determine the eligible e-commerce platforms for its pilot cross-border trade. Authorities are looking to expand the pilot scheme nationwide in the near future. 15. Defined as orders of two or more products with a total value under RMB 1,000 (RMB 800 for goods from Hong Kong, Macao and Taiwan); or an order of one product of any value
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 31 CROSS-BORDER SALES BY THE NUMBERS
number of number of cross- ENTERPRISES 18 border SHOPPERS ENGAGED in in China 2,000 cross-border sales million
percentage of CHINESE SHOPPERS who have 39% purchased from Australia
US$118.8 million number of survey value of cross-border goods respondents who cited imported between July 43% long delivery times as a 2013 and November 2014 problem with CROSS- BORDER SALES //////////////////////////////////////
RMB 1 trillion share of cross-border estimated size of the 78% transactions made via cross-border market MOBILE PHONES in China by 2018
Source: China Internet Watch, General Administration of Customs, Tmall Global 2014
32 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS These preferential policies result bonded warehouse in China (via QR sticker) and dispatch the in lower costs (estimated to be (available through the Victorian goods to a domestic courier. 20 to 30 per cent cheaper than Employers’ Chamber of Commerce physical stores) and faster product and Industry (VECCI) and Premium These services are delivered clearance and dispatch times (one Australia Foods), or via express through their own e-commerce to two days, versus up to 30 days mail delivery (available through stores (such as kuajingtong. for bulk commercial shipments). Australia Post’s service with Tmall). com), or through a government- For these reasons, cross- approved arrangement, with around border sales are conservatively Orders are processed by designated 2,000 third-party e-commerce estimated to double in 2015. e-commerce trading platforms. marketplaces licensed to handle These platforms, usually set up cross-border transactions, such Cross-border merchandise can be and maintained by a state-backed as Tmall Global or JD Worldwide. sent to China as a consolidated or licensed company, handle shipment for dispatch from a customs clearance, track-and-trace
Table 7: Examples of approved platforms and e-commerce marketplaces
Location Licensed cross-border trading platform Approved partner e-commerce marketplace
Shanghai Free Trade Zone kuajingtong (跨境通) amazon.cn, yhd.com
Ningbo kuajinggou (跨境购) alldaycn.com, ikjtao.com
Hangzhou kjeport (跨境一步达) Tmall Global, yintai.com
Zhengzhou National Economic and Technological Development Zone e-maoyi (e贸易) wgyp.com (Henan-bonded logistics centre)
Chongqing bonded zone cqkjs (重庆跨境贸易电子商务服务网) igetmall.net, 365hele.com
Guangzhou Top Ideal SCM (卓志供应链) JD Worldwide
Source: Austrade in-house research. Information current at February 2015
Credit: Amazon China
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 33 CASE STUDY: BELLAMY’S ORGANIC
Bellamy’s Organic flagship stores on Tmall (above) and Tmall Global (right)16
Bellamy’s Organic, a Tasmania-based organic infant food company, entered the Chinese market a decade ago and is well established in both online and offline channels. Products that have been designed to comply with organic and other certification requirements are sold through regular trading and sales channels. By establishing a flagship store on Tmall Global and taking advantage of China’s cross-border e-commerce policies, Bellamy’s distributor is able to directly sell to consumers infant nutrition products which meet Australia’s domestic requirements only.
CONVENTIONAL DISTRIBUTION
The majority of imported ship full container loads directly entry strategy that complements products sold in online malls and to the warehouses of integrated and drives offline distribution. hypermarkets in China are handled e-commerce marketplaces, For example, many consumers by conventional distributors, who are such as online hypermarkets use smartphones to read online experienced in managing customs and specialist websites. For product reviews and promotional and quarantine procedures, storage this to occur, an e-commerce materials before finalising an in- and distribution of merchandise to marketplace must have the store transaction. User-generated both online and offline retailers, such necessary import licence (e.g. feedback from online channels as department stores, supermarkets dairy import licence). All remaining can help popularise a product and convenience stores where the distribution is managed through the in offline markets, or direct an vast majority of retail sales occur. marketplace’s internal network. exporter to areas where product refinements are needed. For high turnover items, such An online sales channel should as infant formula, exporters can form part of a wholistic market
16. http://bellamys.tmall.com/?spm=a1z10.3-b.1997427721.d4918089.p5cUGg and http://bellamyshk.tmall.hk/shop/view_shop.htm?spm=a220m.1000858.0.0.eNEdDW&scm=1048.1.1.12&rn=b35f833f0398ac8231d008b7b85ca93e both accessed 29 March 2015
34 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS ONLINE VERSUS OFFLINE: MARKET ENTRY FOR AUSTRALIAN FOOD
Figure 6: Sales channels of packaged food and beverages in China
Health food shops/online shops/ Other food direct selling/ other groceries 2.5% 16.3%
Hypermarket Supermarket 17.9% 40%
Convenience stores/ food groceries 23.3% Source: Euromonitor, 2013
Online sales form only part of traditional means of distribution, associated with online shoppers, a comprehensive market entry such as the food service sector. particularly for undifferentiated strategy. According to Euromonitor, there are products. ‘Much of the recent more than 24,000 fast-food chain turnover growth in online retail As shown in Figure 6, online sales outlets and more than 30,000 chain has been from bargain hunters of food and beverage account hotels in China. Such outlets have who easily switch brands once for no more than 2.5 per cent of modern procurement practices promotions become less attractive,’ national food sales. Of this amount, and are attuned to the quality says Vision Management heavy bulk products such as rice, demands of their customers. partner Frank Gibson. ‘It would cooking oil and bottled beverages be dangerous to view an represent a lion’s share, with a Xavier Naville, a partner at Vision online presence as a universal sizeable amount of chocolate, Management Consultants, says solution for a China entry.’ fresh and dried fruit and other that China’s expansive third- snack food also sold online. tier cities are often a mistakenly In China, as elsewhere in the world, overlooked source of sales sustained profitability is built on For smaller exporters, online sales opportunity for food exporters. communicating value and striking can be a cost-effective means to ‘There are over 600 major cities the right balance of interests establish a sales footprint in China, behind the main first-tier centres between exporter, distributor and particularly for niche products in China. They’re the ones where retailer. ‘If you want to build a not traditionally available in China consumers have fewer choices brand, and get any real volume, you where educating consumers of brands. In the main cities, it’s a still need to be able to effectively through mass-market advertising cage fight between all importers.’ build brand, communicate with can be prohibitively expensive. consumers and defend pricing. Working with offline distributors This requires investment and Companies looking for high also helps to avoid the type of capability,’ says Gibson. turnover need to look towards more price hypersensitivity that can be
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 35 SALES VIA THIRD PARTIES
A consolidator is a shipping and Australia-based buying agents are Matt McKenzie from the Export Group distribution agent who consolidates becoming an increasingly popular advises that it is critical to coordinate smaller consignments into larger ones form of international procurement between your online channel and to reduce overall transportation costs, for Chinese enterprises. A buying physical stores. ‘We have successfully particularly for small or trial shipments. agent takes ownership of the used a couple of key strategies to product and handles the export manage these challenges,’ McKenzie Once cleared by customs and China and distribution process. This says. ‘Firstly, we recommend working Inspection and Quarantine (CIQ), includes the Australian buying with trusted partners in both channels goods are released to a distributor offices of Chinese distributors that will respect your pricing strategy. or retailer, or held in a bonded and online hypermarkets, as Secondly, we suggest offering unique warehouse until an order is placed. well as sites selling goods and pack sizes in the online channel that services to visiting Chinese cannot be found in the physical world. Shared expenses such as an tourists (see box below). Thirdly, in either channel it is critical to online shopfront are also offered not “undersell” your brand by offering by some consolidators, making Unofficial buyers include small, it too cheaply. Although there can this a cost-effective means for unauthorised traders buying in be a short-term volume gain, the managing e-commerce logistics. Australia at retail prices and selling opportunity cost of not developing Australian companies operating via their own shopfronts. For this a viable pricing strategy is huge.’ under this model in China reason, many Australian exporters include Premium Australia Foods, may be surprised to learn that their Sanitarium, for its range of cereal VECCI Export Services, Noah’s products are already available in products, made a clear distinction Group and Digital Pantry. China. A simple search on between which product sizes would Taobao.com will indicate if a be sold online and which would be product is available online in China sold in physical stores. Larger pack sizes are sold via the online channel: this allows the product to be sold at a profitable rate, which would not INSIGHT: ONLINE STRATEGY have been so easy with smaller pack BEGINS AT HOME sizes (as packing and shipping was included in the online consumer Australia received close to 800,00017 visitors from China in 2014, an price). Over about 12 months, online increase of more than 10 per cent over 2013. Currently there are more sales of Weet-Bix developed at than 140,00018 Chinese students studying in Australia, accounting such a rate that it was possible for for 26.6 per cent of all foreign students. About 387,400 permanent the company to expand sales into residents and citizens of Australia were born in China, according to the second and third-tier cities that would 2011 census19. not have been cost-effective or even physically possible in traditional retail. Shopping is an important part of the Australian experience for any Chinese visitor. The opportunity to encounter products at the point of production – such as during factory tours or cellar doors – can be a very powerful means of promoting your brand identity in mainland China.
Tools such as Dianping and Alipay allow Australia-based merchants to target local Chinese users and gain insightful feedback. News of attractive products travels fast through social networks, and can result in consumers taking it upon themselves to trade your products via cross- border and C2C channels. Knowing that your product is already trading in China is a positive sign of your market potential.
In 2015, China’s leading online travel agency, Ctrip.com, launched a shopping service purchase products in RMB for collection at hotels or airports.
17 Tourism Australia, Visitors by country of residence, September 2014 18 Department of Education, Monthly Summary of International Student Enrolment Data, September 2014 19 Australian Bureau of Statistics, State and Territory composition of country of birth, 18 December 2013
36 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS DISPATCHING YOUR GOODS IN CHINA
Improvements in the availability every month in 2014 in Shanghai of these parcels were online and cost of truck and last-mile alone, with the average resident shopping orders. Last-mile ‘kuaidi’ logistics services have helped spending US$122 a year on delivery drivers on electric- spur the growth of e-commerce courier services.20 It is estimated bikes are a common sight in in China. More than 100 million that between 40-60 per cent every major Chinese city. parcels were reportedly delivered
Figure 7: Delivery options and times from Australia to China
PRODUCT CLEARANCE THROUGH ‘CROSS-BORDER’ PORT 6-48 HOURS.
POSTAL AND PARCEL CLEARANCE
1 - 7 DAYS 12 - 48 HOURS CONSUMER’S RESIDENCE
MANUFACTURER ACCREDITED 2 - 6 HOURS 3 PL CROSS- LOCAL BORDER BONDED 1 - 6 DAYS PARCEL WAREHOUSE DELIVERY 17 - 21 DAYS STATION
2 - 5 HOURS 2 - 6 HOURS 1 - 2 DAYS DELIVERY BOX
1 - 2 HOURS
1 - 2 DAYS REGIONAL 3PL* OR INTEGRATED E-COMMERCE DISTRIBUTION PLATFORM CENTRE WAREHOUSE
COLLECTION 1 - 2 DAYS AUSTRALIA - BASED POINT (E.G PROCURER OR CONVENIENCE CONSOLIDATOR STORE) DISTRIBUTOR OR 1 - 2 DAYS WHOLESALER WAREHOUSE
STANDARD PRODUCT CLEARANCE FOR BULK B2B CONSIGNMENTS 1-30 DAYS.
Source: Austrade in-house research, 2015
* 3PL – Third Party Logistics 20 http://www.shanghaidaily.com/metro/society/13b-parcels delivered/shdaily.shtml
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 37 E-COMMERCE MARKETPLACES WITH INTEGRATED LOGISTICS
To ensure fast and reliable delivery, hubs and tens of thousands of order items dispatched from online hypermarkets such as company-employed delivery drivers. nearby distribution centres – such JD.com and Yihaodian operate The cost of delivery is typically as consumer electronics, shoes their own logistics networks, absorbed into the retail price. and cosmetics – can be as low as complete with fully automated three hours in first-tier cities, an warehouses, local distribution Delivery times for high turnover attractive feature for consumers.
Figure 8: Market share of leading express delivery companies in China
Other 17% EMS 27% Zhongtong (ZTO) 6%
Yunda 8%
Yuantong (YTO) 12% Shunfeng (SF) 20% Shenfeng (STO) 12%
Source: Credit Suisse, Sino Hotspot Series: Ecommerce Logistics, May 2014
THIRD-PARTY LOGISTICS PROVIDERS
Domestic courier companies marketplace like Taobao. Fees are prices from Shunfeng Express provide warehouse-to-door delivery typically no more than RMB 12 for in December 2014. Discount services for companies operating a intra-city deliveries below 1kg. companies such as Yunda offer stand-alone e-commerce website services for as little as RMB 5. or independent shopfront on a Table 8 shows indicative
Table 8: Shunfeng delivery rates - December 2014
Same-day Express Economy Cash-on- Origin Destination Insurance 1kg 10kg 1kg 10kg 1kg 10kg delivery Shanghai Shanghai - - ¥ 12 ¥ 30 - - Yes Yes Shanghai Beijing ¥ 150 ¥ 420 ¥ 22 ¥ 112 ¥ 18 ¥ 63 Yes Yes
Shanghai Xinjiang - - ¥ 24 ¥ 204 ¥ 20 ¥ 110 Yes Yes
Shanghai Shenzhen ¥ 150 ¥ 420 ¥22 ¥ 139 ¥18 ¥ 99 Yes Yes
Source: SF Express
38 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS STORAGE, WAREHOUSING AND ORDER FULFILMENT
Marketplaces operated by the third-party providers include order is available. Several Australian Alibaba Group (Tmall, Taobao) fulfilment, pick-and-pack, store companies also offer warehousing have an accredited Operational operations, warehouse management and fulfilment services in China. Service Providers programme. and tracking. A directory of Services provided by these qualified service providers (Mandarin only)
COLD-CHAIN LOGISTICS
A relatively underdeveloped service Fierce competition and a desire temperature-critical products. Third- a decade ago, cold-chain logistics to provide customers with an party logistics companies such in coastal China is a sophisticated unbroken cold-chain have as Shunfeng Express also offer a sector. Temperature-critical foods encouraged online hypermarkets last-mile cold-chain delivery service. can be delivered reliably door-to- and specialty sites to establish their door within major cities, where own chilled warehouses and fleets demand for fresh and frozen of variable temperature delivery foods is outpacing the capacity vehicles. These marketplaces are of established infrastructure. ideal partners for exporters of
REVERSE LOGISTICS
Managing reverse logistics is to 25 per cent of online orders experienced agent can also provide important to ensure effective are returned, with reasons ranging assistance for managing returns. operations and attract and retain from incorrect clothing size to Non-faulty goods are typically customers. Most e-commerce concerns over product authenticity. repacked and re-sold. Refer to marketplaces allow returns of page 43 for additional information goods within seven days of Online hypermarkets can collect on China’s consumer laws. purchase. The China Industry returned goods for the vendor Research Network estimates up and capture buyer feedback. An
CASE STUDY: PELORIS GLOBAL
Australia-based company Peloris Working with a trusted local Global Sourcing worked with NSW cold-chain delivery partner, Dairy Connect and the Chinese NSW milk is now being sold on import authorities over 12 months Yihaodian, JD.com and Tmall.com to develop a cold-chain export across East China. solution for Australian fresh milk that streamlines customs and A QR code is applied to each bottle quarantine procedures without to provide consumers with added compromising China’s very stringent assurances about the quality. food health and safety regulations.
Each bottle has a unique QR code.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 39 UNDERSTAND KEY REGULATIONS
PRODUCT REGISTRATION, INSPECTION AND QUARANTINE PROCEDURES
All goods imported into China must subject to automatic licensing – of origin, specifications, quantity/ pass through a series of commodity which, contrary to expectation, weight, total value and expiry date. inspections and meet certification needs to be applied for with the requirements, after which they contract of imported goods. China places especially strict require a China Inspection and restrictions on imports of dairy Quarantine certificate for their use All types of imported food need products, pet food and agricultural and sale in China. Subject to their to obtain a Sanitary Certificate products. Imported milk (UHT nature, goods on arrival require a issued by the China Inspection milk, fresh milk etc.) needs to go physical inspection and a safety and Quarantine Bureau and through quarantine inspection and test (e.g. for the presence of toxins). undergo inspections carried out approval procedures and acquire Goods must be accompanied by by the Administration of Quality a Quarantine Permit on Imported formal certification recognised by Supervision, Inspection and Animals and Plants (QPPA). China’s the Chinese government. Customs Quarantine (AQSIQ). The AQSIQ Regulation on Registration for brokers or import agents (including manages a registration system for Foreign Establishments Intended e-commerce procurement overseas manufacturers of imported to Export Foods to China also offices) provide valuable advice food and a mandatory record- requires that processing facilities specific to each product. For filing system for all exporters (or for certain foods, including dairy, an overview, see Table 9. export agents) of food to China. meat, egg and bee products, be pre-registered prior to export. Generally, China classifies imports Documents required for customs into three categories: permitted, clearance vary according to Lastly, exporters dealing in dairy restricted and prohibited goods. The different products. However, certain products, as well as agricultural majority of goods, including milk documents are required for all types products such as olive oil and (fresh and powdered milk), frozen of imported food. These include frozen meat, will also need to go meat and vegetable oil, fall under bills of landing, invoices, packing through record-filing procedures the permitted category. Imports of lists, official health certificates from with the China Chamber of these goods are monitored by the the export country and the relevant Commerce of Foodstuffs and Ministry of Commerce (MOFCOM) AQSIQ inspection certificates. Native Produce, a subordinate via an automatic licensing system. Exporters need to report product organisation under MOFCOM. MOFCOM and Customs jointly details to the AQSIQ including issue an annual catalogue of goods the product name, brand, country
40 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS CHINA FOOD AND DRUG ADMINISTRATION
Imported cosmetics, medicines commonly referred to as the and vitamins are required to obtain ‘blue hat’ mark, and contains approval from the China Food the characters ‘保健食品’ and Drug Administration (CFDA), (supplementary food) written in the national-level certification a blue font with a standard code authority. Since 2003, vitamins beginning ‘国食健字’ (see image and supplements have also been at left). The application procedure required to obtain an additional generally takes between five mark from the CFDA. This is months and two years.
PRODUCT STANDARDS
Chinese product certification and recommended standards. imported products listed in the standards are to a large extent Mandatory standards are prefixed CCC product catalogue. Currently aligned with the European GB, while recommended standards this covers 159 product types in 23 International Standards Organization are prefixed GB/T. DB standards categories, including toys, electronic and American Standards for Testing are usually applicable to individual goods and household appliances. and Materials, and are administered provinces and used as a testing In practice, obtaining a CCC mark by the Administration of Quality ground for future national standards. for your product can take 60 days Supervision, Inspection and to one year to complete. Testing for Quarantine (AQSIQ). Standards are These standards are enforced via CCC approval can only be carried classified into four types: national the China Compulsory Certification out by China Quality Certification (GB), industrial (HB), provincial or (also known as CCC or 3C), a Centre – approved laboratories local (DB) and enterprise (QB). GB safety mark required for both located in China, and requires the standards are divided into mandatory domestically manufactured and submission of a product sample.
LABELLING
All products sold in China must be for food products must contain to contain their relevant quality affixed with labels or documentation the net weight, list of ingredients, standards such as GB, HB or QB. in Chinese. The label may also address of the Chinese distributor, contain foreign text, but its Chinese date of production and expiration MOFCOM and Chinese Customs characters must be bigger than the date; while those for cosmetics jointly issue an annual catalogue foreign ones. Product information must contain the product’s quality of goods subject to automatic must be explicitly indicated, certificate information. Additionally, licensing, which must be applied including the product name labels for pre-packaged food, for at the same time as the and country of origin, as well as medicine and cosmetics need contract of imported goods. the address of the distributor or to be recorded with the CFDA. importer registered in China. Labels Labels for certain goods also need
TARIFFS, DUTIES AND OTHER REGULATORY PROCEDURES
Table 9 summarises major import is provided as general reference on requirements that apply to regulations and duties applicable only and other requirements may the import of Australian food, to 25 selected products. Please apply. Seek professional advice please refer to the Department of note that CIQ testing timeframes from a customs broker before Agriculture website at are indicative only. This information exporting. For further information www.agriculture.gov.au/export.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 41 Table 9: Regulations, import procedures and taxes for 25 selected products.
Regulations and procedures Duties and taxes
Export Top 25 AU Export Establishment CIQ • Certification and approval VAT Tariff Cons' products Health Cert registration testing tax
• Sanitary certificate 1 UHT milk • Quarantine Licence on Imported Animals and Plants 20 days • Certificate of origin 17% 15% 0 • Automatic import licence • Sanitary certificate 2 Fresh milk • Quarantine Licence on Imported Animals and Plants 7-11 days • Certificate of origin 17% 15% 0 • Automatic import licence
3 Infant formula • Quarantine Licence on Imported Animals and Plants • Automatic import licence 17% 10% 0 4 Yoghurt • Quarantine Licence on Imported Animals and Plants 17% 10% 0
5 Fruit and veg 5 days • Phytosanitary certificate 13% 10-13% 0
6 Fresh and • Quarantine Licence on Imported Animals and Plants frozen meat 20 days • Automatic import licence (for pork) 13% 23% 0
7 Seafood • Quarantine Licence on Imported Animals and Plants 12- • Sanitary certificate 13-17% 20% 0 8 Wine 8 days • Sanitary certificate 17% 14% 10% 9 Spirits • Sanitary certificate 17% 10% 0 10 Beer • Sanitary certificate 17% 0 0 Juice • Sanitary certificate 11 and other 15 days • Certificate of origin 17% 20- 0 beverages • CIQ label 35% • Certificate of origin 12 Honey 20 days • Quarantine Licence on Imported Animals and Plants 13% 15% 0 • Sanitary certificate
13 Vitamins and • Blue Hat CFDA supplements 130 days • GMP 17% 4-20% 0 • Certificate of origin 14 Furniture 6 days • Phytosanitary certificate 17% 0 0 Clothing and 15 accessories 3 days 17% 0-25% 0 16 Toys • CCC 17% 0-15% 0 • CCC CFDA CIQ label • Certificate of Inspection and 17 Beauty and 6.5- 0- personal care 2-5 months Quarantine of Inbound Goods 17% 10% 30% • Certificate of origin • Sanitary certificate Outdoor 18 and sporting 20 days 17% 0 equipment 10-16% Home 19 improvement 20 days 17% 10% 0 • Quality certificate 20 Jewellery • Certificate of origin • Customs clearance of entry commodities 17% 35% 10% (for rough diamonds)
21 Packaged snacks • Sanitary certificate 13-17% 25% 0 • MOA • Quarantine Licence on Imported Animals and Plants 22 Pet food • Certificate of Inspection and 13% 15% 0 Quarantine of Inbound Goods • Certificate of origin 7.5- 23 Pet care 17% 25% 0 • Sanitary certificate • Phytosanitary certificate 24 Olive oil 15-20 days • Certificate of origin 13-17% 10% 0 • Certificate of analysis • Automatic import licence
25 Cheese • Quarantine Licence on Imported Animals and Plants 17% 20% 0 15 days • Automatic import licence
42 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Credit: JD.com
COMPANY TAXES
An e-commerce tax was introduced other foreign-invested enterprises MOFCOM is currently preparing in China in 2013 following a in China, including a corporate administrative regulations for MOFCOM announcement that income tax (CIT) of 25 per cent online retail businesses which the country’s tax laws would apply and a value-added tax (VAT) of 17 aim to standardise the payment uniformly to traditional and online per cent or business tax of five per of e-commerce tax. The relevant enterprises. The tax rate applicable cent, depending on the nature of tax rates and payment rules are to online businesses is currently the goods or services in question. expected to be released in 2016. the same as that applicable to
CHINA’S CONSUMER PROTECTION LAWS
China implemented a revised • custom-tailored items commodities or receiving Consumer Protection Law in March • fresh or perishable goods services through the platform. 2014 for items sold via the internet, television, telephone and mail order. • digital products downloaded In cases of commercial fraud, Consumers have the right to return online or audio-visual products compensation of up to three unpacked by the consumer goods within seven days from the times the original price of the date of receipt and the seller has • delivered newspapers product or service charges to refund the amount paid by the and periodicals. paid by the consumer may be consumer within seven days. Online sellers are required to refunded, along with a minimum provide authentic and complete fine of RMB 500. Where defective To prevent digital consumers from details of their products and/or products have caused injury abusing their rights and unilaterally services to online shoppers. to human health or resulted in terminating contracts without proper death, business operators shall reason, the Consumer Protection Online consumers have the compensate consumers for the Law stipulates that the seven- right to demand compensation economic and psychological day unconditional return is not from the e-commerce platform losses thereby incurred and pay applicable to the following goods: if their rights or interests have punitive damages of up to twice been infringed when purchasing the amount of those losses.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 43 ESTABLISHING A LEGAL ENTITY IN CHINA
Foreign merchants seeking to will describe its legal range of enterprises selling clothes and establish their own online store commercial activities in China. accessories need to have a are required by Chinese law to first minimum registered capital of RMB set up a legal entity in China; only When setting up a company, you will 1 million to be listed as a corporate then can they create an online need to invest a minimum amount vendor on Tmall, and a minimum version selling the same range of of registered capital, determined of RMB 500,000 is required for products. The process is the same on a case-by-case basis by the enterprises selling cosmetics on for opening a shop on a Chinese AIC based on the company’s JD.com. These threshold levels domestic marketplace such as Tmall proposed business scope. For can vary greatly between different or JD.com. Prior to registering on a FICE, the minimum amount platforms and product types. the site, vendors are required to of registered capital is generally show their registration certificate, around RMB 500,000 (A$98,200). A foreign-invested enterprise business licence, the Chinese ID of seeking to provide services to other the company’s legal representative Companies are strongly encouraged trading parties on its own online and company bank account details. to hire a legal services provider platform will need to apply to the for the corporate establishment Ministry of Industry and Information A foreign-invested commercial process, which takes four to six Technology (MIIT) for an Internet enterprise (FICE) – basically a limited months to complete. Costs vary Content Provider (ICP) licence. liability company whose business depending on the service provider This requirement is waived for licence includes import and export and complexity of the application. companies engaging solely in the – is the ideal vehicle to engage in online sale of their own products imports and retail sales in China. Every company established in (including service products), without China is required to designate a providing additional internet services. To set up a company in China, legal representative and register They will still need to conduct an foreign companies need to obtain this person with the AIC. The legal ICP filing if any relevant website name pre-approval from their local representative is fully empowered content is hosted in China. Ministry of Commerce branch to bind the company, and his and a business licence (one of or her name is recorded on the Notably, an ICP licence can only the basic documents of corporate business licence and in the be issued to Chinese domestic registration in China) from the company’s Articles of Association. enterprises or joint ventures with local Administration for Industry foreign investment capped at 50 and Commerce (AIC). When Some online marketplaces set per cent and minimum registered applying for a business licence, minimum capital threshold levels capital of RMB 10 million, except the company will be asked to for enterprises wanting to be in certain areas such as the define its business scope, which registered as vendors. For example, Shanghai Free Trade Zone.
E-COMMERCE IN CHINA - A GUIDE FOR AUSTRALIAN BUSINESS
44 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS CHINA-AUSTRALIA FREE TRADE AGREEMENT (ChAFTA)
Prime Minister Tony Abbott and President Xi Investment Minister Andrew Robb and Commerce Jinping announced the conclusion of negotiations Minister Gao Hucheng signed a Declaration of Intent for the China-Australia Free Trade Agreement to work towards signature of the Agreement. The (ChAFTA) on 17 November 2014, during President Free Trade Agreement was signed in June 2015. Xi Jinping’s state visit to Australia. Trade and
Credit: David Foote, Auspic
Pictured (L-R): Commerce Minister Gao, President Xi, Trade and Investment Minister Robb, Prime Minister Abbott
Upon entry into force, ChAFTA will provide As one of only a handful of developed countries significant new opportunities for business by to have concluded a free trade agreement with improving or securing Australia’s competitive the world’s second largest economy, Australian position in the large and growing Chinese market. companies are uniquely placed to leverage the benefits of ChAFTA through e-commerce channels.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 45 SECURED OUTCOMES Outcomes set to benefit Australian companies include: • 95 per cent of Australia’s goods our largest agricultural export • ChAFTA’s built-in agenda provides a exports (by value) to China market, eliminating tariffs on meat, platform to deepen commitments will enter duty-free on full dairy, wine and processed foods and expand market access implementation of the agreement to take advantage of China’s • Nearly all of Australia’s future economic reforms. • ChAFTA will improve the manufacturing exports will competitiveness of Australian enter China duty-free within agricultural exports to China, four years of the agreement
Key outcomes relevant to many of Australia’s most popular online products in China include the removal of tariffs: • on a range of processed foods • of 12 to 25 per cent on • on seafood, including 15 and 14 per including biscuits, cakes, tinned fruit, beef over nine years cent duties, respectively, on rock most fruit juice and pasta within four lobster and abalone, over four years • of 14 to 20 per cent on years, with honey and orange juice wine over four years • of two to three per cent on five and seven years respectively barley, sorghum and oats on • on horticultural products, ranging • on Australian dairy products day one of the agreement. up to 30 per cent, mostly within four (which can be as high as 20 per years, with oranges and all other cent) within four to 11 years citrus fruits within eight years
ChAFTA OUTREACH PROGRAMME The Government is running an Supported by Austrade Trade Information on the next FTA Australia-wide outreach programme Commissioners and officials outreach event can be found aimed at assisting Australian from the Department of Foreign at http://www.austrade.gov.au/ business to better understand the Affairs and Trade and other Export/Events/Australian-Events opportunities provided through relevant agencies, the seminars ChAFTA and other recently provide attendees with a detailed Further information on concluded trade agreements such briefing about the benefits of ChAFTA can be found at: as the Korea-Australia Free Trade the FTAs including ChAFTA, and www.dfat.gov.au/ChAFTA Agreement and the Japan-Australia practical information on how to Economic Partnership Agreement. maximise benefits from them.
46 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS BUILD AND MANAGE YOUR ONLINE BUSINESS
Credit: YHD.com
BUILDING A SHOPFRONT
Online malls provide merchants • description of the physical • evidence of the good standing with a portal to assist and govern attributes of the product of the company, including awards and certificates the design of their shopfronts, • details of its function and manage product listings and and performance • description of the packaging. orders. As these portals are only • description of the quality and This information should be available in Chinese, exporters durability of the goods seeking to develop their own accompanied by numerous customised shopfront within an • description of the input professional photos and videos. online mall are advised to employ materials used (or not used) Chinese-speaking staff or use • description of how the goods were the services of a service provider manufactured and supervised ‘You can’t launch and leave and assume your brand will succeed. experienced with their preferred • testimonials and examples Ongoing digital activity is key e-commerce marketplace. from brand ambassadors in driving brand awareness.’ • description of the company owners In working with a partner, Kate Walker, Joint Managing Director, exporters should provide the • a history of the brand and story to The Clean Food Co. following information: tell about provenance, if applicable
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 47 Figure 9: Product information sought by online consumers
Price/promotion/special offer 79%
Product feature (colour or size) 78%
Other users’ reviews and comments 69%
Brand (brand info. or background) 62%
New trends/new arrivals 53%
Tips on how to mix and match 50%
Source: Survey analysis, China’s Connected Consumers, February 2014
AUSTRADE’S TIPS • Consumer reviews and testimonials that appear ‘cooked up’ or fake are all too common and a big turnoff for savvy buyers FOR EFFECTIVE • Stand-alone consumer product websites should be updated SHOPFRONT DESIGN regularly, easy to navigate and contain professional images AND MANAGEMENT • Make sure the site can be accessed quickly via a smartphone. Hosting in Australia or the US can result in frustratingly slow load times
• Ultimately, reliability is more important than price or promotion. Ensure your product gets to your consumer as described, and within set timelines
• Ensure you are prepared to respond quickly, in Mandarin, to customer enquiries. Young shoppers are notoriously impatient
• Adopt QR codes and a complementary social media strategy to enable consumer interaction.
48 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS GETTING PAID
Most online marketplaces integrate Merchants can opt for either You can also choose to settle with third-party online payment settlement by turnover or by every week, month or quarter. platforms such as Alipay or Tenpay period. Settlement by turnover (see Table 10). Alipay, for example, means the money will be sent to The platforms listed in Table works much like PayPal, linking an the foreign company’s account 10 all use Alipay or Tenpay, Alipay merchant account to the once turnover reaches a certain as well as accept Union Pay, company’s bank account. Crucially, amount (minimum of US$5,000). Visa and Mastercard. Chinese consumers can pay for products through Alipay in RMB. Alipay can then convert the RMB Table 10: Online payment system used by major platforms into foreign currency and remit it to the company’s foreign bank Alipay Tenpay account, eliminating the need to open a Chinese bank account. The Taobao/Tmall √ exchange rate is determined by one of Alipay’s partner settlement YHD √ banks: China Construction Bank or Bank of China. Alipay charges JD.com √ a service fee between 1.8 and 3 per cent of the transaction value. VIP.com √ √ The higher the monthly transaction value, the lower the fee. Amazon √
ATTRACTING AND RETAINING CUSTOMERS
Getting your merchandise to China that two-thirds of these users in the purchase-making process. and listed on an e-commerce interact with brands to learn Research by the Boston Consulting marketplace is only half the battle. about the latest products and Group indicates Chinese With marketplaces such as Taobao services, receive special offers consumers rely more heavily featuring up to one billion items, and access customer service. on online product reviews than standing out from the crowd their Western counterparts.22 requires planning and coordination A professional marketing agent or between social media, stand- Chinese-speaking employee can An online store or product alone websites, online advertising manage these critical interactions typically receives a consumer and marketplace promotions. with customers. Mark Tanner of score between zero and five China Skinny emphasises the need for three main criteria: Managing social media to adequately train sales staff and online reviews or online agents, and provide a • accuracy of product description Q&A cheat sheet. He says that • customer service experience Social media is an extremely ‘quick and transparent responses popular form of personal to customer feedback, in a way • delivery speed. communication and information that understands the nuances of Qualitative feedback is provided sharing in China. The two leading Chinese language and culture, on the function and attributes of channels, WeChat and Sina is critical to online success.’ the product. Chinese consumers Weibo, attract 438 million and 157 are very discerning: any reason million active users per month, Managing user feedback on to suspect a product or review is respectively21. It is estimated products plays an integral part fake will be an instant turnoff.
21 https://www.techinasia.com/weibo-q2-2014-monthly-active-users-revenue-and-net-loss vw 22 BCG, The World’s Next E-Commerce Superpower, Navigating China’s Unique Online-Shopping Ecosyste, November 2011
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 49 Figure 10: Top information channels
User review on social media 39%
Friends/word of mouth 38%
E-commerce website like Taobao 36%
Brand’s official sites 35%
Media online platform 33%
Brand official news 27%
Online display ads 21%
Traditional media 20%
Celebrities 20%
Key opinion leaders 17%
Source: Survey analysis, China’s Connected Consumers, February 2014
Table 11: Examples of comments on Australian products, various online marketplaces, December 2014
Feedback Product Price Positive Negative
• Good product, trustworthy Cosmetic RMB 698 (A$130) • Feels good, will buy again Nil sheep oil • Just like the one I bought at Expo, good product
• Good product to use in winter I can tell it is fake Facial cream RMB 26 (A$5) • It is cheap, why not I had an allergic reaction, it must be fake • Smells good Smells bad
• Heard it is No. 1 in Australia, taste good RMB 179 (A$33) Tastes different from the one Carton of beer • It is very light, I like it 375ml X 12 bottles I bought in Australia • Great foam, I like it
• Baby loves it, will buy again Infant formula RMB 188 (A$35 ) • I trust the brand Nil • Good quality, good brand
• Very satisfied, tastes great RMB 109 (A$20) Honey • A bit expensive, but worth the price Nil 500g • Love it, will buy again
• Tastes good Smaller than I expected, not very juicy RMB 99 (A$18) Oranges • Fresh Average 20/bag • Sweet Expensive
Source: Austrade in-house research, 2015
50 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS COMPANY WEBSITE
Even with a presence on Results from a China State Industry and Information. You will e-commerce platforms and social Administration for Industry and then receive a unique Internet media, it is recommended that Commerce (SAIC) survey released Content Provider (ICP) code exporters maintain mobile-friendly on 23 January 2015 discovered assigned to your website, indicating Mandarin language pages on their that across the major e-commerce that it has been approved. The Australian website, or develop a platforms, only 57.8 per cent of approval process generally takes new standalone website hosted goods were identified as authentic. three to 20 days to complete. in China for faster loading speeds ‘Adding Chinese pages to your .com. and better search optimisation au will go a long way to assisting Companies looking to allow third by Baidu, the dominant Chinese- build consumer brand trust, and parties to use their website as an language web search service. we also encourage businesses to online platform (for example, affiliate sell directly from their own home- marketing) need to apply for an ICP Robert Burns, General Manager company website,’ says Burns. licence as well. In this case, the of China Sales Co., explains that company must have a minimum company websites help build Registering a website in China is registered capital of RMB 10 million consumer trust. Given the high the same as in other countries: you and be party to a joint venture with prevalence of fake products need to buy a domain name and a Chinese partner. Except within available online in China, customers obtain web hosting. Domain names very restrictive cases, ICP licences often will look to official company in China are quite inexpensive, can only be issued to Chinese websites to confirm product and about A$10 a year for a .com domestic enterprises or joint company information. ‘Chinese domain or A$180 for a five-year ventures with foreign investment consumers are tired of fakes, they com.cn domain. Specific to China, not exceeding 50 per cent. want the real product, and from however, is the requirement to the real source,’ says Burns. file a website with the Ministry of
Table 11: Examples of comments on Australian products, various online marketplaces, December 2014 ONLINE ADVERTISING
A highly developed and competitive • affiliate marketing through blogs market exists to attract the digital and other social media attention of potential customers. In • targeted user outreach campaigns. China, relying on search engines to SALE! drive unpaid ‘free’ traffic to a website Licensed digital advertising • Rather than describing or shopfront is generally ineffective. agencies have access to discount rates and can provide segment discounts as a percentage off, discounts in Chinese are McKinsey estimates annual spending analysis and ROI tracking to ensure expressed as a proportion on digital advertising in China will advertising is targeted correctly. of the original price, reach US$33 billion by 2016 and using the character 折. will become the most popular form For companies starting out in the of advertising in the country.23 Chinese market with a limited budget, Calvin Chan, chief operating • 30% off would thus be expressed as 7 折. Techniques used to drive traffic to officer of Admaster, recommends e-commerce storefronts include: search advertising as one of the most effective forms of online • Other common sales tactics • keyword searches on Baidu advertising: ‘Keyword advertising, include two-for-one deals and Taobao or Tmall both on search engines and on and limited time offers. the marketplaces themselves, • displaying ads on portals such as Sohu and video- has been shown to have some of sharing sites like Youku the best returns on investment.’
23 http://www.mckinsey.com/insights/media_entertainment/taking_the_pulse_of_chinas_ad_spending
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 51 MARKETPLACE PROMOTIONS
A cost-effective way for Australian Products and brands participating brands to find new customers in a national promotion must be is to participate in the regular manufactured in Australia and sales promotions put on by traded on established e-commerce e-commerce marketplaces. These marketplaces such as: promotions typically focus on product categories (e.g. clothing, • Yihaodian cosmetics), countries of origin and • JD.com seasonal events. For example, on 18 March 2014, Yihaodian sold • VIP.com 1.03 million one-litre cartons of • Tmall / Tmall Global UHT milk within 24 hours as part • SFBest.com of its ‘Imported Milk Guinness Record Challenge’ promotion. • Yummy77.com. New products and brands Throughout the year, Austrade are especially encouraged to cooperates with leading participate. A lead-in time of three e-commerce marketplaces to months is typically required. Image above: Food and Beverage promotion stage online promotions featuring on YHD.com in 2013 and JD.com in 2014 Australian brands and products. In addition to national and regular Past promotions have featured category sales promotions, major more than 700 Australian SKUs, sales events are timed with events generated up to 15 million in the Chinese calendar (see unique page views and grossed Table 12). In particular, November sales of several million RMB. and December see a spike in online sales (see Figure 11).
Figure 11: China monthly online retail sales, 2014
60
50
40
30 RMB Billion 20
10
0
APR MAY JUNE JULY AUG SEP OCT NOV DEC
Source: China National Bureau of Statistics
Merchants participating in category, national or seasonal promotions are typically required by marketplaces to provide discounts and free promotional products.
For the latest schedule and list of participating marketplaces, please contact [email protected] or 13 28 78.
52 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Credit: VIP.com
Table 12: National or seasonal promotions January or February Chinese New Year – the largest and most important (according to lunar calendar) > gift-giving period for families and business. February 14 > Valentine’s Day May 17 > ‘I want to eat’ food promotion on Yihaodian. June 1 > Children’s Day June > Dragon Boat Festival June 18 > 6.18 JD.com anniversary and mid-year promotion for all major platforms. August 8 > International Day on Tmall and Taobao.
Mid-Autumn Festival – the second biggest traditional gift- September or October > giving festival on the Chinese lunar calendar.
Singles’ Day – Registered trademark by Alibaba. An annual online sales November 11 > promotion targeting young single Chinese. Items are often heavily discounted.
‘Double 12’ – China’s equivalent of Cyber December 12 > Monday, featuring heavy discounts.
December 25 > Christmas.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 53 54 E-COMMERCEE-COMMERCE IN IN CHINA CHINA: - AA GUIDEGUIDE FORFOR AUSTRALIANAUSTRALIAN BUSINESSBUSINESS SEEKING ASSISTANCE
HOW AUSTRADE CAN HELP
The Australian Trade Commission – • promote international education of services to Australian exporters Austrade – contributes to Australia’s • strengthen Australia’s in growth and emerging markets. economic prosperity by helping tourism industry Australian businesses, education www.austrade.gov.au institutions, tourism operators, • seek consular and passport services. governments and citizens as they: Austrade provides information [email protected] • develop international markets and advice that can help you reduce the time, cost and risk of 13 28 78 (within Australia) • win productive foreign exporting. Austrade offers a range direct investment
AUSTRADE IN CHINA
Seeking the right advice and • Business introductions to buying Austrade’s services for exporters assistance is critical to the success managers, both in offline and are performed on a fee-for-service of doing business in China. online channels basis, starting at A$275. Austrade’s Austrade maintains a network • Feedback on the suitability of fee and other international of 10 offices in China. Austrade’s Australian products and services for marketing costs may qualify for Chinese speaking staff can provide the China market financial assistance under the exporters with market guidance • Advice on applicable EMDG and Export Finance and and access to information, regulations in China Insurance Corporation. For more promotions and referrals such as: information, please contact • Participation in online and offline [email protected] or 13 28 78. promotions and trade missions.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 55 WHAT IS EMDG?
The Export Market Development the export of intellectual property eligible export promotion expenses Grants (EMDG) scheme is a and know-how outside Australia. above A$5,000 provided that the key Australian Government total expenses are at least A$15,000 financial assistance program for The EMDG scheme: • provides up to eight grants aspiring and current exporters. to each eligible applicant. Administered by Austrade, the • encourages small and medium- Further information can be scheme supports a wide range sized Australian businesses obtained from: www.austrade. of industry sectors and products, to develop export markets gov.au/Export/Export-Grants including inbound tourism and • reimburses up to 50 per cent of
EFIC
The Export Finance and Insurance Clients for Efic services include: • Companies operating in Corporation (Efic) is Australia’s emerging and frontier markets. export credit agency. Operating • Small and medium enterprises A detailed outline of Efic services on a commercial basis, it partners (SMEs) that are exporters can be found at www.efic.gov.au with banks to provide financial • Companies in an export supply chain or by calling 1800 093 724. solutions for Australian exporters • Companies looking to expand including working capital loans, their business operations overseas guarantees, bonds, documentary to better service their clients credit guarantees, and medium- term export payment insurance.
56 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS THIRD-PARTY SERVICE PROVIDERS
The following information is organisations listed here or take of this information or the advice provided for the benefit of payment for their listing. As the received from these organisations, companies seeking assistance need for professional services which are taken entirely at the in developing an e-commerce varies depending on individual user’s discretion. For information on strategy in China. The companies circumstances, please use other service providers, or advise listed in this section are registered commercial discretion to assess on listing as a service provider with with Austrade and some have the suitability of these providers Austrade, please email provided input into this Guide. to meet your business needs. china-ecommerce@austrade. gov.au or visit www.austrade. Austrade does not endorse or Austrade does not accept liability gov.au/contactus. guarantee the services of the for any loss associated with the use
E-COMMERCEE-COMMERCE IN IN CHINA CHINA: - AA GUIDEGUIDE FORFOR AUSTRALIANAUSTRALIAN BUSINESSBUSINESS 57 AdMaster is a marketing data technology company that uses big data to help Contact Details brands measure the effectiveness of digital marketing. AdMaster offers solutions www.admaster.com.cn for third-party digital advertising verification, cross-screen reach analysis, Lavender Wang social media monitoring, e-commerce measurement and data management Associate Marketing Director – including data obtained from computers, mobile devices and digital TV. (+86) 186 1635 6425
Ajyaguru provides a customised cross-border service to help overseas brands Contact Details to sell their products on leading Chinese e-commerce marketplaces like Tmall www.ajyaguru.com Global, JD Global, Yangmatou, Meilishuo and Mogujie. With bonded warehouse Dino Sun facilities in Tianjin, Zhengzhou, Hangzhou and Ningbo, Ajyaguru’s one-stop sales [email protected] and logistics solutions provide uncomplicated, low-investment market entry with minimal registration and clearance processes.
Australia Post, in cooperation with Alibaba, provides a low-cost one- Contact Details stop service for Australian merchants to sell their branded products into http://auspost.tmall.hk/ China through its flagship store on Tmall Global: auspost.tmall.hk. Services Steven Foo – Head Business include initial market consultation, store design, product and company Development Asia translation and localisation services, local customer service and returns [email protected] (+61) 3 9106 8706 support, access to order management and fulfilment platforms, marketing and social media support and system training. At present, Australia Post does not charge subscription fees for merchants to join the program.
Baozun is China’s largest provider of ecommerce solutions for brands. They Contact Details provide a full range of services including: Ecommerce strategy, marketing www.baozun.com services, store management across brand and third party platforms, warehousing, Nicolas Zurstrassen logistics and customer service. Since 2007 Baozun has implemented complete [email protected] ecommerce solutions across Tmall, JD, Wechat, Amazon and Tmall global for [email protected] (+86) 21 6095 6000 more than 100 clients including Nike, Converse, Burberry and Microsoft.
Baozun is headquartered in Shanghai with offices in HK, Taiwan and Hangzhou. It is invested in by both Alibaba and Softbank and has a staff of more than 2000 people and more than 80,000sqm of warehousing under management.
China Sales Co. provides exporters and businesses with the essential China Contact Details digital and e-commerce sales and representative services to enable cross- www.chinasalesco.com border e-commerce from Australia to China. China Sales Co. is a global Robbie Burns – General Manager licensed partner and provider of China’s top e-commerce and marketing [email protected] (+61) 3 9221 6396 platforms including the Alipay payment system and Alibaba e-store group platforms. For enhancing digital marketing and traffic, China Sales Co. is a licensed partner with China’s biggest media company the Shanghai Media Group (SMG), and is also licensed with China’s top search engines Baidu, QiHoo 360, Sogou and Sohu. China Sales Co. also provides managed on-ground (live) in-market sales support and trade support services.
58 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS China Skinny is a Shanghai-based marketing, research and digital agency Contact Details purely focused on the China market. Building upon its roots as a market www.chinaskinny.com research company, China Skinny incorporates the latest Chinese insights and Ann Bierbower analysis into its marketing execution and recommendations for a wide range of Senior Marketing Manager industries ranging from food and beverage to investments, education, fashion, [email protected] (+86) 21 3221 0273 tourism and technology. China Skinny offers services and expertise in China strategy, consumer trends and insights, market research, brand positioning and communications, web, mobile, social media and e-commerce.
The Clean Food Co. was established to place Australian food and beverage Contact Details products at the forefront of Chinese consumer preference and demand. www.thecleanfoodco.com With strong strategic partnerships with Chinese-based distributors and Kate Walker and Margaret Harris marketing agencies, The Clean Food Co. develops individual export and Managing Directors market launch strategies, to ensure long-term success for brands in China. [email protected] [email protected] (+61) 404 009 992 Developers of the Australian Selection consolidated marketing platform in China, (+61) 416 343 062 The Clean Food Co. provides a unique and highly cost-effective gateway to the Chinese consumer market. Activated online, via mobile and social media, as well as in-store, Australian Selection is open to all Australian brands, industry associations, government bodies and organisations that share the vision of promoting Australia’s credentials as a clean, green, safe source of food and beverages in China.
Dezan Shira and Associates is a specialist foreign direct investment practice, Contact Details providing corporate establishment, business advisory, tax advisory and www.dezshira.com compliance, accounting, payroll, due diligence and financial review services Richard Cant - Regional Director to multinationals investing in emerging Asia. Since its establishment in 1992, [email protected] the firm has grown into one of Asia’s most versatile full-service consultancies (+1) 781 547 8649 with operational offices across China, Hong Kong, India, Singapore and Vietnam, in addition to alliances in Indonesia, Malaysia, Philippines and Thailand, and liaison offices in Italy, Germany and the United States.
Export Growth China is a program subsidised and run by NSW Business Chamber Contact Details in partnership with chambers across Australia to assist Australian businesses www.exportgrowth.com.au nationwide to export to China. The program has been created to reduce the Sara Cheng cost, complexity and risk for exporters to enter or expand in China. The Export [email protected] (+61) 2 9458 7341 Growth China program provides comprehensive Export Readiness and Feedback reports, promotes exporters, products, services and brands in China and matches Australian exporters with genuine Chinese importers, distributors and agents.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 59 Market Engine is an Australian based global ecommerce company. We Contact Details specialise in launching Australian brands on Chinese ecommerce platforms www.marketengine.com such as Alibaba Tmall Global and JD worldwide. Market Engine bridges the Roy Hui language, cultural and technological challenges that are typically experienced [email protected] by Australian brands doing business in China. Our innovative technology provides Australian merchants with the ability to manage their Chinese product listings in English, Australian dollars and in real-time. Our end-to-end solution also includes merchant support, customer service, site administration, platform integration, localisation, marketing, financial, logistic and legal solutions
Peloris Global Sourcing (PGS) is an Australian-owned logistics management Contact Details company connecting premium producers to rapidly expanding Asian markets. PGS’s www.pelorisglobalsourcing.com China-focused cold-chain management, ‘track and traceability’, authentication and Grant Verry anti-counterfeiting solutions are backed by a network of Asia-based professionals [email protected] proficient in regulatory compliance, customs clearance protocols and market access. They are supported in Australia by a team of process engineering, procurement, sales and marketing, and supply chain logistics specialists.
Premium Australia Foods (PAF) was created specifically for Australian food Contact Details producers. PAF brings together experienced e-commerce personnel and Australian www.premiumaustraliafoods.com food and beverage experts to offer a one-stop shop for the China e-commerce Chris Morley market, including depot collection, aggregated shipping, customs clearance, [email protected] warehousing and marketing through PAF’s own Tmall shopfront and additional online channels. This allows food manufacturers to play to their strengths while reducing the risk and capital outlay required to enter the Chinese market. PAF offers Australia’s premium food manufacturers proven access to its Chinese online sales platforms in conjunction with strategic marketing services.
Psyma Business Research China is part of a global consumer research Contact Details network spanning 18 offices in 10 countries. Psyma analyses the trends, www.psyma.com key factors, channels and audiences that can affect business success Lisa Zeng – Managing Director for fast-moving consumer goods in China. Psyma’s research combines Natacha Extier – Marketing Manger qualitative methods, such as product focus groups, with quantitative [email protected] (+86) 21 5187 1198 analysis and expert insights, and in-house online communities. These address key research areas such as product and concept evaluation.
60 E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS Headed by a team of international marketing and e-commerce experts, Quality Contact Details Brands International Direct (QBID Pty Ltd) provides a full range service to take www.qbid.com.au a company’s brand to, or extend its reach, in China. QBID is the approved George Panagios, Harry Wu, John Kilborn partner of JD.com Worldwide for Australia and New Zealand and provides [email protected] support for marketing, pricing, customer service, product security, regulatory, (+61) 3 9560 5396 online and offline promotion, as well as logistics requirements. QBID can help a business get started in the QBID store on JD.com or establish its own store. QBID’s focus is China, but its networks and expertise extend well beyond.
The Silk Initiative champions forward-thinking food and beverage manufacturers with Contact Details a desire to bring Chinese consumers the best brand and product experiences on www.thesilkinitiative.com offer. The company specialises in food and beverage (packaged goods and retail) Andrew Kuiler – Founder route-to-market planning, leveraging consumer and business insights to develop [email protected] better brand, product, packaging and retail strategies for the China market. (+86) 156 0173 3177
Think China is a Sydney-based, data-driven digital marketing consulting firm Contact Details founded in 2013 to help Australian businesses understand relationships between www.thinkchina.com.au their brands and China’s online consumers. Using actual e-commerce sales Benjamin Sun – Founder data and a native understanding of digital marketing and social media in the [email protected] Greater China region, Think China works with clients to develop informed, (+61) 2 9098 5087 localised online marketing strategies reflective of regional differences. Think China also offers exporters solutions in web development and digital marketing.
The VECCI Export Services China e-commerce platform helps Australian food and Contact Details beverage exporters overcome the hurdles of doing business in China by eliminating www.vecciexportservices.com.au a number of ‘middlemen’ in the import and distribution process. It sells products Eddie Zhao directly through www.yiguo.com, a vertical B2C food products website established [email protected] (+61) 3 8662 5234 in 2005 with more than one million registered consumer accounts and over 10,000 corporate accounts. Importation, warehousing, sales and marketing and local logistics are taken care of by VECCI Export Services and its alliance partners in China.
Workshop focuses on long-term development of brands in China by being a Contact Details one-stop shop for brand management, sales and marketing. With partners www.workshop-asia.com in Sydney, London and San Francisco, Workshop helps brands market and Hugh MacGillivray – Partner distribute by combining the power of traditional distribution with public relations [email protected] and e-commerce channels, allowing brands to align marketing spend while communicating with and collecting insights directly from consumers.
E-COMMERCE IN CHINA: A GUIDE FOR AUSTRALIAN BUSINESS 61 USEFUL TERMS: FROM ALIBABA TO ZHUIZONG
Alibaba – China’s largest e-commerce company. Pingtai 平台 – (e-commerce) platform or marketplace Alipay 支付宝– Alibaba’s proprietary online payment system. Qin 亲 – term used by Xiao’er to address customers Aliwangwang 阿里旺旺 – Alibaba’s proprietary instant messenger, used widely on all Alibaba QQ – popular multi-platform instant messaging e-commerce platforms for real-time communication application developed by software company Tencent between customers and customer service reps. Ruanwen 软文 – to invite celebrities or key opinion AQSIQ – General Administration of Quality leaders to promote products on social media. Supervision, Inspection and Quarantine. SF Express 顺丰快递 – the largest domestic logistics Baidu 百度 – China’s most-used search engine. company in China and owned by SF Holdings Group.
Baoyou 包邮 – Shipping included in the price. Shangou/ Miaosha闪购/秒杀 – a time or volume-limited flash sale. May be loss-leading or stock clearing. Blue Hat – mandatory certification and label applied to health food products. Tencent – Popular provider of website portals, software and mobile applications such as WeChat and QQ. CIQ – Bureau of Entry and Exit Quarantine and Inspection. Tenpay 财付通 – proprietary online payment system developed by software company Tencent. CNCA – Certification and Accreditation Administration of the People’s Republic of China Tuan Gou 团购 – group buying.
Daigou 代购 agent buying, whereby a third Tuihuanhuo 退换货 – product replacement or return party (often a friend or relative) purchases Weibo 微博 – microblogging site equivalent to Twitter. and dispatches overseas merchandise Weidian/Weishang 微店/微商 – a social sales Dazhe 打折 – discount, discounted. store operated on the WeChat social media Dianpu 店铺 – (e-commerce) shopfront. application, either by an individual or company.
Dianping 点评 – a popular site listing information, Weixin 微信(WeChat) – instant messaging reviews and nearby restaurants and service providers. and social media application developed by software company Tencent. Haitao 海淘 – overseas purchases (online in-store). Xiao’er 小二 – customer service representatives, Jiesuan 结算 – checkout. especially those on Taobao and Tmall.
Jingdong 京东 – JD.com. Yu E Bao 余额宝 – online savings account managed by Ali Group and connected to Alipay accounts, Juhuasuan 聚划算– an offshoot of Alibaba, used for funding purchases or earning interest. offering goods at a limited-time discount. Yu Le Bao 娱乐宝 – online retail investment Kuaidi 快递 – express delivery. service managed by Ali Group for selling Kuajie 跨界 – cross-industry cooperation shares in future film productions. to promote products or business. Yushou 预售 – presales.
Kuajing 跨境 – cross-border sales (of goods shipped from overseas). Zhanggui 掌柜 – shop owner.
Lenglian 冷链 – cold chain. Zhongchou 众筹 – crowdfunding. Paimai 拍卖 – auction.
Peisong 配送 – distribution. Zhuizong 追踪 – parcel tracking.
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