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E-Commerce in China a Guide for Australian Business

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E-Commerce in China a Guide for Australian Business 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 alternative for Australian exporters. MINISTER FOR TRADE 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
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