Entering the Chinese market for the first time!
In the first half of 2020, 2,356 new Cross-border E-commerce related enterprises were registered in China, with 637 registered in June being the highest in a single month, according to data from SkyEye（天眼查官网：https://www.tianyancha.com/）. China’s Cross-border E-commerce is expected to account for 20 percent of global retail e-commerce sales by 2023. This is a very important and indispensable opportunity for small and medium-sized enterprises who are looking to expand their business and revenue.
What’s Cross-border E-commerce?
Cross-border E-commerce refers to an international business model of which imported goods are bought through an e-commerce platform before its customs clearance, therefore all the process including: electronic payment settlement, delivery logistics and remote warehousing are done and supported by the platform.
Traditional mode of foreign trade:
Overseas goods reach Chinese consumers through five main channels: (1) Overseas factories; (2) Domestic traders; (3) Local Importers; (4) Local Distributors; (5) Retailers.
Cross-border E-commerce shopping platform:
The supply chain is greatly shortened, so that foreign businesses can sell to Chinese consumers directly, and domestic consumers can face overseas businesses directly.
Which platforms are classified as Cross-border E-commerce channels?
When the seller is an overseas individual or business, they usually choose:
Tmall Global – Alibaba’s Cross-border E-commerce platform, is focused on letting domestic consumers to directly import overseas goods. It is also one of the preferred platforms which supports overseas brands to directly reach Chinese consumers, builds brand awareness and provides consumer insight;
JD Global – On April 15, 2015, JD International officially went online, taking the business mode of “self-management + overseas merchants” done directly from overseas;
PDD Global – PDD Global is committed to integrate itself with the cross-border industrial chain to ensure that consumers can enjoy imported goods at the lowest price in the world;
Little red book international (LRBI) – The brand requirements are higher than in other platforms and only can join it if invited by the LRBI´s team, otherwise it is not allowed to have an account and sell its products;
WeChat Cross-border eCommerce – High autonomy, the seller has a large degree of freedom only limited by few platform standards.
What’s the benefits of setting up a store on those channels?
According to customs statistics, the import and export of Cross-border E-commerce in China reached reach 1.69 trillion yuan in 2020, an increase of 31.1% when compared with 2019 a sum of 0.57 trillion yuan.
We can find that in 2020, when the pandemic was raging and the economy going into a downturn, Cross-border E-commerce business is booming. In recent years, China Customs Commission has successively issued a series of tax policies, which reflects China’s encouragement and attention to standardize the Cross-border E-commerce. Considering it, our team sorted out the tax policies related to Cross-border E-commerce:
Tariff preference
The Ministry of Finance of China and the State Administration of Taxation stipulate that for Cross-border E-commerce retail imported goods imported within the limit value, the tariff rate is temporarily set at 0%; Tax exemptions for import VAT and consumption tax will be abolished, and the tax will be temporarily levied at 70% of the statutory tax payable.
No Chinese entity needed
Customs individuals or enterprises, if they want to establish Cross-border E-commerce storefront in China, do not need to set up a physical store or registered branch companies in China, keeping it as simple and convenient. Regarding the establishment of stores, any interested business can directly consult Jademond´s Cross-border E-commerce team!
Two storage modes to choose from
Cross-border E-commerce currently supports two modes: bonded import mode and direct mail import mode.
| Imported bonded | Import direct mail | |
| A place where goods are stored | Oversea location | Bonded warehouse |
| Express delivery time | The delivery time is relatively short, close to the ordinary e-commerce | Adopt the way of international logistics delivery, it takes a long time |
| Suitable for the category | Some mass commodities, such as food, drinks, milk powder and other fast consumer goods | Some luxury brands, such as high-end clothing, shoes and bags, etc |
| Advantage | Fast logistics; centralized procurement, low transportation cost | Complete categories, fewer links and low operating costs; flexible mode |
| Disadvantage | Occupied capital, limited expansion of categories, inventory risk | Slow Logistics, High cost, the overseas warehouse operation cost is high |
Bonded import mode:
It refers to having a whole batch of goods shipped to the bonded area in China to later allow customers place the order and complete the payment, the customs check the SanChan (orders, waybill, single) of the goods from the bonded area directly, which is later sent to the end customer under the supervision of the fast customs clearance.
Such as our U.K. GBFS project.
Direct mail import mode:
It refers to individual consumers ordering overseas products on designated Cross-border E-commerce websites, and declaring its taxes online. After confirming the order, the commodities are directly delivered from overseas to China through express mail and other channels, the transaction is realized through the e-commerce service platform and customs clearance management system.
Just like Jademond´s German Bunting project.
Well stablished Cross-border E-commerce platforms in the Chinese market:
The relatively mature integrated Cross-border E-commerce platforms in China include Tmall International, JD International, Little red book international, PDD Global and We Chat. Below, we will analyze the advantages and disadvantages of these platforms one by one:
Advantages:
These platforms are based on big data analysis and have a relatively complete set of platform algorithms. Taking Tmall International as an example, the big data based on Ali Cloud can be used to analyze the traffic and high-quality customers from its Cross-border E-commerce platforms, and provide insights for paid advertisements.
Layouts and product details templates are available for reference.
Disadvantages:
The entry cost is high. For reference, please check THIS ARTICLE;
Little red book international requirements are high, since the brand must receive an invitation to enter it. It also charges a high commission which to some small and medium-sized enterprises is a cost pressure;
PDD Global is a breeding ground for lower-end products, which reflects its popularity amongst low-end users;
There is no customized templates in the shopping system and CRM management is difficult.
Then what kind of Cross-border E-commerce platform should be chosen for the small and SMEs that have not entered the Chinese market yet?
WeChat Cross-border E-commerce is a nice new try!
WeChat is based on a huge user base and traffic. Once you have created a Cross-border E-commerce storefront, you can use the CRM system to connect with the social network and monitor data in real time;
The entry cost of entry is low, and there is no need to pay high margin and commission;
You can customize your shopping system;
You can customize your advertising campaign and KOL promotion.
In general, Cross-border E-commerce is a trend and an opportunity, but it still needs the efforts of the enterprises themselves in order to successfully penetrate the Chinese market.
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