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E-trade seizes new platform
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AN increasing number of companies are entering the booming cross-border e-commerce business because the Shanghai Free Trade Zone offers a convenient channel to cater to domestic consumers eager to buy quality imported goods.
Kuajingtong, the state-backed e-commerce platform that currently hosts more than 100 vendors of imported goods, is one of the newer faces on the scene.
It is financed with US$500 million from a venture called Face to Face that was formed in April by Itochu, Japan’s third-largest trading house, Charoen Pokphand Group, Thailand’s biggest conglomerate, and Chinese companies CITIC, China Mobile and Shanghai Information Investment Inc.
According to documents from the Free Trade Zone, the venture aims to use CP Group’s department store space to showcase imported goods so that offline shoppers can see the merchandise available before they may place online orders.
The zone allows importers open exhibition areas of bonded goods outside of designated bonded warehouse areas in an effort to drive consumption and offer convenience for both shoppers and vendors.
After providing customs with bond or bank guarantees, importers can display or sell bonded goods at designated locations, either within or outside of bonded areas and then declare duty afterward.
Shanghai-based Yihaodian, a wholly owned online shopping unit of US retailer Wal-Mart, is among the first e-commerce websites to set up a bonded warehouse within the Free Trade Zone to ship imported goods directly to consumers instead of having to ship them from overseas destinations.
Yihaodian is currently selling more than 100 imported items.
Chinese authorities have given approval to the cities of Shanghai, Hangzhou, Shenzhen, Zhengzhou, Chongqing, Guangzhou and Wuhan to carry out trial projects of cross-border e-commerce.
Authorized trade companies can store their imported goods within bonded areas in those cities and make a one-stop customs declaration for merchandise when individual consumers submit an order online.
In that way, imported goods can be delivered straight from bonded areas inside China, saving on logistics costs and time-consuming customs clearance procedures.
According to the General Administration of Customs, more than 4.1 million parcels valued at about 1.01 billion yuan (US$159 million) were inspected and dispatched under these pilot programs by the end of last year.
German retailer Metro AG has set up a demonstration area in Guangzhou’s bonded areas and is considering a similar setup in Shanghai.
In early September, Metro said it was launching its official flagship store exclusively on Alibaba Group’s Tmall Global platform to offer imported German products to Chinese consumers.
In the first phase, more than 100 products, including dairy, canned foods, coffee and chocolate, are available.
Metro’s imported goods are stored in Shanghai Free Trade Zone warehouses so that domestic buyers are able to benefit from direct delivery.
Speedy customs clearance is provided through Alibaba’s service team and logistics partners.
Japanese goods
Chinese online portal and gaming operator NetEase has started its own e-commerce site, called Kaola.com. It also has set up large warehouses in Hangzhou, Ningbo and Zhengzhou.
Japanese trading company Mitsui, hoping to tap Chinese demand for high quality Japanese products, started selling merchandise through Kaola.com in April.
“Strong demand for Japanese goods by the Chinese will encourage more Japanese players to sell goods via cross-border e-commerce,” Daiji Takeshima, a spokesman for Mitsui & Co China, said in an email to Shanghai Daily.
He said Mitsui “intends to offer as many goods as possible in cooperation with reliable Japanese suppliers.”
NetEase has set a target of more than 40 billion yuan in annual sales in 2016, half of which will come from Japan sources.
China is expected to become the largest cross-border business-to-consumer market, with volume of imported goods purchased online set to jump more than 10 times to US$245 billion by 2020. That would comprise about a quarter of the global market, according to joint research by Alibaba and consultancy firm Accenture.
Despite the great strides, cross-border e-commerce is still in its early stages. Last year, cross-border e-commerce imports rose 59 percent to 476 billion yuan, accounting for 12.7 percent of cross-border online transactions, according to domestic Internet consultancy Analysys International.
Shanghai has also unveiled a set of local guidelines to promote the trend. In a set of 12 measures released in July, the city said it aims to “significantly” improve the proportion of cross-border e-commerce transactions in the city.
Municipal authorities are encouraging innovative demonstration projects and urging e-commerce companies to step up collaboration with offline retail companies.
It all bodes well for Chinese consumers, who have faced language problems, delivery delays and no easy recourse for product returns when purchasing directly from overseas online retailers.
The China E-Commerce Research Center estimates that the number of people buying merchandise from online overseas sites will rise to 35.6 million in 2018, with the value of goods topping 1 trillion yuan.
The development of cross-border e-commerce means ordinary consumers will have safer, more lawful access to imported goods.
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