March 7, 2021

How to sell products to China using ecommerce

Dr Peter Mowforth

Slides used for the talk are available here: China and EcommerceAsia is now the biggest ecommerce market in the world. The Chinese economy continues to power forward with an overall growth rate of 6.9% {ref}, a population of 1.4 billion {ref} and a Government that is keen to create a consumer-led economy {ref}. Chinese retail ecommerce is growing at a steady 27% and is estimated to reach $1.6T by 2019 {ref}. While several people are concerned by the booming level of borrowing and debt in China {ref}, for the next few years at least, it will remain a fantastic place to sell products.In many markets such as health, beauty and fashion-goods, the UK is seen by the Chinese buyer as a reputable and trusted place to buy from {ref}. The likelihood of buying brand fakes is less than from local Chinese suppliers while UK cosmetics and health-related items are rated much higher in terms of quality, testing and standards of production {ref}. The maturity of UK luxury brands helps make UK products aspirational. Relatively high disposable incomes means that the Chinese nouveau riche are happy to pay a premium to secure top class brands from trusted sources. UK products sold directly to Chinese consumers are typically 10%-15% more expensive than in the UK.UK ecommerce companies such as The Hut Group launched into China in 2015 {ref}. Their most recent figures show international sales of over £316m {ref} with Chinese sales now 70% of their total sales volume. Put simply, within 2 years, ecommerce sales to China have completely transformed their very rapidly growing business.These type of business opportunities are short-lived. If you are based in Scotland with the right kind of products combined with motivation to grow your sales then selling to China should probably be top of your things-to-do-right-away agenda.Taking PaymentsIt’s important to transact in a way that is familiar and trusted by your customers. Chinese tourists in Scotland will expect to pay their bills using AliPay, UnionPay or WeChatPay. Ecommerce buyers in China uses the same platforms with Alipay and WeChatPay together sharing over 90% of the market.Each of these channels are safe, secure and global. Setting up an Alipay personal account takes a few minutes here while modules to take Alipay through your ecommerce websites are available for Magento here, Shopify here and WooCommerce here. Payments come through to your own bank within 1-2 days.FulfilmentAll the major couriers, and many others, will deliver to mainland China from the UK. There are a wide range of costs that vary on the basis of speed of delivery, weight, size and quality of service. A major cost factor is whether you have to pay import duties when entering China or whether you are importing duty free. Optimising this is complex and requires local specialist contacts who are familiar with all the detailed aspects of the process. See later section for Scottish solution.At the moment, imported items where somebody in China purchases at item via ecommerce from, for example, a Scottish supplier requires a Customs Clearance Certificate. These are usually managed through the courier company. From January 2018 the Chinese Government has announced that these will no longer be required {ref} as they move to simplify the process of global trade.AlibabaAlibaba.com is a global wholesale B2B channel designed for high volume sales. If you want to sell your products via Alibaba, the step-by-step process is as follows:

  • Register for a join-up free account here.
  • Provide Alibaba with your business details.
  • Specify what you want to sell on Alibaba (free accounts limited to 50 items).
  • Provide details of the products (name, photos, description).
  • Provide payment and shipping terms, minimum order quantity and prices.
  • Provide production capacity, estimated delivery time requirements, and packaging details.
  • Submit, … that’s it.

Alibaba makes use of automated translation services from English to all the main global languages including Chinese.To become progressively more visible to your potential buyers you will need to join-up as a Gold member and then get assessed. Alibaba also makes money on Alipay commission along with a variety of other services designed to get you more customers.Surprisingly, few Scottish Scottish brand owners make their products available on Alibaba {e.g.ref}.TmallAlibaba controls over 80% of Chinese ecommerce through sites like Alibaba, Tmall and Taobao . Tmall is the primary destination for Chinese shoppers seeking genuine premium brands. Many large western brands (Nike, Johnnie Walker, Adidas, NorthFace, Burberry …) as well as some countries have stores on Tmall. To setup a store on Tmall, simply follow the process outlined below or available on the website:

Top results on Tmall when searching for ‘Scotland’ are Trump branded products {ref}.WeChatIf you look at how ecommerce marketing channels work outside mainland China, social media only plays a minor role in the purchasing process. The opposite is true in China. For example, WeChat has tight mobile integration between social communication, ecommerce and payment mechanisms through WeChatPay:

A WeChat app user can simply point their smartphone camera at a product and with a single click, buy it for immediate delivery. Local ecommerce fulfilment is typically much faster than purchasing from local shops (which are fast disappearing {ref}). Within the major Chinese cities, ecommerce customers are coming to expect ecommerce purchases to arrive in minutes {e.g. ref}.OtherAlthough it’s possible to sell directly to Chinese customers from Scotland, to create a business of scale requires optimisation of each of the key components of ecommerce - marketing, website conversion, payment and fulfilment.INDEZ partner, Unineed, has rapidly built a business selling directly to the Chinese B2C market. All business operations (web support, marketing, and fulfilment) are all managed and run directly out of Glasgow. Turnover doubles annually with sales this year at around £4m.Unineed’s limit to growth is the availability of third-party products from Scottish businesses that fit the following criteria:

  1. Products that have good search volume in the Chinese market (i.e. customers want them).
  2. Sufficient margin to cover the marketing costs.
  3. Ability to scale the supply chain (good ecommerce is about scale and volume).

A key advantage of this approach for Scottish brand owners is that it can use a dedicated website for your business that Chinese customers can use to buy things from. This means that you have control of your brand in China. The Chinese customers are not Taobao or Tmall customers, they are your customers where you control the prices, the brand and the relationship.

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