Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.
China is the world’s largest eCommerce market with over 50% of global eCommerce transactions coming from China. In 2018, China’s online retail transactions reached $1.33 trillion and are forecasted to reach $1.99 trillion by the end of 2019. In 2018, the number of digital buyers in China surpassed 560 million with the total number projected to reach 634 million in 2020. By that year, China’s eCommerce market is predicted to be larger than those of the U.S., UK, Japan, Germany, and France combined, according to Dezan Shira & Associates.Domestic eCommerce (B2C), Cross-Border eCommerce, and B2B eCommerce>
The eCommerce space in China is dominated by domestic platforms, namely Alibaba’s Taobao and Tmall (55% market share) and JD.com (25% market share). Pinduoduo, a new model of social media eCommerce firm that leverages group purchasing, has overtaken dozens of competitors in the past two years to become the third largest platform, with 5.7% market share. Platforms such as Suning, Kaola, Vipshop, Gome, Yihaodian, Dangdang, JMei, and others make up the remaining market share. Cross-border eCommerce is experiencing significant growth; estimates suggest that the current $122 billion of cross-border eCommerce transactions could grow to $199 billion by 2022.
U.S. companies seeking to sell products on China’s eCommerce platforms can choose either to establish a presence in China or use cross-border eCommerce to sell products directly from abroad. American firms can also take advantage of China’s cross-border eCommerce bonded warehouses. These special bonded zones create a pathway that streamlines Chinese Customs procedures and makes conducting cross-border eCommerce easier for buyers and sellers. There are more than a dozen (and growing) cross-border eCommerce bonded zones in China. Through this channel, Chinese consumers can purchase no more than 5,000 RMB ($735) per transaction and no more than 26,000 RMB ($3820) per year. American companies seeking to sell through one of these special zones need to work with local authorized partners who have integrated systems to record transactions with China Customs.
“Singles Day”, November 11, is the busiest online shopping day of the year when huge discounts are offered on every eCommerce platform. For some brands, up to 80% of revenue is generated on that day. In 2018, Alibaba recorded sales of about $31 billion on Singles Day, $10 billion of which was spent in the first hour. Other holidays such as Valentine’s Day and Chinese New Year are also aggressive online shopping periods.eCommerce Intellectual Property Rights>
Intellectual property rights infringement across China’s many eCommerce platforms is common. The primary method of enforcing intellectual property on eCommerce platforms is through notice-and-takedown procedures, which allow rights holders to request that the platforms delist or “takedown” links offering infringing products, based on established intellectual property rights. For patent and trademark infringement, similar to enforcement offline, companies must have those rights registered in China in order to be accepted by eCommerce platforms. In addition, it is critical that companies familiarize themselves with the takedown procedures for the larger eCommerce platforms in China, as different platforms have different procedures for accepting takedown notices. Finally, monitoring large Chinese eCommerce platforms for infringing goods can be time-consuming, and oftentimes companies rely on local agents to monitor the platforms in a regular and cost-effective manner. Despite these challenges, a growing percentage of business-to-business and business-to-consumer sales occur on eCommerce platforms in China, and effective IP enforcement strategies must have an online component.