Published March 31, 2016
By: Jim Tompkins, CEO, Tompkins International & Michael Zakkour, Vice President China/Asia Pacific Practice Leader, Tompkins International
Amazon is finally connecting with Chinese consumers. Not because Amazon.cn is suddenly popular – no, it’s because Amazon.com is suddenly popular.
Some American brands and retailers are seeing major increases in their sales to Chinese consumers, not through major in country bricks and mortar expansion, rather because Alibaba and JD.com are making it easier than ever to set up flagship stores on Tmall.com and JD.com and to start selling on their “Global” sites which allow companies to sell in China without having to establish full operations there.
Wal-Mart, announced on March 28 the debut of “Global E-Buy”, a new feature in its app that will enable Chinese consumers to buy products made and sold in America. They may be happy to buy bedding and home dcor in a Wal-Mart China store, but increasingly they prefer to buy baby-gear, vitamins and food products from Wal-Mart America.
What this all adds up to is the rapid maturation and importance of the Cross Border Commerce (CBC) opportunity in China. What is CBC? It is the future of e-commerce and retail. It’s the growing reality that you can sell from and deliver to anywhere in the world through e-commerce. This will eventually include Africa, India, South America and ASEAN, but right now the most important Cross Border Commerce market in the world is China.
China has more than 500 million online consumers today, many of whom have an insatiable appetite for American products and brands. But, they want to be sure that what they are buying is real, safe and affordable.
This is not just a commercial movement; the Chinese government’s stated goal is to rapidly expand consumption as a major part of its economy. They have spent the last two years adjusting laws and regulations to encourage spending and to make it easier to sell in China. One such example is the new online tax and tariff regime recently approved. As reported by Business Insider,
“The government will remove a special tax, or so-called parcel tax, previously levied on imports sold online. Instead, it will charge value-added and consumption duties that are currently imposed on most products sold in China but with a 30% discount, according to a Thursday statement posted on the website of the Ministry of Finance.
As the world’s second-largest economy pushes its online retail industry and promotes cross-border e-commerce, the country has expanded the program to 13 cities. China’s State Council approved the latest changes which will come into effect on April 8, according to the Thursday statement.”
Amazon has recognized the potential of CBC in China and the rest of the world and is rapidly building the logistics structure for “Global Prime” deliver (2-3 days for free). In China itself Alibaba and JD are in a fierce competition to sign up global brands and retailers to sell to Chinese consumers on their platforms and are actively pursuing two-way CBC in developing nations.
CBC is still in the development stage in many parts of the world, but it is well established in China. Costco, Nautica, Nike, Macy’s and many others have embraced CBC as the big opportunity there.
Eventually CBC will be the “Industrial Revolution” sized disruption to commerce it is destined to be globally, but as stated, today China is the #1 opportunity.
The following is a five point plan for how you can start your CBC journey to the Middle Kingdom.
- Make CBC, with a start in China, a mission critical avenue for your growth and profitability in the next 10 years
- Conduct deep research and analysis on all of the opportunities, platforms and potential partners China CBC requires – Develop your strategy for entry and expansion
- Identify, vet and consummate relationships with domestic and Chinese CBC enabling partners
- Build the structure (platform stores, merchandising, logistics, marketing, etc.) for your CBC operations
- Plan for expansion – Use China as the launch pad for global CBC sales
If you are still not convinced that Cross Border Commerce must be a part of your future, we suggest you look at how seriously Alibaba, Amazon, JD, Target and Wal-Mart are pursuing three billion global e-commerce customers and ask yourself if you want to be a part of the revolution, or be crushed by it.