Cross-border E-commerce in China Is Driving the Industry Forward

Cross-border e-commerce is growing in popularity in China. The growth rate of China’s cross-border e-commerce has been higher than the total amount of imports and exports in spite of the slowdown of global trade, which means that the penetration of cross-border e-commerce in import and export trade has been very high.

According to China’s Ministry of Commerce, Cross-border E-commerce in China reached CNY6.5 trillion (US$1.02 trillion) in 2016, accounting for 20 percent of China’s foreign trade. Thanks to an increase in disposable income and demand for high quality and authentic products among consumers in China, cross-border e-commerce will continue to grow annually at over 30 percent in the next few years, becoming a new growth point for the e-commerce industry in China. By 2020, a quarter of the population, amounting to more than half of all digital buyers, will be shopping either directly on foreign-based sites or through third parties. China is poised to become the largest cross-border B2C market by 2020.

It’s possible for many international brands to sell their products directly to China’s digital shoppers and break into the market through Tmall Global and other B2C platforms. For consumers who want to buy foreign goods which are very expensive or hard to access in China, Cross-border e-commerce may be the best channel for them. Some specific categories of foreign goods such as milk powder, diapers and pet food are particularly favored by Chinese consumers, perceiving them to be of higher quality and more trustworthy. Let’s have a look at some major drivers of cross-border e-commerce in China:

1.     Technical Development

Cross-border e-commerce market in China is in the process of upgrading due to the rise and development of Internet, cloud computing, and intelligent terminal, optimization of payment and logistics system.

2.     Consumption Upgrade

In 2020, the number of middle-and upper-middle-class families in China was estimated to be about 0.2 billion, meaning that there will be more demands on foreign clothing and gadgets not yet available in China. Goods that traditional “bricks or clicks” merchants seldomly sell will be of great popularity.

3.     Industry Support

The number of small and medium-sized enterprises focusing on foreign trade in China was about 5 million, occupying 60% of total imports and exports. Moreover, cross-border E-commerce has now become an important way to develop foreign trade and to promote the Belt and Road initiative.