(ChAFTA) was entered into force on 20 December 2015 means an increasing number of Australian companies are looking to use such avenues and platforms to sell all sorts of their products to China’s consumers who are hungry for quality and authenticity of Australian products.
E-Commerce brings China’s 332 million online consumers who are accessible to a variety of Australian producers with lower costs, less risk and easier market access than would come with more conventional export methods. It’s a new way of business and China is already the world’s largest e-commerce market.
But with a market made up of millions of consumers with a variety of different spending powers, where should you start? Don’t worry by the end of this article you will have a much better idea of when to start and whether to start considering the importance of a strong e-commece strategy to enable you to thrive and take your own piece of this exciting new market.
The Numbers don’t Lie: Chinese Consumer LOVE online shopping
(In this image a woman uses her mobile phone in front of a”shopping wall” in a subway station in Shanghai. The “shopping wall” is a virtual supermarket with “display shelves”. Consumers can buy products by scanning a code on the shopping wall through a transaction terminal installed on mobile phones. These goods are delivered within 24 hours of the order, photo courtesy of China Daily )
Although Chinese consumers are relatively new to online sopping, with the most internet users of any country, China has already managed to comprise almost half of the global online retail sales which are not slowing down in growth. Total online retail sales amounted to $630 billion in 2015, totally a growth of 33.3% from 2014. Currently, the volume of online sales in China exceeds that of the US with an expected annual growth rate of 20% up until 2020.
Currently, the value of cross-border consumer e-commerce transactions were valued at more than $50 billion Australian dollars in 2015 (McKinsey and Company). According to The Australian Trade Commission although there are no official statistics on the volume of Australian products being sold to China they estimate that Australia is the fourth most popular source of products behind the United States, Korea and Japan.Businesses must cater to users across their mobile devices in order to increase their opportunity to reach Chinese consumers. The McKinsey&Company’s 2016 survey found that China’s digital consumers predominantly use mobile devices to access the internet as opposed to doing so through their larger electronic devices such as laptops or PCS with 55% of China’s internet users having made a mobile purchase compared to only 19% of users in the United States. Additionally, the rise of online shopping emporiums such JD.com and Taobao , mean consumers can now more ease and speed purchase all types of international products that were previously inaccessible to them from China. Recently, Alibaba announced it will establish an office in Australia to service the Australian and New Zealand markets.
Consider Cross border e-commerce Regulations
(Shoppers walking alone a street in Beijing’s City Centre, photo courtesy of Tomohiro Ohsumi/Bloomberg)
First and foremost you must consider the newly established e-commerce regulations. Despite the regulations that have evolved from the China-Australia Free Trade Agreement (ChAFTA), changes made to e-commerce channels regulation are yet to become fully evolved.
Cross border e-commerce (CBEC) is the Australia special import channel which allows products to be sold to online consumers around the world and in China. In April 2016, the Chinese government with an emphasis on regulating the sector implemented new rule changes on cross-border e-commerce regulations that impact all businesses including Australian exporters. On this positive list are 1142 categories of products which are permitted in cross-border e-commerce. The list of these permitted products can be found on the aus-trade website. However, for Australian exporters it is notable to highlight that cosmetics, vitamins, honey, wine and many dairy products can continue to be sold through e-commerce platforms. Additionally, all products imported via B2B conventional trade through the China Australia Free Trade Agreement can also be sold online. Despite the rapid change in regulations, Australian products most in demand by Chinese e-consumers are included in the ‘allowed’ -positive- list.
Chinese consumers are attracted to a variety of Australian products which are considered to be high quality by Chinese consumers. They are particularly looking to purchase goods which range from food products to cosmetics. The below is an insightful video published by StarTrack which highlights which product categories are in high demand.
Keep Up to Date!
Australian exporters need to stay in the loop in order to fully engage and maximise their opportunities with the e-commerce market in China. Australian exporters need to register their products with Chinese authorities as before the end of the previous regulatory grace period which ends on 12 May 2017.
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McKinsey, 2016, China’s E-Tail Revolution,< http://www.mckinsey.com/global-themes/asia-pacific/china-e-tailing>
The Australian Trade Commission, 2016, E-Commerce in China, < https://www.austrade.gov.au/australian/export/export-markets/countries/china/doing-business/e-commerce-in-china>