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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
6th China Cross-Border E-Commerce Conference 2016: Key Takeaways
1) 48%ofthebusinessessurveyedshowedawillingnesstosetcross-bordere-commerce(CBEC)asasignificantlygreaterpriorityinthefuture.
2) WiththeemergenceofopportunitiesforCBECimports,traditionalretailersareleveragingCBECtobringqualityproductstoChinesecustomers.Third-partyvendorsarealigningthemselveswiththeopportunitybyprovidinglocalizedsolutionsformarketingandoperationstointernationalretailerspenetratingintoChina.
3) The“cewebrity”economyandmobilee-commercearetwotrendsthatwillcontinuetopropelthegrowthofCBEC,whichinternationalretailerswantingtopenetratetheChinamarketarerecommendedtoutilize.
FungGlobalRetail&Technologyattendedthe6thChinaCross-BorderE-CommerceConferenceinShanghai,whichwasattendedbyover500seniorexecutivesrepresentingover50e-commerceplatforms.Wesummarizethekeytakeawaysbelow.Cross-BorderE-Commerce—ALogicalWayToDriveFutureGrowthChina’scross-bordere-commerce(CBEC)industryisexpectedtocontinueitsspectaculargrowthinto2017.TheconferencekickedoffwithanoverviewfromRolfVisser,theChairmanandCo-FounderofCross-BorderEcommerceCommunity,whopresentedthelatestglobaltrends.Cross-BorderEcommerceCommunityisanon-profitassociationofregionalpartnersthatconductsresearchandconnectsCBECplatformswiththeaimofboostingimportandexporttrade.
VisserarguesthattheimpactofthedisruptiveforcesofCBECwilllikelybemostpositiveforsmall-andmedium-sizedenterprises(SME)byenablingthemtoentertheglobalvaluechain:
• InresearchconductedbytheUniversityofSouthernCalifornia,82%ofthosesurveyedindicatedthatcross-bordere-commercewillhaveagreatimpactonSMEsoverthenextthreeyears.
• Some48%ofthebusinessessurveyedindicatedtheircompany’swillingnesstosetCBECasasignificantlygreaterpriorityinthefuture.
• CBECisestimatedtoaccountfor21%oftotalglobalonlinetrade.
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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
• Onaverage,e-commercefirmsexportto30-40economiescomparedwith3-4economiesfortraditionalexporters.
Asdomesticmarketsmature,CBECbecomesthemostlogicalwaytodrivefuturegrowthforSMEs—firmsbenefitfromawiderreachofglobalmarketsandreducedbusinessrisks,whichleadstomarginexpansion.VisserconsidersitunlikelythattheUS,underaTrumpadministration,woulddrasticallyreducetradewithChinabyimposingtariffsof45%onimportsfromthecountry,toavoidretaliationfromChina.RetailersAndConnectedCross-BorderRetailWeattendedseveralpresentationsofbusinessesadjustingtheirmodelstocatertoconsumers’demandsunderthenewlandscape.Forexample,traditionalretailersleveragingCBECtoincreasesalestocustomers,andCBECthird-partyvendorsprovidingvalue-addedservicesforinternationalretailerspenetratingintoChina.
MetroChina—InternetPlusRetailerStrategyMetroChinahasadoptedan“InternetPlus”strategytoactivelymeetthedemandofChineseconsumersforhigh-qualityimports:
• Expandomnichannelretailing:MetroChinasellstoChineseshoppersthroughitsonlineshoppingplatformpoweredbydatatechnology.
• Poweredbyaglobalsupplychain:MetroChinaleveragesthegroup’sglobalsupplychain,whichconnectsover2,200MetrostorestodelivertoChineseshoppers.
• FurtherstrengthenitsO2Ostrategy:MetroChinafocusesonpartnershipswithqualityO2OpartnersandthedevelopmentoflocalservicesO2Oandconvenience-storeformats.
HeadquarteredinGermany,MeroGroupservicesChina,oneofitsfocusmarketsgloballythroughMetroChina.
ForSingles’Day2016,MetroChinaactivelyengagedChineseconsumersthroughlivestreamingandtargetedadvertising.Duringthepresaleperiod,Metro’soverseasflagshipstorewasrankedtenthamongTmall’shealthyfoodmerchants.
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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Figure1.MetroChinaOnline—Sold-OutMerchandiseonSingles’Day2016,byTime
Source:MetroChina
Leqee—IntegratedServiceProvidertoAlignImportsWithChineseConsumers’ExpectationsLeqeeisathird-partysolutionsproviderforCBECanddigitalmarketingforinternationalbrandssellingtoaChineseaudience.Leqeespecializesincross-borderconsumerimportsintoChina,focusingonbaby,foodandskincareproducts.Since2009,thecompanyprovidesaone-stope-commercesolutionforbrandstargetingChineseconsumers,includingchanneldistribution,integratedgloballogistics,big-dataservicesande-commerceplatformoperations.Leqee’spartnersincludeNestle,Heinz,Kanebo,Unilever,Dove,etc.
Figure2.ConsumerTrendShifttoQuality-CentricfromPrice-Centric
Source:Leqee,KantarRetail
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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Leqeeclaimedthatcewebritiesplayasignificantroleincross-bordere-commerceastheyfacilitateconsumers’productdiscoveryandconversion.Inidentifyingproductopportunities,CBECretailersshouldpayattentiontothefollowingprinciples:
• Identifythoseproductsthathavethepotentialtogoviralwhenspreadbycewebrities.
• Engagecewebritiesinproductpromotion,viapopularWeChatofficialaccounts,Weibo,B2Cplatformsandonlinecommunities.
• Operatesustainablyandrespectconsumers.
Figure3.Leqee—2015WyethCBECExpansionInitiative
Source:Leqee
Rkylin—CBECasAnotherAvenueforForeignBrandstoSelltoChinaRkylinisanotherintegratedserviceproviderforCBECimporterssellingtoChina,withservicescoveringstorage&logistics,operationsanddistribution.Specifically,thecompanyhelpsforeignbrandssucceedinChinainthefollowingareas:
• Improveproduct-managementoperations:RkylinadvisesinternationalretailersonpricingandmarketingstrategyinChina,productandevent-pagedesign,promotionsandcustomerservice.
• Customizedservices:Rkylinhelpsretailerssetuptheirofficialwebsite,provideonlineintegratedmarketingservices,O2Osolutionsandacustomizedclient-relationshipmanagement(CRM)service
• Channeloperationservices:RkylinhelpsinternationalbrandsmanagethesupplyandsalesofmerchandiseoncommonlyusedB2BandB2CplatformsinChina.Rkylinalsoprovidesafter-salessupport,includingcollectionandshipment,customsclearanceanddeliveryservices.
YingZhou,Rkylin’sCEO,claimsthatCBECenablesinternationalretailerstoselltoChina’smarketefficientlyandatalowcost.However,healsopointedoutthreecommonchallengesthatforeignbrandsfaceinsellingtoChinathroughCBEC,namely:1)thecomplexityofmultiplevaluechainsforCBECinChina;2)fragmentedchannels;and3)brandbuildingandraisingcustomers’awareness.
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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Figure4.TimelineofChina’sCBECIndustry
Source:Rkylin
ZhououtlinesfourstepsforinternationalretailerstopenetrateintoChineseonlineshopping:
1) TestChineseconsumers’reactiontoaninternationalbrandandproductviakeywordsearchindex(whichshowshowwellabrandisremembered),theclickrateofbrandwords(whichshowshowinterestedconsumersareinabrand),productsales(whichshowshowpopularaproductistoconsumers).
2) OpenaTmallinternationalflagshipstore,whichprovidesopportunitiesfortrial-and-errortestingandacquisitionoffirst-handfeedbackfromconsumers.
3) StartdistributingonTaobao,inordertogainmoreexposureandmaximizepotentialforlow-costbrandingandcoverage.
4) Distributeonacross-borderthird-partyplatform,suchasJD,Kaola,Vipshop.
5) TransitiontogeneralimporttradefromCBEC,which,accordingtoRkylin,canpotentiallyexpandthemarkettenfold.Thetransitionprocessincludestrademarkregistrationandathoroughcommodityinspectionprocedure.
HomeCredit—FinanceInnovationinOnlineShoppingTheavailabilityofconsumercreditwilllikelyfuelthecontinuedgrowthofCBEC,whichispreciselywhereconsumerfinanceproviderssuchasHomeCreditcomein.MartinFiala,HeadofOnlineBusinessofHomeCreditChina,sharedthecompany’svisioninprovidingsmallconsumerloansforbothonlineandofflineshoppersglobally,includingthosewhoareunbanked,i.e.withoutacredithistory.HeadquarteredintheCzechRepublic,HomeCreditisatop-rankedconsumer-financeproviderinChina.
TheonlineversionofHomeCreditChinapresentsasimpleandeasywayforconsumerstoapplyforconsumercreditandhavetheirapplicationsapprovedinreal-time,supportedbybig-dataanalyticsforriskmanagement.
HomeCreditfoundthatconsumersarewillingtospendanadditional20%–30%onmoreexpensivemerchandiseiftheyweregiventheoptiontopaybyinstallment.Theavailabilityoftheinstallmentpaymentoptionalsoincreasestherevenueofanonlineshopbyfourtimesinthreemonths.
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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
Figure5.HomeCreditChinaOnlineProducts
Source:HomeCredit
MobileE-CommerceTrendShowsNoSignOfSlowingAppAnnierecommendedthatbothcross-borderanddomesticretailersalikewillneedtocompeteinthenewretailingenvironmentbyprovidingmoreoptionsforconsumers,inparticular,inmobilee-commerce.
AppAnnieemphasizedthatretailersshouldimprovetheuserexperienceofmobileapps,enhanceinteractionwithappusersforbetterengagementandincreaseloyalty.Moreover,mobileappsthatfeaturecross-industrycooperationhavethepotentialtoleadtoawin-winoutcome.AsuccessfulexampleisthecollaborationbetweentheinternationalrestaurantchainMcDonald’sJapanandPokémonGo—theMcDonald’sJapanappwasthetoprankedmostfrequentlyusedappamongPokémonGoplayers,whilethePokémonGoappwasranked#1asthemostfrequentlyusedgamingappamongtheappusersofMcDonald’sJapan.
Figure6.Cross-IndustryCollaborationofMobileApps
Source:AppAnnie
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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
ConclusionInsummary,thetonesharedbyspeakersattheannualCBECconferencewasgenerallyoneofoptimism,ascross-bordere-commerceisexpectedtogrowsustainablyagainstthebackdropoftheslowingphysicaleconomy.OurmostimportanttakeawaywasthebroadspectrumofservicesthatwereavailabletointernationalretailerswhoareseekingtoimportintoChina—rangingfromprovidersofintegratedsolutionstoconsumercredit—toincreasetheappealoftheirgoodstoChineseonlineshoppers.
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December20,2016
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:[email protected]
IvyHuangResearchAssistant
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