Chinese Economy Driven by SEA Cross Border eComm Sales

The country is perfectly poised to serve these emerging markets closer to its borders, and it makes perfect sense that cross border eComm sales to SEA are on the up.

Date:2020-01-17 by GLOSKU


Chinese Economy Driven by SEA Cross Border eComm Sales

China is already benefiting from not only an increase in domestic online sales but also from cross border eComm sales shipping to emerging markets in Southeast Asia where there is a population of 570 million people sitting off Southern China borders and coastal regions.

The country is perfectly poised to serve these emerging markets closer to its borders, and it makes perfect sense that cross border eComm sales to SEA are on the up. All you need to do is take a good look at Google’s e-Conomy SEA 2019 report and it doesn’t take a rocket scientist to see what is happening in this part of the world.

Google, Temasek, Bain, and company predict that the SEA eComm market is set to reach $300 billion in gross merchandise value over the next half a decade – up from $100 billion recorded in 2019 – and it seems the ball is already rolling for Chinese eComm firms as a result of the latest Coronavirus pandemic which has only served to accelerated demand for online shopping in the region.

The days of year on year 10% GDP growth figures may be over for China; however, the country is still reporting yearly growth rates far higher than other major ‘developed’ global economies in Europe and Asia. That’s not to mention the fact that post ‘global pandemic’, China was on course for another 6% GDP bulge.

The latest economic reports also suggest China is already on the road to recovery in the aftermath of a global lockdown. Economists are already predicting its impressive pre-pandemic growth rates will return once the economy settles down in 2021.

It is also worth noting that the only developed nation that comes close to China right now is the Republic of Ireland which is reporting a growth rate of 5.5% but when you compare the size of these two far way countries, China’s economy eclipses Ireland. Even the world’s largest economy, the USA currently worth a staggering $21.44 trillion has a growth rate that is not even half of China’s.

One of the key industry sectors spurring on China’s continued growth into the future is eComm sales, and online retail firms in the country are preparing for a three-pronged increase in this sector.


1. Domestic Growth in eComm Sales

Although online sales only account for around a quarter of all retail sales in China domestic online shopping will continue to soar. The science behind this growth is much easier to understand than you might think.

Those that did not know how to shop online were forced to learn how to during ‘lockdown’. Moreover, many of those citizens will continue to shop online now they have experienced how convenient online shopping is. Had COVID-19 not happened, these people may never have taken the time to create an eComm account.

On top of this, travel restrictions also lowered brick and mortar cross border sales. Chinese tourists have not been able to go overseas to buy foreign brands. As an alternative, many of these consumers turned to online stores to purchase foreign branded goods leading to accelerated growth in local eComm orders.

With these new trends, eComm companies have learned how to more efficiently streamline their services. For example, some are able to connect with overseas eComm stores and offer foreign brands on their domestic eComm store and earn a profit through affiliate sales.

All-in-all, eComm stories have quickly adapted and learned how to improve their supply chain models largely by accident which is all thanks to a crash course in logistics courtesy of the latest ‘pandemic’.

2. Niche Cross-Border eComm Sales

Cross-border eComm sales are a two-way street in China. Although it is not obvious at first, the growth in domestic sales is not only a ‘Chinese eComm Company’ phenomenon, it is also affected by cross-border sales of imported goods from US and European e-comm firms.

This begins with your standard e-shop sales from an advert and then goes deeper into tactics used to increase online orders. For instance, decentralized e-commerce strategies aimed at using influencers and affiliates to encourage sales are currently major driving forces behind the rise in Chinese eComm sales across the board which includes imported goods.

One area that is booming is the sale of foreign boutique brands into China. Products from Swarovski affordable boutique jewelry collection to pricey boutique dog clothes from US brands such as Dog & Co are all the rage. The latter satisfies wealthy dog owners with the need to fashionably dress their expensive pedigree pets!

A key point worth noting here is the emergence of ‘social commerce’ in China which is not only helping the increase in sales for foreign boutique brands but all brands being sold online in China.

Chinese social media influencers and experts in affiliate marketing are using their existing followers, email lists, and reach via their Chinese based social media accounts to drive sales on behalf of eComm brands. For example, something as simple as scanning a 2D code on someone’s WeChat account in order to get a discount or special deal will earn the WeChat account owner affiliate commissions.

In exchange for a sale, the affiliate/influencer receives a percentage of the total sale, and in some cases a percentage of any repeat purchases made by consumers that came through their affiliate platform. 

This affiliate marketing model gives the US/European firms a sales rep on the ground in the country their goods are being sold. Someone that knows the culture, language, and how to get the message across is an invaluable asset to any store and this is exactly what Amazon does via its affiliate marketing programs. 

This niche market is growing thanks to digital platforms like GLOSKU. Using this system anybody can become an ‘e-shop owner or affiliate’ if they are willing to promote products from US/EU brands. Via the GLOSKU system, shipping the product is already taken care of and this includes meeting all the compliance and regulations from source to destination.

GLOSKU effectively helps brands expand into Asia and also gives anybody in Asia. Adding to this, the platform gives local citizens the ability to become an online merchant for luxury personal shoppers by providing them with a reliable supply chain and other areas associated with starting a personal shopping e-comm business.

3. Cross-Border Sales

Cross-border eComm sales have exploded in China. As with the domestic market, eComm firms now have a firm grip on their neighbouring sub-continent of SEA – a region currently reporting some of the world’s highest economic growth.

With the online eComm market set to triple by 2025, and a rise in online sales from SEA citizens seeking goods from Chinese eComm companies, cross-border eComm sales will help Chinese firms as well as ‘daigou’ target their products in not only the domestic markets but also in the SEA market.

In most SEA countries, US/EU brands are often slapped with heavy tax levies. Yet, once again, thanks to digital platforms such as GLOSKU, merchants can ship US/EU brands into China and over to SEA countries while enjoying preferential e-commerce tax duties. This is because GLOSKU has localized entities in the countries the merchants are shipping their goods into.

Recap

China’s eComm economy is on the rise with both domestic online sales increasing and a rise in cross-border eComm activity. One of the primary markets for China’s cross border eComm sales in SEA - a market set to triple in size over the next 5 years. Meanwhile, it is not just Chinese eComm firms benefiting from this rise in cross-border eComm activity.

Companies in the US and EU are also reaping the rewards of this growing Chinese marketplace. Goods are finding their way into the Chinese market from Europe and the US thanks to digital platforms such as GLOSKU which are a vital piece of the supply chain fueling cross-border trades. 

One of the reasons these European and US brands can successfully penetrate the Chinese retail market using systems such as GLOSKU is that the brand gets to connect directly with affiliates. These affiliates are effectively a domestic sales force that understands how to drive sales within their culture. This group of people is made up of affiliates who use ‘social commerce’ marketing strategies to encourage people to make online purchases.

This decentralized e-commerce strategy is a pull marketing technique that means the brand does not have to pay for advertising or market research to create ads that appeal to Chinese shoppers. It is the affiliates using ‘social commerce’ that take the time to pull the sales in for the brands on their behalf in exchange for an affiliate commission.

Platforms such as GLOSKU’s help connect firms in the US and European with Chinese eComm vendors and vice versa. The platforms connect people, mediate the exchange of currency, and take care of the logistics bringing the goods into China which then help to drive domestic sales and sales into the South East Asian market.