Since the onset of the COVID-19 pandemic in early 2020, e-commerce has remained a relative bright spot in an otherwise difficult global retail market. Across the pricing spectrum, many brands have accelerated digitization efforts to adjust to a new reality: even in the emerging post-COVID retail environment in geographies like North America and Europe, millions of consumers – even those who previously had never made a purchase online – enjoy (and in some cases now prefer) the convenience and ease of e-commerce.
This trend has powered the continued growth of cross-border e-commerce, which, simply defined, is the selling of a product by a merchant in one country to a consumer in another country, as opposed to domestic e-commerce sales. Coming off the explosive growth in e-commerce revenue seen over the past two years, it is estimated that by next year, upwards of one in four e-commerce shoppers in the United States will have made an online purchase from a merchant in a foreign country.
On May 17, Jing Daily hosted a webinar coinciding with the release of a new joint white paper co-authored by JD.com and Shopify, “The Future of Cross-Border E-Commerce in China: A Guide for Global Brands.” The panel included Frankie Ng from the One Shopify Partnerships team at Shopify, Zachary Gidwitz, Senior Director at JD.com, Kevin Zhao, CEO and Founder of GLOSKU, and Zack Zhang, Head of Global Strategic Partnership at NihaoPay.
Here are Jing Daily’s top five takeaways.
1. International brands and merchants still face major hurdles to sell in the China market.
According to Kevin Zhao of GLOSKU, brands interested in expanding into China still face issues such as accessibility, payment fulfilment, and logistics. These obstacles, according to Zhao, can be overcome with solutions like JD Marketplace, recently launched by JD.com and Shopify, which simplifies the process by which international merchants and brands can start selling into the China market.
2. Entering the China market means adjusting to the market’s unique media and sales landscape.
Building visibility in China means adjusting to the reality of that market and of its particular social media landscape, as noted by Zhao of GLOSKU. For fashion brands, for example, this means considering a presence on platforms like Xiaohongshu or Douyin (TikTok’s China-market sibling) to reach their younger, fashion-focused user bases. Similarly, expanding into the China market also means adjusting to the country’s shopping holidays such as Double Eleven, Qixi, or 618 – holidays unique to China that are some of the biggest spending periods of the year.
3. What the new Chinese Data Security Law and the PIPL restrict cross-border data exchange means for e-commerce.
According to Frankie Ng of Shopify, one of the key elements of the new Chinese Data Security Law is to ensure Chinese customer data is stored in China. As such, the way Shopify integrates with JD.com on JD Marketplace is that Shopify does not pass Chinese consumer information into the Shopify platform. Rather, JD.com acts as an intermediary. After a sale, merchants or brands on JD Marketplace ship products to a JD warehouse, and once the product is identified by JD.com as going to an end buyer in China, that information is not passed to Shopify, staying within the servers of JD.com.
4. How platforms are tackling the issue of counterfeit products.
Asked about how platforms like JD Marketplace can crack down on counterfeits and assuage brand concerns about others selling counterfeit versions of their products, Zachary Gidwitz of JD.com discussed the robust application process for merchants to join JD Marketplace. According to Gidwitz, this includes proving the merchant owns the brand or has the rights to distribute the brand, along with registration information. Gidwitz added that in cases where a merchant is caught selling counterfeits, possible penalties include having to pay ten times the cost in restitution.
5. Even as a wave of brand nationalism sweeps China, demand remains high for foreign brands.
According to Gidwitz of JD.com, affluent, white-collar consumers in first and second-tier cities in China continue to place a premium on foreign brands, and “the pie is growing, not shifting.” Urban consumers in China still enjoy finding and buying brands ahead of the pack, and according to Gidwitz, the domestic Chinese brands currently popular among Chinese consumers are not displacing demand but rather making up a different part of the demand.
Added Kevin Zhao of GLOSKU, his company has seen particular growth in interest in imported brands in the beauty and cosmetics segments since 2020, accelerated by people spending far more time on social media since the onset of the COVID-19 pandemic.