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E-commerce Opens Opportunities for SMEs to Access Vast China Market
According to a new report, China's exploding cross-border e-commerce presents a new and novel way for small and medium enterprises in Asia, including the Philippines, to access the Chinese market.
China’s exploding cross-border e-commerce presents a new and novel way for small and medium enterprises (SMEs) in Asia, including the Philippines, to access the Chinese market, according to a new report.

China is the largest e-commerce market in the world, with an estimated $630 billion in 2015 sales, according to the just-released “E-Commerce in China: Opportunities for Asian Firms.” This is nearly 80 percent larger than the US market, which China overtook more than two years ago.

“China’s e-commerce market is big, growing fast and increasingly open to goods from abroad. Thanks to the combination of overseas travel, increased Internet usage, exposure to foreign brands, as well as surging demand for foreign products from Chinese consumers, China is projected to become the world’s largest cross-border e-commerce market by 2020,” said the report, a joint study released this month by the International Trade Centre and Alibaba.

The report added that as much as 40 percent of local online consumers in China now purchase goods from abroad. Cross-border consumer e-commerce amounted to an estimated $40 billion in 2015, more than 6 percent of China’s total consumer e-commerce, and is growing at upward of 50 percent annually.

The study attributed the rapid growth in China’s cross-border e-commerce to the mainland consumer’s search for cheaper and better quality goods, with goods online being an average of 6 percent to 16 percent less than in traditional stores. Cross-border shoppers prefer items that are either too expensive or too scarce at domestic stores.

“For example, shoppers in cities use overseas sellers most often for premium health-care products [for example, dietary supplements, medicines and medical instruments]. Consumers in smaller cities primarily shop for luxury goods from foreign vendors,” the paper said.

“China’s online shoppers are growing more mature or ‘rational’, and rational shoppers make up almost 40 percent of urban online shoppers. These more mature consumers see the e-tail space as a place to find quality, reasonable prices and a better shopping experience.”

The country’s online shoppers spend 176 percent more per purchase when buying from overseas than domestically. Some 11 percent make purchases of over $782, and one-fourth spend between $156 to $469 per international purchase.

In 2015 clothing and shoes were the top goods purchased by Chinese online shoppers, accounting for nearly 80 percent of the total. This was followed by general products, books and audio-visual products, computer and computer products, household appliances, gift cards and game cards, and handbags and suitcases.

Other cyber purchases included flight and hotel reservations, food and health-care products, movie and show tickets, cosmetic and beauty products, stationary and sports products, mother and baby products, and jewelry and accessories.

The report urged SMEs in the region to seize the opportunity to make use of online platforms to reach the Chinese consumer market and to adapt their products to the market’s demand.

It also underlined the importance of support from the local government in terms of giving producers access to credit and factories and providing tax incentives.

“China is estimated to have a population of more than 1.3 billion. The market is so large and diverse that it has great potential for overseas exporters,” the study emphasized.

The global business-to-consumer cross-border e-commerce market is increasing rapidly and expected to reach $1 trillion by 2020.
  Source: Business Mirror

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