Cross-Border E-commerce to China - Bart Horsten and Ed Sander

Cross-Border eCommerce to China 27-9-2016

ChinaTalk / MyChinaWeb 1

Cross Border e-Commerce to ChinaEd Sander & Bart Horsten

E-Trade Summit, September 27th 2016, Antwerp, Belgium

Introduction Bart Horsten

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• China Entrepreneur and Consultant since 1998, focusing on assisting Western SMEs in doing business in China.

• Managing Director of HORSTEN International, a company with more than 35 years of experience in China and offices in Belgium, Hong Kong, Shanghai and Xi’an.

• Shareholder and Board member of several China/Hong Kong ventures.

• Founding Partner of MyChinaWeb, the first China online marketing agency in Belgium.



Introduction Ed Sander (艾德艾德艾德艾德)

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Imagine ...

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Rising Affluence

5

0

50

100

150

200

250

300

350

2013 2015 2020 2025 2030

Projection of China’s Urban Households by Income Group

Low Income Lower Middle Income Middle Income Affluent

Source: ANZ Research

Imagine …

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Pork with clenbuterol (causes palpitations, sweat attacks and diarrhea)

Exploding watermelons

Pork sold as beef after it has been treated with borax

Rice with cadmium

Pigs ears (a Chinese delicasy) made of gelatine and sodium oleate (used in soap)

Soy sauce with arsenicum

Wine watered down with sugar water and chemicals

Old steamed bread recycled by soaking it in water and flour

Pork that glows in the dark

Cabbages sprayed with formaldehyde7

Imagine …

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“They are all sold to you. We don’t eat wheat soaked in

wastewater. There are still wheat farms irrigated by clean

water from the wells. We eat those.”



Top Concerns in China

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0 10 20 30 40 50 60 70 80 90

Unemployment

Traffic

Worker conditions

Education

Corrupt Business People

Health care

Safety of medicine

Safety of food

Quality of manufactured goods

Rising Prices

Crime

Water Pollution

Rich-poor gap

Air pollution

Corrupt Officials

Very Big Problem Moderately Big ProblemSource: Pew Research Center 2015

Imagine …

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山寨shanzhai



Concerns for Online Shopping

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41%

48%

55%

70%

78%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

After Sales

Discrepancy online display vs actual product

Size

Can't try before purchase

Authenticity

Source: KPMG 2014

Imagine ...

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iPhone 6: 22% more expensive inside China

Luxury Goods have 10 – 50% import tax



The Equation ...

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Lack of Trust +

High domestic pricing of luxury goods+

Interest in authentic foreign products=

Cross-border shopping

Luxury Shopping

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1/3rd of the world’s luxury purchases are done by Chinese, but only 1/5th are done in

China.



Chinese Tourists

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6%

7%

44%

75%

0% 20% 40% 60% 80%

BUSINESS

VISITING FRIENDS/RELATIVES

SHOPPING

LEISURE

Purpose of Travel

Source: China Outbound Tourism Research Institute (COTRI) 2014

How Chinese Tourists spend their money

16Source: China Outbound Tourism Research Institute (COTRI) 2014

Shopping; 57,8%Accomodation; 17,8%

Transport; 10,9%

Food; 5,8%

Attraction Tickets; 3,7%

Entertainment; 3,7%

Tipping; 0,1%



Daigou

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In 2014 luxury dai gou purchases were values at up to $7.6 billion, or nearly half of China’s overall luxury purchases.

Source: Bain and Co. (2016)

Internet Users

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111 137

210

298

384

457513

564618

649688 710

50118

233

308356

420

500557

620656

0

100

200

300

400

500

600

700

800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q2

Millions

China’s Internet Users

Internet Users Mobile Internet Users

52% penetration



China’s Consumers

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Access, Online Shopper; 37%

No Internet Access; 48%

Access, No Online

Shopping; 15%

Source: eMarketer 2015

Cross-Border Retail e-Commerce Buyers in China

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20,0%

31,0%

40,0%

45,5%48,0% 49,5% 50,7%

6,5%

11,2%

15,8%19,1%

21,5%23,4%

25,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

2014 2015 2016 2017 2018 2019 2020

% of digital buyers % of total population



Cross-Border Retail e-Commerce Sales in China

21Source: eMarketer May 2016

30,1

57,1

85,8

110,7

129,1

144,2

157

60,0%

90,0%

50,1%

29,1%

16,6%11,7% 9,4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

20

40

60

80

100

120

140

160

180

2014 2015 2016 2017 2018 2019 2020

% Change

Billion USD

sales % change

Popular Products

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2%

5% 5%

11%

17%

31%

0%

5%

10%

15%

20%

25%

30%

35%

Food Baby Care Beauty

% of Transaction Volume

Domestic Shopping Cross-Border Shopping

Source: iResearch & Tmall Global 2013



Introducing MyChinaWeb

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The ‘BAT’tle between the 3 major players

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Alibaba’s Platforms

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International B2B

C2C (small businesses)

Domestic B2C (China => China)

International B2C (China => World)

International B2C (World => China)

Chinese B2C e-Commerce Platforms

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Tmall56,1%

JD 24,8%

Tmall

JD

Suning

VIP

Yihaodian

Amazon.cn

Gome

Dangdang

Jumei

Yixun

Others

• China-registered companies only• Cash security deposit• Annual subscription fee• Commission on each transaction• Work with designated logistic partners• Invest in marketing



Cross-Border e-Commerce Pilot Cities

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• In 10 cities and some free trade zones and additional qualified cities

• Reasons: • to protect consumer interests• strengthen monitoring of product safety• safeguard national tax receipts

• Western companies without legal entity in China can sell their products directly to Chinese consumers

m-Commerce



WeChat Shops

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The West vs China



Strategy for China

Have one!

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Strategy for China

Localization!

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Strategy for China

Commitment!

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Threat or Opportunity?

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Leave your business card for free e-books

Thank you

Author, Lecturer

Ed Sander

+31 6 51 214 206

[email protected]

@edsander

www.chinatalk.nl

nl.linkedin.com/in/edsander/

Founding Partner

Bart Horsten

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+32 477 61 51 44

[email protected]

www.mychinaweb.com

be.linkedin.com/in/bart-horsten-263021b

Cross-Border E-commerce to China - Bart Horsten and Ed Sander

Marketing

Transcript of Cross-Border E-commerce to China - Bart Horsten and Ed Sander