6th China Cross-Border E-Commerce Conference … indicated that cross-border e-commerce will have a...

December20,2016

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.

December20,2016

• 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.

December20,2016

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

December20,2016

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.

December20,2016

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.

December20,2016

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

December20,2016

ConclusionInsummary,thetonesharedbyspeakersattheannualCBECconferencewasgenerallyoneofoptimism,ascross-bordere-commerceisexpectedtogrowsustainablyagainstthebackdropoftheslowingphysicaleconomy.OurmostimportanttakeawaywasthebroadspectrumofservicesthatwereavailabletointernationalretailerswhoareseekingtoimportintoChina—rangingfromprovidersofintegratedsolutionstoconsumercredit—toincreasetheappealoftheirgoodstoChineseonlineshoppers.

December20,2016

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comEsmePauSeniorAnalyst

IvyHuangResearchAssistant

HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242–246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017

6th China Cross-Border E-Commerce Conference … indicated that cross-border e-commerce will have a...

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