Mainland chinese cross-border ecommerce reached $17.963 billion in 2015 and a turning point, says new research from international management consulting firm Oliver Wyman, reports Retail News Asia.
According to iResearch, this number is expected to grow more than 60% reaching 7% of total Chinese ecommerce value by 2018.
However, the research firm has warned that increasing regulation in China may mean that the industry has reached an inflection point.
“Chinese consumers are probably the most informed and digitalised in the world,” the report detailed. “As Chinese consumers travel abroad, they are increasingly aware of offline prices around the world.”
Cross-border ecommerce provides Chinese consumers with access to the best products at the best prices without leaving home. The report, titled Shopping Without Boundaries found that one in five online Chinese shoppers made a purchase on cross-border ecommerce platforms in 2015, double the proportion in 2014.
Today’s cross-border ecommerce businesses expanded out of the Daigou model “buying on behalf of”, which involved small businesses abroad who brought or sent products back to China. In 2013, the Chinese government established experimental zones of cross-border ecommerce for better regulation.
The most common are platform providers such as Tmall International and self-operated plays such as Jumei – JD Worldwide operates across both models.
What can happen next?
After a strong boom, the report finds that cross-border ecommerce has arrived at a tipping point.
The future now seems unclear to many players due to a series of government regulations. Tax, product safety, manufacturing standards and logistics, these regulations have not been fully defined and leave room for speculation, the report concluded.
While cross-border ecommerce still present various opportunities, companies may want to have a plan B in the works in case the market dynamics changes.
According to aCommerce Chief Marketing Officer, Sheji Ho, cross-border ecommerce in China can be seen as a desperate move to cope with the fact that the domestic market is reaching saturation. Despite the hype, it is still a very small business compared to the domestic ecommerce market. Therefore, it should be said that the surge in cross-border ecommerce is not indicative of China’s overall ecommerce landscape.
A version of this appeared in Retail News Asia on September 17. Read the rest of the story here.