5 Factors that Boosted China Cross-Border E-Commerce in 2019

20/12/2019

China’s e-commerce continues upward momentum. Livestreaming and lower-tier cities the main trends

 

2019 was a great year in China cross-border e-commerce sector. For example,  PRC based larger players such as Alibaba and JD.com doubled down on growth in lower-tier cities. By the way, It was challenging year too. Foreign retailers such as Forever 21, Carrefour, and Metro exited the market, Amazon shut down its domestic China business. We review what happened in 2019 and what it all means for the future of China e-commerce.

 

1. Livestreaming e-commerce officially took off

Livestreaming e-commerce is the trend of the moment as marketplaces and platforms alike began looking for better ways to engage customers. Tmall is literally leading the sector. According to data Taobao Live jumped 309% to reach 35.03 million this past year, and the number of purchased goods jumped 430% to reach 2.36 million. 

Over 100,000 brands and merchants used livestreaming to market their products on Singles Day this year, a new record. Thus livestreaming is not only the ultimate entertainment format but it is also the internet’s next form of digital communication. It is coming from China to reshape the whole e-commerce industry one stream after the other. That’s why every big e-commerce player such as Pinduoduo, Xiaohongshu and more decided to embrace this trend.

 

2. Singles Day broke new records

Risultati immagini per 2019 singles's day

 

Alibaba alone generated US$38.4 billion in GMV on Singles Day 2019, a 26% increase from the previous year. Total Singles Day GMV, including that of other platforms, jumped 52% to reach 600 billion RMB. The fours keywords of this double 11 are: live-streaming,  cross-border e- commerce, green 11.11 and global reach.. What about logistics? In 10h the number of delivery orders exceeded 812 millions. By the way, even JD broke 2018 edition’s record. Beijing based e-commerce platform reached almost $22 billion in revenue after 24h. 

 

3. Alibaba acquired Netease’s Kaola import business for US$2 billion

 

Launched in 2015, NetEase’s Kaola is one of the largest cross-border e-commerce platform in China. NetEase’s Kaola currently cooperates with more than 5,000 brands from 80 countries covering apparel, maternity and infant care, household appliances, personal care, health care and other major categories of products. Thus, the merger between the China’s top two cross-border e-commerce platforms created a dominant market giant, moreover experts agreed that this deal increased Alibaba’s competitiveness in terms of cross-border e-commerce. he total market share would reach 57.1%, securing them a leading position in the industry. With Kaola and Tmall Global combined under its umbrella, Alibaba owns almost 60% market share of the cross-border e-commerce import market in China, securing them a leading position in the industry.

 

4. New consumption: The power of China’s lower tier-cities

new law for cross-border e-commerce - xi'an - cifnews

More than a quarter of Chinese citizens using e-commerce. Online retail is moving toward individualization and customization. Lower tier cities will be the main engine’s of tomorrow.  It’s estimated that by 2022 there will be a 56% increase in consumption in urban areas and the middle class will constitute about 54% of the Chinese resident population in the cities. In 2018, China’s total retail sales of consumer goods stood at nearly 38.1 trillion yuan, up 9% from 2017. Final consumption contributed 76.2 % to China’s GDP growth, 18.6 percentage points more than in 2017. In terms of market scale, first tier cities such as Beijing or Shanghai have the lion’s share but lower-tier cities catch up fast. But 3rd-tier cities are the real surprise and have begun to demonstrate strong purchasing power, with Southwest and North China emerging as a force to reckon with, even greater development potential has appeared in 4th-tier cities.

 

5. China’s new e-commerce law came into effect

china's e-commerce - cifnews

 

The Chinese government enacted its first-ever e-commerce law. The new legislation was a positive development in the country’s long-lasting fight against counterfeit products and intellectual property violations, said lawyers. The regulations require all online merchants to register for business licenses and pay business taxes. Now even individual-run stores on WeChat and Taobao will have to file tax returns and issue official tax receipts. To enforce this clause, platforms such as Taobao and WeChat will have to verify business licenses, conduct identity checks on sellers, and submit both identification and information to tax authorities. It’s still to be seen how much taxes sellers will have to pay, yet it’s clear is that there will be more scrutiny on daigou selling through WeChat and Taobao.

 

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