The rapid expansion of e-commerce in China has grabbed headlines around the world and reshaped the business landscape for both foreign and domestic firms. Already the world’s largest, China’s e-commerce market has grown by 50% per year since 2011, and is expected to be worth USD$1 trillion by 2019. Canadian companies looking to export to China should consider the opportunities the country’s online commerce sector presents.
In a country where traditional channels of commerce are fragmented and often not consumer friendly, e-commerce provides customers with an abundance of choice, accessibility, easily-managed returns (not prevalent in other channels in China), and confidence in vendors at a clear price point. Millions of Chinese are now purchasing foreign products, including those in developing regions, which were unavailable even just a few years ago.
Canada’s high quality goods and services are in demand. Despite domestic economic challenges, Chinese consumers particularly the emerging middle class are spending more than ever before in online marketplaces. Cross-border e-commerce can help Canadian exporters meet the aspirations of millions of Chinese seeking premium foreign products. Issues surrounding the safety of domestic products have pushed consumers to look abroad for brands with a strong reputation and a focus on quality. Demand is strongest in areas such as high quality foods, natural alternatives to artificial products, cosmetics, and healthcare products.
For Canadian exporters, selling online in China can be as simple as shipping directly from Canada to the consumer, or via engaging one of several 3rd party service providers who can facilitate the entire logistics process, including customs, branding, marketing and payment. In what traditionally has been a difficult market for smaller Canadian companies to access, e-commerce provides a relatively straight-forward path to gaining a foothold in China.
While the attraction is clear, the decision to engage in e-commerce in China is not without its own challenges and risks. Government policies regulating the marketplace are dense, complicated and prone to change without notice. Concerns over the protection of intellectual property are valid and must be managed appropriately. Canadian companies must recognize that the Chinese e-commerce market is extremely competitive, and merely getting listed on a Chinese marketplace is not enough to succeed. Successful market entry requires a well thought-out business model and the ongoing commitment of resources, both financial and managerial, to ensure products are branded and marketed effectively for a Chinese audience, and sold at a profit.
This guidebook is designed to walk you through the various decision points required for entering China via e-commerce channels, and provide you with some of the tools to begin making an informed decision.
The Canadian Trade Commissioner Service (‘TCS’ www.tradecommissioner.gc.ca) with its network of resources in China, including a dedicated team focusing on e-commerce, is available to Canadian companies interested in learning more about the topics presented in this guidebook.
For specific questions, the TCS in China can be contacted at InfocentreChina@international.gc.ca.
