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China Embraces Cross-Border Ecommerce

By 2020, more than a quarter of the population will shop digitally for foreign products

June 14, 2016 | Retail & Ecommerce

Cross-border ecommerce is growing in popularity in China. In 2016, more than 15% of the population will make purchases from abroad worth $85.76 billion, according to eMarketer’s first-ever estimates of the consumer trend.

Cross-Border Retail Ecommerce Buyers in China, 2014-2020

While cross-border ecommerce is not a new trend in China, it is spreading to a much wider population base. By 2020, a quarter of the population, amounting to more than half of all digital buyers, will be shopping either directly on foreign-based sites or through third parties.

Digital shopping in China grew by more than 70% in 2015. This rapid surge in adoption is in part thanks to a higher standard of living in China combined with a greater exposure to, and knowledge of, foreign products. Last year’s intense growth is also attributable to Alibaba launching Tmall Global in 2014, and JD launching JD Worldwide in 2015, enabling overseas brands to sell their goods directly to digital shoppers in China. In addition, in some categories, such as infant products, consumers in China perceive overseas goods to be higher-quality and more trustworthy.

eMarketer forecasting analyst Shelleen Shum commented, “While the new cross-border ecommerce tax implemented in April this year negatively affects some categories of goods, the demand for foreign goods via the cross-border ecommerce channel is still expected to remain strong due to better prices compared to offline retailers, perceived quality and better variety.

“Furthermore, cross-border ecommerce goods sold via the business-to-consumer (B2C) channel are expected to take up a growing share of the total cross-border ecommerce market in 2016 as consumers shift to platforms that are more professional and organized. Since the merchants selling on these B2C platforms have to be authorized, they are considered more trustworthy.”

Cross-Border Retail Ecommerce Sales in China, 2014-2020 (billions and % change)

Cross-border buyers in China are expected to spend an average of $473.26 each this year on cross-border purchases. This represents 4.2% of the total retail ecommerce market and will amount to a spend of $85.76 billion this year.

On a global scale, cross-border ecommerce habits vary widely. In the US, cross-border buying is far less common and is not poised for strong future growth. By comparison, digital buyers in Canada frequently cross digital borders to make purchases, and when they do, the US is often their country of choice. Canadian cross-border ecommerce behavior is closely related to the strength and weakness of the Canadian dollar.

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