China is set to become the world’s largest online retail market this year, according to the Ministry of Commerce, but this isn’t stopping China’s e-tailers from expanding to all corners of the globe.
“Vancl is, and will be, focused on its domestic market, but the intention to go global is quite natural, whether it’s the brand or the manufacturing that goes outside China,” said Luan Yilai, vice president of the Beijing-based online clothing retailer.
Chinese e-commerce companies tend to provide an English website targeting U.S. and European customers when they start to go global, said Chen Dong, the China head of large merchant sales at PayPal. Vancl launched theirs in 2010. This past September, it branched out to the Vietnamese market by partnering with the Vietnamese online payment company ECPay, creating a Vietnamese website and local operations.
“Vietnam is quite representative of Asian markets: Fast-growing with a considerable market size and similar in culture,” Luan said. “We think we can grow quickly if we start in Vietnam.” According to Nnan Dan newspaper, 31 million people – or 34 percent of the country’s population — were accessing the Internet in Vietnam by the end of September. The China Internet Network Information Center reported that by June, 538 million people (almost 40 percent of the population) were accessing the internet.
Another Chinese e-commerce site with serious growth potential is Jingdong Mall (also known as 360buy), which many insiders call China’s amazon.com. While Jingdong Mall’s English-only website just launched this past October, the company ships to 35 countries and has begun attracting markets in North America, Australia, and Western Europe. They also have a Russian-language website and a local distribution partner there.
Unlike Vancl, Jingdong Mall buys made-in-China goods that it sells overseas, rather than expanding into local operations around the globe. Shi Tao, Jingdong Mall’s vice-president, told China Daily that the company plans to build warehouses overseas to eventually shorten the delivery period. He said that the brand strives to be like Amazon, doing business in different country locally and having diverse sources of products.
Amazon is the world’s largest retailer by user number, according to research firm comScore Inc, and 60 percent of its customers come from countries outside of North America. As of June, almost all of the 60 million registered Jingdong users were from the Chinese mainland.
“Going global will be part of the future, something you need to do other than your main business in China even though it’s not urgent now,” said Hu Yanping, general manager of the Data Center of China Internet.
PayPal reported astonishing sales figures for Latin American and Eastern European markets targeted by Chinese e-commerce businesses: from July 2011 to June 2012, exports by Chinese e-commerce companies to Argentina increased by 96 percent, to Israel by 72 percent and to Ukraine by 71 percent.
“Compared with the domestic market, e-commerce players are likely to have higher profit margins in the international market,” said Li Chengdong, an e-commerce analyst and columnist of the Chinese website of The New York Times.
photo credit: vancl