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Cross-border E-Commerce
With the development of technology and the growth of the Internet, it has provided consumers from all over the world the ability to purchase a product and/or services that may be unavailable or expensive in the home countries from internet based platforms; also known as cross-border E-commerce. China is a key market for cross-border e-commerce as it transitions to a consumption economy fueled by growing middle class. The development of China’s e-commerce has captured the world’s attention with many foreign brands and retailers selling their products via cross-border e-commerce platforms. A recent research states that the total value of China’s E-commerce have reached an estimated figure of RMB 5.2 trillion in 2015 and expects an increase of RMB 1.3 trillion in 2017.
There has been a strong demand for imported goods such as cosmetics, skin care products, electronics, maternal, baby products, clothes, shoes, accessories, jewelry, and others. But one of the concerns over this especially about Chinese products is the unsafe, unregulated, and counterfeit product that have undermined trust thus pushing consumers towards overseas brands that are generally perceived to be of higher quality. However, by sampling the products before its production provides the assurance needed to meet the required quality and design. In any case, finding the right supplier would be another issue that one might face. Nonetheless, with the availability of Internet, the possibility is endless; a leading platform for global wholesale trade, Alibaba connects suppliers and factories to potential vendors or buyers. This would also eliminate the language barrier as this platform conveys in English. Additionally, Alibaba provides a way to find suppliers in countries such as India, Thailand, Bangladesh, Vietnam, Pakistan, China, Australia, Hong Kong, Malaysia, Indonesia, Japan, Taiwan, South Korea and other countries.
Production in China
As production cost is high, outsourcing production or seeking a manufacturing company in another country that suits the organizations’ needs would be more effective and cost efficient. In China, it is cheaper to manufacture because of the low labor cost in comparison to other countries. Thus, leading to a lower cost resulting in better sales. Furthermore, Chinese manufacturers provide better service than most domestic manufacturers in different parts of the world. As long as the minimum requirements are met, the Chinese factory will be willing to work for you. Also, Chinese factories are quick and their turnaround/lead time is impressive. However, shipping cost, duty, and tax have to be taken into consideration in determining the final price.
Cross Border E-commerce Operations
Currently, the import business on the cross-border e-commerce platform is conducted under two modes of operations:
- Direct mail model
- Bonded area import model
With the Direct mail model, consumers purchase goods from qualified e-commerce platforms and products are shipped by international transportation to reach the customers directly. As for bonded area import model, the products are shipped in bulk and stored in warehouses before being shipped to customers that have placed their orders online after completing customs clearance and inspections and quarantine procedures.
The success of cross-border e-commerce models highly depends on the collaboration between the supply chain partners. Integration including product sourcing, logistics, payment, and after-sales services is key to avoid any broken linkages and supply chain gaps affecting the purchasing process. It is important to look at the bonded import channel, as retailers have to bear inventory risk when the imported products are sent to bonded warehouses before being delivered to customers. It is vital that retailers forecast their demand before the shipment begins in order to avoid any inventory risk. The governments play an important role to establish appropriate trade zones and loosen the trade barriers
Cross-border E-commerce offers a new alternative to department stores, small businesses, and large-scale supermarkets to compensate any losses. With the fast growth and rising competition are encouraging alliances and strategies so that consumers are able to have products from all over the world at their grasp.
Daxue’s Consulting expertise on the market
Cross-border E-commerce offers a new alternative to department stores, small businesses, and large-scale supermarkets to compensate any losses. With the fast growth and rising competition are encouraging alliances and strategies so that consumers are able to have products from all over the world at their grasp.
Cross border e-commerce is a reliable way to enlarge your business and expand your client base with a constant profit. It will break down the limit of location for some businesses that is only attracting a small and local audience. Daxue has helped many Cross-border e-commerce to develop their strategy in both way from China and in China. Daxue’s expertise in China will help your company to step to another level.
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