Why is the Cross Border eCommerce Market in China Surging?

Cross border eCommerce in China is surging at a remarkable rate. Chinese restrictions on eCommerce imports have relaxed, and consumers are eager to tap into the worldwide market of retail products that are available to them. Platforms like Alibaba’s Tmall Global and Kaola have helped to drive cross border eCommerce in China to staggering levels. In 2018, this cross-border market reached $5.8 trillion and then increased in 2019 by a further 21%.  What is driving this incredible increase?

Relaxed Regulations

Recent Chinese regulation changes have made cross border eCommerce in China easier for both the retailers and the consumers. The personal limit of tax-free, cross-border eCommerce goods has increased. The “positive list,” which are the categories of goods that can be imported, duty-free, has been increased. Restrictions on distribution centers have been relaxed, which allows retailers to warehouse products in designated free trade zones and offer more convenient domestic delivery options to the consumer.

Cross border eCommerce in China continues to be designated as a “safe harbor” when it comes to retaliatory tariffs imposed upon US goods. This designation greatly reduces the uncertainty for US retailers who are wanting to enter into cross border eCommerce in China. It also allows foreign retailers to test out the Chinese market with reduced risk before committing to an off-line retail presence in China.

Convenience

Cross border eCommerce in China has also increased for the same reason that it has seen an increase worldwide: convenience. Online marketplaces make it much more convenient for consumers to find what they are looking for. With a world of retailers available to consumers, high quality and good value become more accessible for everyone. With a large portion of the Chinese population residing in rural communities or smaller cities, cross border eCommerce in China brings the marketplace to remote locations.

Increasing Wealth

Economic growth in China has been rapid. Chinese consumers have experienced an increase in personal income, which has expanded their spending capacity. Cross border eCommerce in China has increased dramatically as higher incomes have been matched with the availability of retail goods from around the world, all of which are supported by giant strides in digital infrastructure.

Aging Population

Surprisingly, a major driver for increased cross border eCommerce in China is the aging population. Seniors aged 65 and over account for approximately 150 million consumers in China, which is around 10.5% of the population. This demographic also has a strong consumer presence. Topping the list of senior’s cross border eCommerce purchases in China is health supplements. A recent study shows that 30% of senior’s eCommerce purchases were in this category.

Cross border eCommerce in China has been growing at an exceptional rate and is expected to continue a steep trajectory. Studies predict that Alibaba Group alone could import a total of $200 billion USD worth of goods between 2018 and 2023. Cross border eCommerce in China continues to be welcomed with relaxed regulations. Chinese consumers are enjoying access to a world of retail products. The surge in cross border eCommerce in China looks as though it will continue for the long-term. Click here to learn more.