For British consumer brands expanding into China, appointing a distributor is a pivotal moment but one that is often misunderstood. Too often, the partnership is viewed as transactional, with responsibility for growth quietly outsourced to the Chinese side. But to distributors in China, what matters most is not just the product, but the relationship. They want UK brands to be proactive, responsive and collaborative, willing to invest in the shared success of the partnership from the outset.

The groundwork matters. Chinese distributors expect British companies to arrive prepared. That means more than having a polished pitch deck; it means having already registered trademarks, done basic due diligence on competitors, understood import regulations, and defined how the brand will support local compliance. A surprising number of UK brands skip these steps, assuming that it’s the distributor’s job to sort out the detail. Many suppliers fail at this first hurdle by ignoring documentation standards or treating China’s import regime as a secondary concern. Getting it right first time is the best option, as regulatory compliance is as important to long-term brand building as social media campaigns or glossy packaging.

One of the most common pain points cited by distributors is vague or inconsistent communication. What begins as enthusiasm quickly sours when a UK partner fails to provide clear answers on pricing, promotional support or stock planning. Brands that don’t take the time to explain their commercial model, or who delay decisions while head office deliberates, can leave Chinese partners stranded, trying to navigate local retailer and consumer expectations with incomplete information.

Contracts, while not glamorous, play a vital role in protecting both sides from misunderstanding. Distributors want formal clarity on pricing, margins, promotional responsibilities and product availability. They also want to understand how marketing materials will be created, who signs them off, and what kind of investment will be made into brand building locally. In the absence of these basics, even the strongest product may flounder.

Even with a robust agreement in place, the relationship hinges on trust and communication. Regular check-ins are expected. Monthly reports are standard. Shared forecasting tools, collaborative WeChat groups and digital dashboards are common practice. Yet many UK companies still treat the China market as peripheral, failing to dedicate personnel or time to maintain momentum. Distributors notice. As one regional partner working with a major British homeware brand put it, “When they stop turning up to meetings, we stop believing they care.”

For many distributors, the most valuable UK partners are those willing to learn and adapt. British brands often arrive with a fixed sense of their visual identity or messaging, assuming it will translate directly to Chinese consumers. But effective distributors see local insight as their core contribution to the partnership, and they expect to be heard. At a recent CBBC consumer roundtable, buyers described successful collaborations in which brands revised colour schemes, updated taglines and reconfigured packaging based on distributor-led testing. Those that resisted feedback — especially on details like ingredient labelling or product sizes — were seen as difficult to work with, even when demand existed.

Beyond adaptation, distributors also expect commitment to joint marketing. Most do not want to carry the cost of consumer acquisition alone, nor can they succeed without brand investment. British brands with the greatest traction in China are those who co-create campaigns, fund livestreaming with KOLs, attend in-market events and respond quickly to promotional opportunities. This doesn’t always mean huge budgets, but it does mean flexibility and speed. In sectors like cosmetics, wellness and high-end grocery, brands that fail to engage digitally — on platforms like Little Red Book, Douyin or Tmall — can become invisible, even if they have shelf space. A lack of digital fluency or an unwillingness to share brand assets is viewed by distributors as a red flag.

There are also structural challenges. Many UK brands, particularly smaller ones, still experiment with multiple distributors at once — one for e-commerce, another for offline, and sometimes additional partners for duty-free or cross-border trade. Unless tightly managed, this often leads to price undercutting and confusion. Distributors operating in fragmented environments are often left firefighting, while their UK partners attempt to course-correct from a distance. Brands who want to work with more than one distributor must have rigorous internal systems and a clear channel strategy. If not, they risk alienating their most committed partners.

When these dynamics work well, the results can be transformative. One Scottish food brand saw its China orders quadruple within two years, driven by regular planning calls, mutual investment in social media, and constant feedback loops around packaging and logistics. Crucially, the UK team made themselves available weekly — something the distributor cited as essential to building trust. Similarly, a British skincare brand working with a regional distributor in Jiangsu said the partnership succeeded because they treated the Chinese team as their “marketing co-founders”, not just as a route to shelf space.

In China, where trends move quickly, partnerships built on process alone rarely last. But those built on openness, accountability and co-creation tend to grow stronger over time. UK brands that view their distributor not as an outsourced sales agent but as an embedded partner — someone who understands the market, speaks to consumers, and carries the risk — are the ones that create lasting value on both sides.

Join CBBC’s China Consumer 2025 to learn more about the luxury and retail sector in China

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Why Cross-Border E-Commerce Appeals to British Businesses

For British businesses, cross-border e-commerce into China is a compelling opportunity to tap into the world’s largest online retail market without the complexities of establishing a physical presence. In 2025, China’s cross-border e-commerce market is projected to reach £268 billion, with annual growth exceeding 10%, driven by rising consumer demand for premium international goods. Cross-border e-commerce allows UK brands to sell directly to Chinese consumers through dedicated platforms, bypassing traditional import regulations and reducing upfront costs. Transactions below RMB 5,000 are exempt from import tariffs, and annual e-commerce purchases under RMB 26,000 enjoy a 30% reduction in value-added tax, making it cost-effective for businesses to test the market. Additionally, cross-border e-commerce offers British firms access to sophisticated digital marketing tools, such as livestreaming and social commerce, to build brand awareness among China’s 989 million internet users. For SMEs, this low-risk entry model is ideal for exploring consumer preferences before committing to larger investments.

The 2025 CBEC Landscape in China

China’s cross-border e-commerce landscape in 2025 is a dynamic ecosystem, underpinned by government support and technological innovation. The country has expanded its network of 105 cross-border e-commerce pilot zones, which streamline logistics through bonded warehouses, reducing delivery times and customs complexities. Platforms like Tmall Global, JD Worldwide, Douyin, Little Red Book, and WeChat Stores dominate, each catering to distinct consumer segments and product categories. In 2023, cross-border e-commerce import and export volumes surged to RMB 2.38 trillion (£244 billion), a 15.6% year-on-year increase, with beauty, fashion, and health products leading demand. Chinese consumers, particularly affluent urbanites and Gen Z, are drawn to cross-border e-commerce for its access to high-quality foreign brands unavailable locally. However, challenges such as regulatory compliance, logistics costs, and intense competition persist, requiring British brands to choose platforms strategically.

Tmall Global

Tmall Global, Alibaba’s dedicated cross-border e-commerce platform, holds a 50.8% share of China’s e-commerce market, making it the go-to choice for established brands. It hosts over 70,000 global brands and attracts affluent consumers seeking premium products.

Pros: Tmall Global offers robust infrastructure, including seamless payment integration with Alipay and access to Alibaba’s logistics network, Cainiao. Its flagship store model allows brands to customise their online presence, enhancing brand visibility. The platform’s data analytics tools provide deep insights into consumer behaviour, enabling targeted marketing. Tmall’s livestreaming feature, used by 40% of its merchants, boosts engagement through real-time product demonstrations.

Cons: High setup and commission fees, often 2-5% per transaction plus annual service charges, can deter smaller brands. Intense competition requires significant marketing investment to stand out. Compliance with Tmall’s stringent onboarding process, including brand authentication, can be time-consuming.

Suitable Brands: Premium British brands in fashion, cosmetics, and health supplements, such as Burberry or The Body Shop, thrive on Tmall Global. Established companies with strong brand recognition and marketing budgets are best positioned to leverage its scale.

Consumer Profile: Affluent urban professionals, aged 25-45, with disposable incomes above RMB 140,000 annually, shop on Tmall Global for luxury and high-quality imports. These consumers prioritise brand prestige and product authenticity.

Expert opinion: “China’s leading e-commerce platform, brand flagships are seen by consumers as being official and authentic, often setting pricing expectations for the whole market. Offers the most sophisticated loyalty and membership programmes and performance marketing options. Essential across many categories – but especially luxury, home/lifestyle, health, and fashion,” says Tong Digital’s Jack Porteous.

JD Worldwide

JD Worldwide, operated by JD.com, commands a 15.9% market share and is renowned for its focus on electronics, household goods, and health products. Its direct-to-consumer model appeals to brands seeking control over pricing and branding.

Pros: JD’s self-operated logistics network, with over 200 warehouses, ensures fast and reliable delivery, critical for consumer satisfaction. The platform’s partnership with Tencent enables payments via WeChat Pay, enhancing transaction ease. JD’s emphasis on quality control and anti-counterfeiting measures builds consumer trust.

Cons: High operational costs, including logistics fees, can erode margins for low-value products. JD’s focus on specific categories limits its appeal for niche or luxury brands. The platform’s rigorous vetting process may delay market entry.

Suitable Brands: British brands in consumer electronics, health supplements, or baby products, such as Dyson or Holland & Barrett, are well-suited for JD Worldwide. Companies with reliable supply chains and mid-to-high price points perform well.

Consumer Profile: Middle-class families and tech-savvy consumers, aged 30-50, shop on JD Worldwide for trusted, functional products. They value quality, safety, and competitive pricing over luxury branding.

Expert Opinion: “Longtime competitor to Tmall, JD’s audience skews more male than Tmall, making it a good platform for consumer electronics, technology, and alcohol brands,” says Porteous.

Little Red Book (Xiaohongshu)

Little Red Book combines social media and e-commerce, targeting young, urban female consumers with a focus on lifestyle and beauty products. Its storytelling approach has made it a cultural phenomenon, with 200 million monthly active users in 2025.

Pros: The platform’s social commerce model allows brands to engage consumers through user-generated content and influencer partnerships. Its low entry barriers make it accessible for smaller brands. Livestreaming and KOL (Key Opinion Leader) collaborations drive high engagement, with 30% of users making purchases via social media.

Cons: Limited organic traffic means brands must invest heavily in influencer marketing to gain visibility. The platform’s niche focus on beauty and lifestyle restricts its suitability for other categories. Data analytics are less robust compared to Tmall or JD.

Suitable Brands: Trendy British beauty, skincare, and fashion brands, such as Charlotte Tilbury or ASOS, excel on Little Red Book. Emerging or niche brands with strong visual storytelling capabilities can build a loyal following.

Consumer Profile: Gen Z and millennial women, aged 18-35, with a passion for fashion and beauty, dominate Little Red Book. These affluent urbanites seek trendy, aspirational products and value peer recommendations.

Expert Opinion: “Affluent, mostly female consumers in T1 and T2 cities use RED as a lifestyle guide and is an essential marketing platform for any premium brand. For eCommerce, premium homewares, food and drink, beauty, and health products thrive,” says Porteous.

Dewu

Dewu, formerly Poizon, is a niche platform for streetwear, sneakers, and luxury goods, with 100 million monthly active users and a focus on authenticity

Pros: Dewu’s authentication process builds trust for high-value items, ideal for luxury and collectables. Its young, affluent user base drives premium sales. Integration with WeChat Pay simplifies transactions.

Cons: Niche focus on streetwear and luxury limits broader category appeal. High commission fees (5-8%) and competition from resellers can squeeze margins. Smaller brands may struggle with visibility.

Suitable Brands: British streetwear and luxury brands, like Superdry or Mulberry, fit Dewu’s niche. Brands with collectible or high-end products and strong youth appeal succeed.

Consumer Profile: Affluent Gen Z and young millennials, aged 18-30, from Tier 1-2 cities, shop for exclusive sneakers, streetwear, and luxury goods, valuing authenticity and status.

Expert Opinion: “Originally a platform for streetwear fans and sneaker heads, Dewu has expanded its offer into more categories, including beauty and lifestyle. Best for brands focused on a young adult audience,” says Porteous.

Kuaishou

Kuaishou, a short-video and livestreaming platform, has emerged as a CBEC contender with 700 million monthly active users, focusing on affordable, trendy products.

Pros: Kuaishou’s livestreaming model drives impulse purchases, with 35% of users buying via live sessions. Low entry costs and a user-friendly interface make it accessible for SMEs. Its focus on lower-tier cities expands market reach.

Cons: Limited brand control due to reliance on influencers can dilute messaging. Less robust logistics compared to Tmall or JD may lead to delivery issues. The platform’s budget focus restricts premium brand appeal.

Suitable Brands: Affordable British fashion and lifestyle brands, like Primark or Muji-style homeware, excel on Kuaishou. SMEs with mass-market appeal and influencer marketing budgets thrive.

Consumer Profile: Young consumers, aged 18-30, from Tier 2-4 cities with incomes below RMB 100,000, shop for trendy, budget-friendly fashion and accessories, drawn to livestreaming deals.

Expert Opinion: Challenger short-video and livestreaming platform with big tech in China’s hundreds of lower tier cities, where imported goods are less prevalent. A good opportunity for established brands to gain a foothold in new consumer groups,” says Porteous.

WeChat Stores

WeChat Stores, integrated into China’s “super-app” WeChat, offer a versatile platform for cross-border e-commerce within its 1.3 billion-user ecosystem. Brands leverage WeChat’s social and payment features to create personalised shopping experiences.

Pros: WeChat’s Mini Programs allow brands to customise stores and integrate with WeChat Pay for seamless transactions. Its social nature enables direct consumer engagement via groups and official accounts, enhancing CRM. Low setup costs make it attractive for SMEs.

Cons: High competition and lack of organic traffic require substantial marketing spend to drive visibility. Technical expertise is needed to develop and maintain Mini Programs. The platform’s fragmented ecosystem can complicate scaling operations.

Suitable Brands: British lifestyle, food, and beverage brands, such as Fortnum & Mason or Twinings, thrive on WeChat Stores. SMEs with strong social media strategies and niche offerings can build loyal communities.

Consumer Profile: Diverse consumers, including urban professionals and older generations (35-60), use WeChat Stores for convenience and trusted brands. They value personalised service and social recommendations.

Douyin

Douyin, China’s version of TikTok, boasts over 750 million monthly active users and is a leader in social commerce, blending short videos and livestreaming with e-commerce. Its cross-border e-commerce platform drives sales through engaging content and influencer-driven campaigns.

Pros: Douyin’s algorithm ensures high visibility for engaging content, with 43% of users finding ads enjoyable. Livestreaming and KOL partnerships drive impulse purchases, with luxury goods GMV rising 254% in 2023. In-app stores and Douyin Pay enable seamless transactions, while branded hashtag challenges boost viral reach.

Cons: Heavy reliance on influencer marketing requires significant investment. Limited control over ad distribution, based on user demographics, can lead to inconsistent reach. Foreign brands need a local partner for verification, adding complexity. The platform’s focus on trendy, affordable items may limit appeal for ultra-premium brands.

Suitable Brands: British brands in cosmetics, fashion, and lifestyle, like Lush, Superdry, or Boohoo, excel on Douyin. Trendy, mid-to-high-end brands with creative marketing campaigns can leverage its viral potential.

Consumer Profile: Young, affluent consumers, aged 18-35, from Tier 1-2 cities, shop on Douyin for trendy cosmetics, accessories, and fast fashion. Gen Z and millennials, especially women, are drawn to engaging, influencer-driven content.

Expert Opinion: “Fast-growing livestreaming platform Douyin is vital for capturing younger generations in trendy categories such as beauty and fashion,” says Porteous.

Strategic Considerations for British Brands

Choosing the right cross-border e-commerce platform depends on a brand’s product category, target audience, and resources. Premium brands should prioritise Tmall Global for its scale and affluent consumer base, while electronics and health brands align with JD Worldwide’s quality-focused shoppers. Douyin’s viral, influencer-driven model suits trendy, mid-to-high-end brands targeting Gen Z. Little Red Book is ideal for cool, youth-oriented brands, and WeChat Stores suit SMEs with niche offerings. British businesses must invest in localisation, including Chinese language content and local payment methods like WeChat Pay and Alipay, to build trust. Partnering with local influencers and leveraging livestreaming can amplify reach, particularly on Little Red Book and Tmall. However, brands should be mindful of logistics challenges, such as customs delays, and consider using bonded warehouses in cross-border e-commerce pilot zones to streamline delivery.

Regulatory compliance remains critical, with China’s data security and consumer protection laws tightening in 2025. The CBBC advises UK firms to work with experienced local partners to navigate these complexities. Despite challenges, the rewards are significant: China’s CBEC market offers British brands access to a consumer base with growing disposable incomes and a penchant for quality imports. Cross-border e-commerce is a low-risk, high-reward entry point for UK SMEs to engage with China’s dynamic market.

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China is the world’s leading e-commerce market, accounting for more than half of the online retail sales in 2021. With a population of 780 million digital consumers, e-commerce sales hit £2.3 trillion.

Chinese consumers are also changing faster than their peers in other markets. Consumers’ purchasing behaviours are continuously in flux and that presents a constant challenge for international brands looking to engage with their customers. The rise of 232.68 million Gen Z’ers as a driving consumer force is setting new trends in communicating with targeted customers.

China’s cross-border e-commerce (CBEC) ecosystem has long been dominated by two major B2C platforms: Alibaba’s Tmall Global and Tencent-backed JD Worldwide. Challengers have come and gone – examples include Kaola, ultimately acquired by Alibaba from Netease in 2019 and now reportedly down to just 20 staff, or smaller players like Secoo, whose rise and fall has been much talked about after a promising start and major IPO. The barriers to launch for international brands remain stubbornly high, and the core challenges include customer acquisition and the often long wait for profitability after launch.

The intensification of these challenges and fiercer competition in a lower-growth environment, alongside cultural and socioeconomic factors, is leading to an enormous shift in CBEC towards a more diverse, multifaceted future. This can be referred to as ‘decentralised e-commerce’ – social commerce powered by networks of local tastemakers, taking place wherever consumers are spending their time.

What is the outlook for e-commerce in China?

Due to Covid disruption in multiple cities across China, alongside other challenges including high youth unemployment, difficulties in the real estate sector and a potential global recession decreasing demand for Chinese goods, the country has experienced a drop in consumer confidence in 2022. At the time of writing, it remains to be seen what future policy course China will choose, and how quickly it will open up to the rest of the world and loosen Covid controls.

This means that international brands can no longer rely on their previous assumptions when entering China. It was previously common to feel a halo effect from listings in major global retailers in the world’s megacities. However, thanks to Covid travel restrictions, the proportion of luxury purchases made overseas shrank from 55% in 2019 to just 10% in 2021. Correspondingly, e-commerce purchases of luxury goods trebled from 13% to 39% in the same period.

How trust has driven growth in China’s CBEC landscape

Around 90% of sales happen on four leading marketplaces, but even for these, consumer trust remains staggeringly low, with the best rated platform scoring just 39/100 on ‘trust in product authenticity’ in a 2019 survey. Consequently, recommendations from trusted vendors, friends, family or other credible sources such as micro-influencers is an incredibly important part of the purchasing journey. This journey often takes consumers through multiple social platforms, online and offline locations, official brand websites, and review sites.

Social commerce has arisen as an antidote to the epidemic of mistrust. This vast word-of-mouth or recommendation-driven sales network, where the vendor is not the brand-owner, but a friend, family member, influencer, or celebrity, is set to grow to $474 billion by 2023.

What are the regulatory challenges facing CBEC in China?

Alibaba is the tallest tree in the Chinese e-commerce forest, and it has consequently borne the brunt of the cyclone of regulatory enforcement sweeping the sector. In April 2021, the company was fined more than USD $2.75 billion for monopolistic behaviour, and in its FY22 annual report, described the external environment as the “most severe in decades”. This regulatory focus has allowed others to grow into the gap as Alibaba adapts its business model under increased scrutiny.

Some of the best-known faces who operate on Alibaba platforms like Taobao have also faced their own challenges. Successful live streamers Austin Li and Viya (arguably the most famous live streamers on the planet) have both suffered calamitous falls from grace, with Viya removed indefinitely from the platform in Dec 2021 for tax evasion, and Li – also known as the ‘Lipstick King’ Li Jiaqi  for three months from June 2022 for ‘technical issues’ related to political sensitivity.

The sudden and unexpected fall of these major salespeople left a lot of brands with stock in the wrong place, and often without alternative channels available as a ‘Plan B’.

Chinese consumers are also changing faster than their peers in other markets, presenting a constant challenge for international brands looking to engage with their customers. — Celine Tang, CBBC

How is the CBEC landscape changing?

Growth looks hard to come by for Tmall Global at the moment. Merchants should be wary of seeing it as their sole route to market – even as growth stutters, the platform adds thousands more merchants, intensifying already fierce competition for consumer eyeballs. Alibaba’s first ever quarterly contraction in FY23 Q1 (down 0.1% year-on-year) points to a period of restructuring for the company as it adapts to a new regulatory environment and competitive set – including JD, Douyin (known as TikTok overseas), Kuaishou and WeChat.

In 2021, Bytedance’s short-video social media and eCommerce platform Douyin overtook Alibaba’s to become the dominant platform for live streaming e-commerce. During the early stages of the Covid outbreak in 2020, Douyin’s time spent on platform grew to 88 minutes a day among its active user base. These consumers translated into sales growth, with Caixin reporting that live streaming e-commerce on Douyin topped RMB 800 billion (£95.8 billion) in 2021, more than double its 2020 figure. Alongside Douyin’s growth, rival short-video platform Kuaishou has taken a sizeable share of the market among cheaper products and in lower-tier cities.

In 2022, Alibaba’s long-time rival Jingdong (JD) posted its best-ever figures during its flagship e-commerce festival 618. It is notable that luxury skincare brands are starting to take to the platform in greater numbers – in mid-2022, La Mer opened an e-store, joining other Estée Lauder brands including Jo Malone and Bobbi Brown.

Tencent’s super-app WeChat, with its Mini-Program functionality, continues to be the natural home for influencers looking to monetise their following and open an eCommerce store. Public figures favour the closed network of WeChat where they can push long-form content to loyal followers and convert product recommendations into revenue. WeChat made tentative steps into live streaming in 2020, and during 2022 has begun to centre this feature more prominently within the app. The platform has goals to make serious inroads into this market to compete with Douyin and Kuaishou.

In response, Alibaba has been making the small-business-to-consumer marketplace Taobao increasingly adaptable. The platform, whose name in Chinese has come to mean ‘to shop online’ in the way that Google is used as a synonym for search in English, has a vast user base and an entrepreneurial network of vendors who can adapt in real time to consumer shifts. Their scale varies from a few hundred to a few hundred thousand followers, and many are influencers in their own right. Taobao provides annual rankings of stores based per category on their sales performance, reputation for authenticity, and customer service scores – further encouraging store operators to provide a reliable, professional, and trustworthy service to their customers. Many also regularly publish content to their store subscribers introducing new brands or products or alerting them to upcoming sales events.

An often-overlooked channel is direct sales through brands’ own global .com sites. Given the reduction in tourism between China and the rest of the world, consumers look to retailers’ and brands’ websites to cross-check claims and get a full brand experience. However, many merchants are still not making simple adjustments such as adopting Chinese payment methods like WeChat Pay and Alipay or ensuring sites load quickly in China to cater to this group. The relatively low-cost investment in these adjustments is often well worth it because they typically have a higher conversion and average basket than home market consumers.

Time to move beyond ‘hero SKUs’?

A strength of Tmall Global’s marketing functionality and algorithm is the ability to create hero products – which can unlock the ability to scale sales on specific SKUs (products) quickly. Alibaba’s own case studies point to this as the correct tactic to succeed on the platform.

For niche brands without the budget to continually elevate top-selling products or build new heroes, this creates longer-term issues of over-reliance on one SKU and the need for frequent heavy discounting during shopping festivals like Singles’ Day. The nature of decentralised e-commerce provides brands with a golden opportunity to diversify their range – focusing on hero SKUs on volume channels such as Douyin while working with specialist Taobao and WeChat vendors to expand their range.

Opportunities for brands among increased competition

Leveraging the established audiences of social commerce vendors like Douyin and Xiaohongshu is a vital tactic in any international brand’s playbook in China. It is also essential to look for growth opportunities across all platforms to meet the consumption patterns and preferences of a changing shopper. As emerging platforms look to expand their brand portfolio, there is a burgeoning opportunity for international merchants to diversify their sales channels.

From a risk management perspective, a decentralised approach to e-commerce avoids the difficulties of being overly reliant on one channel or influencer to drive revenue. Different challenges arise around pricing management and ensuring no SKUs become over-distributed and devalued. Both can be managed with adequate planning and resource.

Chinese consumers have already changed their purchasing behaviour. International brands cannot afford to ignore China’s trend of decentralised e-commerce.

Click here to read Samarkand Global’s new whitepaper “Understanding China’s Decentralised eCommerce Landscape”, with foreword by CBBC China Business Advisor (Consumer Retail & eCommerce), Celine Tang.

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Deciding on the right route to enter the China market is the first step if you want to export and sell into the country, whether that’s through cross-border e-commerce or a local distributor.

The second step is to evaluate your market potential. There is no point in coming into the market if you don’t know what opportunities exist and what they are. Knowledge is power; research and data mining are fundamental to establishing your business.

China’s Zero Covid policy is still in place, and unless you are willing to do lengthy quarantines, you may not be able to travel to China in person. It is important to know that there are companies on the ground that can do this evaluation for you.

Using cross-border e-commerce to gain a foothold in China

If you are interested in selling your products in China but are not ready to establish a presence in the country yet, then cross-border e-commerce could be a good place to start.

China has the largest digital buyer population in the world, home to more than 840 million online shoppers. In 2021, China’s e-commerce market was larger than the US, the UK, Japan, Germany and France combined, and in 2021, e-commerce sales reached 52% of total retail sales, making China the first country in the world to have more online sales than traditional ones.

According to The eCommerce Guide, Alibaba’s Taobao and Tmall and JD.com dominate the Chinese e-commerce market with 50.8% and 15.9% market share, respectively, followed by Pinduoduo (13.2%) in third place.

Instead of establishing a presence in China to sell online, foreign firms can choose cross-border e-commerce, benefitting from streamlined customs procedures through over 100 cross-border e-commerce-integrated pilot zones. Those zones limit Chinese consumers to purchasing up to RMB 5,000 (£601) per transaction and no more than RMB 26,000 (£3,125) per year. They must work with authorised partners to record customs transactions.

China has long led the world in aggregate e-commerce sales figures and share of total retail. However, the country may have reached a behavioural tipping point, fuelled by the restrictions of the Covid-19 pandemic.

The current cross-border e-commerce regime permits overseas sellers to sell goods directly to Chinese consumers through certain registered e-commerce platforms (e.g., Tmall Global, JD.com). The qualifying products can be imported on an expedited basis at reduced import tax rates. The products are either shipped from overseas or stored in a bonded warehouse.

Distributor or professional employer organisation?

Once the Chinese consumer is familiar with your product and you feel ready to have a presence on the ground, the next possible step could be to partner with a local distributor or a professional employer organisation (PEO). Both options have pros and cons.

As a new foreign business owner in China, investing in a corporate structure may seem out of the question when you first get started, therefore, you need to look for low-cost options. Using a PEO to enter the Chinese market could be the ideal solution. PEOs specialise in assisting small companies regarding benefits and human resources for their workers.

When you partner with a PEO, they hire the individual on your behalf so that you don’t have to incorporate a company in the country. All employment requirements are fulfilled, including the payment of social benefits, which allows you to start your business immediately. China has a complicated legal system, which can make hiring or firing an employee difficult. Finding a PEO that understands local customs and regulations may be of help for your business.

When you partner with a professional employer organisation (PEO), they hire the individual on your behalf so that you don’t have to incorporate a company in the country

When you sign an agreement with a PEO, you are adopting a co-employment structure. This means that your employees are also the PEO’s employees and that it will have authority over your tax and healthcare responsibilities.

If you think this option is not for you, a local partner could help you move your business forward. Using infrastructure and logistical know-how that already exists may prove to be more time and cost-efficient. The distributor model allows businesses to leverage local expertise and is a popular method among foreign companies. Finding the best-fit partnerships will be critical to your business success.

There are several advantages of working with a distributor, including instant market exposure, expanding brand awareness, benefiting from a local presence and leveraging existing contacts. They can help you access a wider network of customers and channels in new markets.

In general, distributors have processes and teams that know how to sell to their customers and deal with local customs and regulatory requirements. This helps businesses increase sales and make significant savings.

Nevertheless, you should be aware of the disadvantages. Being detached at the local level can result in challenges, such as identifying whether your products are a good fit for the market, or whether your distributors are selling through the most effective channels.

Be risk aware, not risk-averse

The distance from your target market in China can cause problems, such as the lack of brand control. Of course, it is crucial to protect your brand. Your distribution agreement should consider who is responsible in the event of a third party bringing a claim against distributors for products infringing on intellectual property rights, for example.

When researching a potential partner, use traditional web engines but include Chinese platforms as well. Make sure the partner’s address and phone numbers are real and ask to talk to clients. Small steps can take you a long way in China. They are the difference between a fruitful relationship and a catastrophic one.

Finally, take the time to design your business plan. Use a local professional to handle your trade needs, such as outsourcing to a media agency or hiring a local person through an agent.

You need to be a problem solver to succeed in China. Do not underestimate the challenges, but rather, be prepared to stay flexible to handle any situation.

This article is part of a series on exporting to China. See all the articles in the series below.

Part 1: How to conduct market research
Part 2: Protecting your trade mark
Part 3: How to choose the correct route to enter the China market
Part 4: The dos and don’ts of choosing a distributor
Part 5: How to find and hire staff in China

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s Launchpad service gets your company boots on the ground in China quickly and cost effectively.

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Created with information provided by cross-border e-commerce company Samarkand Global

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Singles’ Day 2021 wrapped up last week, clocking a whopping RMB 540.3 billion (£63 billion) of goods sold on Alibaba alone (the group that created the shopping festival in 2009). That made for year-on-year growth of 8.5%,  much lower than last year’s 26% growth compared to 2019, but still impressive given the odds stacked against it. It is also worth noting that this year’s figures captured sales from 1-11 November, as what was once a 24-hour flash sale event has expanded into a multi-day shopping bonanza, including pre-sales stretching all the way back to October.

Beijing’s crackdown on big tech companies as part of its common prosperity drive, coupled with an increased focus on sustainability, meant that the shopping festival was without its usual razzmatazz. Instead of Alibaba’s usual star-studded gala with previous appearances from Taylor Swift, David Beckham and James Bond (Daniel Craig), the company held a very low-profile evening party without a live studio audience to celebrate the event.

Similarly, new regulations for China’s fintech industry – and the fact that just 13% of China’s young consumers are not in debt with some feeling a little shy in light of the latest Delta outbreaks – will have impacted Alibaba’s deferred payment system Huabei, and JD’s Baitiao. In previous years, at least half of sales on Singles’ Day have sold using the credit systems.

The importance of strong logistics was never more pertinent with the current global supply chain, logistics and customs clearance challenges. To minimise the impact, Alibaba’s logistics arm Cainiao pre-stocked over 300 million goods from 87 countries and regions in warehouses in China, on top of securing additional cargo space on over 1,350 flights, 150 trucks and 210 ships, to ensure swift delivery of cross-border purchases. As David Lloyd, general manager UK, Netherlands and Nordics at Alibaba, pointed out in an interview with the Evening Standard, “Whilst no-one is completely immune from these macro challenges impacting global retail right now, we are confident that the brands that sell with us are well-prepared and any potential consumer disruption will be minimised.”

If it wasn’t tough enough already, there were also nationwide warnings about parcels becoming contaminated with the virus, not long before the big promotions on 11/11.

So with all of that in mind, Alibaba’s 8.5% growth is not to be sniffed at. Yet, reading below the headline numbers, there are some interesting data points that are a microcosm of the China market beyond the festival.

Arguably the most impactful growth drivers are consumers from lower-tier cities. This year’s Singles’ Day was the first that saw shoppers from ‘smaller’ cities outnumber those from tier 1 and 2 cities. Spending from lower-tier cities on Alibaba platforms grew 25% on last year — much higher than the company’s overall 8% growth – indicating that spending by the more mature big-city consumers barely grew, if it did at all. The number of luxury goods buyers in smaller cities also grew by nearly 50% on Alibaba platforms. Among the 400 cities from where consumers bought luxury goods during the festival, the fastest-growing 30 locations were all lower-tier cities.

Although there is no question about the rise of domestic brands, Chinese consumers still love buying foreign goods. Major categories were largely dominated by well-marketed foreign brands. As Lloyd explained, “Demand for products from international brands, particularly from the UK, has remained resilient in the China market and in fact grown over the course of the past year. From health and wellness to beauty and food and beverage, Chinese consumers hold ‘Brand Britain’ in extremely high regard for its quality and heritage.”

The often-hyped elderly consumers, although not yet a driving force, did their bit to bolster numbers. A daily average of 1.1 million users browsed 11.11 offers using Alibaba’s new senior mode. Their favoured items included smartphones, down jackets and woollen coats.

Above all, Singles’ Day is representative of how competitive China has become. A total of 290,000 merchants were competing for mindshare during this year’s festival just on Alibaba platforms alone. According to Lloyd, last year more than 1,3000 British brands took part via Tmall Global, including The Body Shop, athleisure retailer Sweaty Betty,  and Brentford-based Teapigs.

With the number of sellers increasing 32% in a pool of sales that rose 8%, the cost of acquisition has increased even further. This reinstates the importance of a smart Singles’ Day strategy which feeds into the bigger picture.

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The scale and penetration rate of e-commerce in China is already astonishing, and this plan aims to push it to new heights. According to the plan, the volume of e-commerce transactions in China reached RMB 37.2 trillion (£4.2 billion) in 2020 and is expected to reach RMB 46 trillion (£5.2 billion) by 2025. E-commerce related employment is expected to reach 70 million by 2025, as e-commerce is further integrated with primary, secondary and tertiary industries across the country.

The key aspects of the plan focus on enlarging and regulating cross-border e-commerce, encouraging sustainability and eco-friendly growth, new consumption scenarios (such as so-called ‘phygital’ retail) and enabling the expansion of e-commerce in more remote areas to support rural revitalisation. Some specific policy plans are described below:

• Deepen the coordinated development of e-commerce and delivery networks.
• Support the opening of free trade zones and ports, a national digital economy innovative development trial zone, cross-border e-commerce comprehensive zones and other pilot projects.
• Increase the sustainability and ‘green operation’ of e-commerce enterprises, including increasing the application and promotion of energy-efficiency technology and equipment, upgrading data centres and warehouse hardware and advancing the reduction of carbon emissions.
• Stimulate the development and regulation of second-hand e-commerce (including platforms such as Idle Fish and Zhuan Zhuan) to promote the recycling and re-use of resources.
• Set up more comprehensive standards for eco-friendly packaging and accelerate the implementation of an eco-friendly packaging product certification system.
• Support the application and implementation of 5G, augmented reality, virtual reality, 3D printing and other new technologies into consumption scenarios to speed up the digital transformation of enterprises and improve both offline and online shopping experiences.
• Actively develop smart community, smart shopping areas, smart gym construction; encourage innovation of business models and upgrade of the food delivery, parcel storage cabinet deployment.
• Support Chinese brands in “going global” (品牌出海) and expand overseas payment settlements in RMB currency.

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When the pandemic hit and retail stores closed, British activewear brand Sweaty Betty had to ramp up its online offering overnight. Luckily, the brand has always taken a “digital first” approach, which also stood them in good stead when they launched on Tmall Global in February 2021. Since then, Alibaba’s consumer insights have helped them build a loyal community of shoppers in China.

In this video, Stacey Widlitz, retail and consumer expert and founder of SW Retail Advisors, talks to Sweaty Betty CEO Julia Straus about how Alibaba supported the brand’s entry into the China market and where their China journey will take them next.

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Hawkins & Brimble started in 2016 after founder Stephen Shortt noticed a gap in the market for high quality and diverse men’s skincare and grooming products. Building the brand around the concept of the ‘British gentleman,’ Hawkins & Brimble created a product that embodied style, quality and heritage.

Since joining Tmall Global in early 2020, China now accounts for 25% of Hawkins & Brimble’s business, which Shortt attributes to the image and style-conscious young male Chinese consumer. He believes that demand for Brand Britain will remain and will in fact increase once Chinese consumers can travel and will be able to discover new brands in person.

In the video below, Shortt talks to retail and consumer expert and founder of SW Retail Advisors, Stacey Widlitz, about how insights from Alibaba’s platform have allowed the brand to adapt its strategy as well as manage supply.

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China is home to the world’s largest e-commerce market, but navigating it can be overwhelming: where do you even start? Although it can seem very similar to the West, China’s online marketplace is distinctive, and this can come with costs and challenges your business will need to overcome to successfully conquer China. In this article, Elanders Group will walk you through some of these challenges and costs, including China cross border e-commerce (CBEC), routes to market, fulfilment options, customs clearance, tax, duty and logistics.

How to get started

The first steps on your journey into the e-commerce world in China are probably some of the most important as they can determine the rest of your experience. You must register your trademark to trade in China legally. To be successful in any market, not just in China, market research is also critical for success. You must fully understand the market you are going into before trying to enter. This will help with creating your ‘China strategy’ – another essential first step. And finally, you must find the right partner for your business. 

China cross border e-commerce and logistics (CBEC)

There are multiple different routes to market in China, but choosing the right one for your business is vital. CBEC is dominated by marketplaces, of which there are two main types: Firstly, e-commerce platforms: these are your big online shopping platforms, like Alibaba, Net Ease, Kaola, JD and more. Secondly, social shopping platforms like WeChat. This type of platform comes with lower platform costs, leaving bigger budgets for leveraging China’s influencer culture and spending on influential marketing opportunities.

It should be noted that there is no quick way into China and on average it takes two to three years to establish your brand.

What is a TP?

You might have heard the term ‘TP’ floating around in your research, but what exactly is it and why do you need one?

A TP is an e-commerce partner for all platforms in China. Your TP is your Chinese business partner whose sole purpose is to help you on your journey into Chinese e-commerce. Most platforms require daily communication, coordination, and negotiation to operate efficiently and simply will not wait for the EU to ‘wake up’ every day. Therefore, you need a partner in the local time zone. In addition to this, the Chinese platforms offer only Chinese interfaces. Without a local presence – whether that is a partner or your own resources – you will not be successful, so dealing with this part of your strategy should be considered ‘mission-critical.’

An example of one of the online shops Elanders Group manages

How does payment work?

As your market will be in China, your customers will pay in RMB. Payment companies collect RMB payments and buy foreign currency at the spot exchange rate. The exchanged amount will be sent to the payment company’s overseas accounts before landing in your UK/European bank account.

Navigating customs clearance and tax

Since Elanders Group is connected with Chinese customs, it can register and track orders digitally. However, prior to the package being sent, Chinese customs must be provided with details of the following:

• The shipment
• The payment
• The order

There are two types of typical shipping models that are used by cross border sellers:

Direct shipping: The personal parcel route and EMS (Express mail services)

This method of shipping is done via services such as Royal Mail or China Post. This avoids customs checks and taxes (as these are paid by the customer at the point of sale) and you will not need stock in China. You also do not need CIQ clearance. The downsides to this are higher costs and longer shipping lead times of between 7-30 days.

Chinese buyers are sometimes happy with this method as it reduces the risk of receiving fake products. Although prompt shipping is vital in Chinese e-commerce, it is preferable to aim for a solution that provides longevity.

The bonded warehouse model

This method involves having your products stored in a warehouse located in a free trade zone (FTZ) in China. This option allows you to store and clear goods without registering or filing with the Chinese authorities. You can also move your goods freely within the FTZ and they can even be transported back overseas without paying any taxes, meaning you can use the bonded warehouse as an Asia hub. All taxes and duties are only paid before customs, therefore they are covered in the retail price to the customer.

The bonded model reduces shipping lead times to 2-4 days, but it does also require CIQ clearance (although this is included within the 2-4 days).

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