Cross Border e-Commerce, a channel for Thai SMEs who want to try the Chinese market

Cross Border e-Commerce

The COVID-19 pandemic has changed consumer behavior around the world, including the behavior of Chinese consumers, who are increasingly buying things online. This is one of the factors that has led e-commerce, especially Cross-Border e-Commerce, to grow rapidly in China.

Statistics show that from 2015 to 2020, importers and exporters in China have increasingly turned to Cross-Border e-Commerce channels every year. The value of imports and exports via Cross-Border e-Commerce channels in 2020 accounted for 38.86 percent of the total import and export value.

In the first half of 2021, the market size of China’s cross-border e-commerce was 6.05 trillion yuan, accounting for 33.48 percent of the total import and export value, and it is expected to reach 14.6 trillion yuan in 2021.

Cross Border e-Commerce may be a new marketing approach for Thai SMEs because it is different from general imports. But to explain briefly, Cross-Border is a method of importing goods from abroad to a free trade zone (Free Trade Zone).

Through special customs regulations, no import license is required and can only be sold through the Cross-Border e-Commerce platform, which is a convenient import method and requires less paperwork than general trade imports.

Cross-Border e-Commerce imports are a way for SME entrepreneurs to try the Chinese market before actually selling their products. This method reduces the hassle and costs of various paperwork, eliminates the problem of unsold products, products being stored until they expire, spoil, and if your products are successful in the Chinese market,

In the future, it can be changed to normal imports to save costs in the long run and expand sales channels from the Cross-Border e-Commerce platform to other online channels or offline channels, such as opening a storefront under your own brand or selling products in department stores to make your products reach a wider range of consumers.

There are many new cross-border e-commerce platforms emerging today. According to iiMedia Research in May 2021, the four giant platforms Tmall Global, Kaoka.com, Jingdong International, and Suninginternationnal are the top four platforms with the largest market share in China.

However, these platforms also have some considerations, especially Tmall Global, which has a very high cost of opening a store (annual service fee of 30,000 – 60,000 yuan and initial deposit of 50,000 yuan or more, depending on the product type and type of store). Therefore, it may not be suitable for Thai SME entrepreneurs who do not have very high costs.

On the other hand, new platforms like Pinduoduo, Kuaishou, and Tiktok, despite being new platforms, have the advantage of not having a high cost of opening a store and have different strengths. Thai SME entrepreneurs who want to try selling products to the Chinese market can choose the service that is suitable for their products.

• Pinduoduo is a platform for selling cheap products. It has an interesting marketing strategy: when you buy products with friends, you will get a cheaper price. It is like having buyers help advertise products, so it is easy to reach consumers. In 2020, there were 788.4 million users (about 11 times the population of Thailand).
• Kuaishou and Tiktok are short video platforms that allow you to sell products through live streaming or by attaching product links to short videos. When viewers watch short videos and like the products, they can click on the links to buy the products conveniently and quickly.

Cross-Border e-Commerce reduces the number of middlemen in the supply chain, allowing businesses to distribute products directly to consumers in China, which increases profits per product. It also simplifies the process of importing goods into China, such as FDA registration and importer registration.

Especially for food supplement, cosmetic and organic products, which are imported normally or General Trading, have very strict import regulations and product safety measures. Importing through normal channels requires advance processing before importing, resulting in a waste of time, expenses and trading opportunities.

There is another interesting thing that Thai SME entrepreneurs should consider to step into Cross-Border e-Commerce, which is Chinese Customs data revealing statistics in 2020 that China imported goods from Thailand through Cross-Border e-Commerce channels worth 2,172.24 million US dollars, an increase of 129.8 percent, with the growth value ranked 4th (after Malaysia, Singapore, and Japan). This is an era where Chinese consumers are increasingly turning to consume goods from abroad, including goods from Thailand.

Therefore, entrepreneurs may consider exporting through Cross-Border e-Commerce channels to test the Chinese market first to see if their products are popular. This will save time and costs compared to general imports and can also help pave the way to expand the customer base to prepare for opening a store in the future. However, this information is basic information / general principles.

Entrepreneurs should choose a reliable trading partner/transport company and study the relevant regulations and policies carefully, especially the requirements in each area before deciding to do business.

Reference source: Thai Business Information Center in China, Royal Thai Consulate-General in Chengdu