CHINA: Cross-Border Online Retail Market Reaching Peak Levels – Mintel

The cross-border e-commerce market in China is expected to peak over the medium term, according to new research from Mintel.

The report found that the market for imported products bought online (‘Haitao’) grew from 53bn yuan in 2011 to an estimated 626bn yuan in 2016 (a CAGR of 64%), but it is now only expected to grow to 1.28trn yuan by 2021 (a CAGR of 15%).

Mintel found that 73% of Chinese consumers shop for foreign imported products from domestic shopping websites, compared with 27% who do so from overseas retail websites.  It also found a clear trend for some products to be more desirable from certain countries – 31% of consumers buy imported food from Taiwan; 36% buy alcoholic drinks from France (principally wine); and 45% buy beauty and personal care products from South Korea.

According to Mintel, the only territory seeing an increase in purchasing among urban Chinese consumers over the past two years was France. Of those who have bought imported products online, 16% bought imported products from France in 2016, up from 15% in 2015. Of those who have bought imported products this year, 20% have bought beauty and personal care products from France, while 36% have bought alcoholic drinks, including wine.

Matthew Crabbe, Director of Research, Asia-Pacific at Mintel, said: “While the Haitao market has seen rapid growth over recent years, and should maintain strong growth for the foreseeable future, it is likely to peak soon as a proportion of online retail in China. This does not stop the Haitao route to Chinese consumers from offering significant potential market opportunities to foreign brands, but it does mean that Haitao is likely to be more relevant to brands looking at initial market entry. Retailers and brands should therefore play to their different country specialities when attempting to differentiate from their competitors.”

When choosing where to buy imported products online, Chinese consumers who have bought imported products online rank proof of quality of products as important (68%), followed by ability to use third-party payment systems (44%). They also want detailed product information (36%) and Chinese-language customer service (25%).

Additionally, 39% said they would like to see a better choice of payment options on overseas online shopping websites. Currently, 35% are less confident about the returns policies of overseas websites than they are of domestic online shopping websites.

Mintel also found that 62% of those who had purchased overseas products agreed that online shopping lacks the excitement of shopping when travelling overseas, with 20% strongly agreeing with this. Additionally, 34% of consumers agreed that they are excited when shopping from websites that run interesting advertising campaigns.