According to Jiguang’s report at the end of November 2018, the total number of online shoppers using Chinese ecommerce apps installed on their mobile devices grew from 207 million to 783 million within just one year. The penetration of ecommerce in China has reached 71.1% of the total Chinese population. With the population of China reaching over 1.4 billion this means there are over a billion people on China’s shopping apps. In terms of spending, Emarketer estimates that spending on China’s shopping apps reached USD 1.53 trillion!
With China shopping apps experiencing such tremendous growth, competition is becoming more and more fierce. New players are forced to fight for even a sliver of market share but nonetheless, there has been a steady stream of new entrants to the market causing constant shifts in the China ecommerce landscape.
Foreign brands players entering the market should take their time in choosing which marketplace to work with. In this blog we’ll cover the prime selling points, focuses, and specializations of the largest China shopping apps. Hopefully, this will be the perfect article to inform you about which China Ecommerce platform to choose for your business.
Ranking: Top 5 China Online Shopping Apps in 2019
The widespread availability of smartphones gave rise to the popularity of mobile shopping apps which has helped further drive the growth of China Ecommerce. China Shopping apps have become the most popular way for users to access online shopping. According to research from China Internet Watch, over 80% of Chinese online sales were generated from mobile apps, and this trend is expected to continue in the future.
Check out the below graph to see the number of MAUs on China’s largest e-commerce platforms for an idea of the rankings. However, remember MAUs does not necessarily translate into revenue, so take these figures with a grain of salt.
The China Ecommerce market continues to see tremendous growth, but it’s impossible not to notice that the growth is gradually slowing down. With more and more competition entering the market the landscape has seen consistent innovation. However, challenges lay ahead, as new laws put into effect in early 2019 have increased the administrative burden many of these platforms face.
#1. Top China Shopping Apps: Taobao: The Undisputed Leader in The China Ecommerce Market
Average Monthly Users (MAUs): 540.27 million
Install Penetration Rate: 52.5%
The Alibaba-backed app has always been a synonym for “online shopping” in China. Ever since its launch in 2003, it remains the most preferred China shopping app and continues to act as a trend-setter for other ecommerce platforms. Operating on a C2C business model, Taobao allows the sale of goods and services between individuals.
For a direct comparison, it acts like the Chinese equivalent of E-bay (without the auction style) with a marketplace focused business model. Any person in China can register to easily to become a merchant and sell to users on the platform, with Taobao acting as the platform and agent in between.
With this business model, it’s no surprise that there is a huge range of products and services available on the platform. Nearly anything you can imagine can be found on Taobao and even things that might be beyond your imagination. The dominant position of Taobao is due to its advanced logistics providers, strong incentives for both purchasers and sellers, and its place as the trendsetter for Chinese ecommerce.
The Double 11 Festival Showcasing Total GMV Of Alibaba’s China Ecommerce Platforms in 2018.
One example of Taobao’s dominance was the creation of the Double 11 shopping holiday in 2009. Due to the popularity of this shopping holiday, Brands and competing Chinese online shopping sites have had to follow the trend and offer promotions on the same day in the hopes of capturing a piece of the pie. Even foreign brands that do not usually participate in third-party shopping festivals, like Apple, now offer promotions on this day.
When we take a look from last year’s data, on the day of Double 11, Mobile Taobao’s daily active users saw a rise of 63.4%. The Double 11 shopping festival dwarfs other popular shopping holidays like Black Friday in the US. The creation of this shopping holiday has been called by many as an “Ecommerce Miracle.”
For 2019, Alibaba has just announced a partnership with Starbucks, that enables a seamless beverage and food-ordering experience by using the app. By the end of April, Alibaba offered on-demand delivery services for more that 2,100 Starbucks stores in 35 Chinese cities. Collaborations like these and its non-stop desire for innovation makes Taobao the undisputed leader of China shopping apps.
#2. Top China Shopping Apps: Pinduoduo: Where Group Buying and Social Commerce Meets
Average Monthly Users (MAUs): 283.27 million
Install Penetration Rate: 22.4%
Ever since its launch in 2015, Pinduoduo has seen explosive growth. Within just three years of launching Pinduoduo rose to become the 2nd most popular China shopping app. In fact, it is the fastest growing app in the history of the Chinese Internet. Its Chinese name 拼多多 literally means to combine a lot of purchases.
What makes Pinduoduo different is that its primary features revolve around group-buying. This means that the more people buy a product the cheaper the products get. Naturally, this leads to users sharing the products with others in the hopes of getting cheaper products.
To further incentivize newly registered users, there are special RMB $1 deals to help users get familiar with buying on the platform. Regular flash sales and limited time offers occur every day to boost the customer return rate. By setting up time limitations it shortens the customers’ decision-making process and encourages impulsive buying.
Statistics on the second largest China Shopping App, Pinduoduo (Source: Techcrunch)
Pinduoduo integrates its paying method with the largest standalone social media app in China, WeChat. The more users share about their products, the greater the chance they have of receiving a discount, which leads to tons of deals on Pinduoduo being shared across social media platforms like WeChat.
Through utilizing this word-of-mouth business model, it has generated a huge amount of sales through users posting and sharing product information. This organic content voluntarily generated by the customers themselves makes Pinduoduo one of the most unique of China’s online shopping sites.
The platform has proved most popular to residents of 2nd and 3rd tier cities, with lower income and consumption power. However, it should be noted that Pinduoduo’s users are on the platform looking for deals, so this might not be the best platform for selling premium goods. Pinduoduo’s unique business model has led it to climb the rankings and secure its place among the top China shopping apps.
For more on Pinduoduo, check out the link below!
#3. Top China Shopping Apps: JD.com: Luxury Goods, Top-Notch Logistics, and more!
Average Monthly Users (MAUs): 263.64 million
Install Penetration Rate: 22.3%
JD.com (otherwise known as JingDong) started with a focus on the direct sale of electronic products in the 1990s. However, JD only really started to grow when it took its business online. It slowly added more and more categories until it developed into the all-around China e-commerce marketplace it is today!
The company has been recognized as a secure provider of not only domestic products but also goods from around the world. With just a push of a button, customers can get direct access to many global brands, including those which do not even have a physical presence in the country. With its nationwide logistics network, JD.com offers both same-day and next-day delivery. By getting its hands on the logistics network as well, JD, in fact, is the only China ecommerce platform that controls every part of its supply chain.
JD.com has even launched its own shopping holiday in the same vein as Alibaba’s Double 11. JD’s shopping holiday is called 6.18, and is celebrated during the first 18 days of June. Like Double 11 other platforms have begun to participate in this holiday. This holiday has developed into the second-largest China ecommerce holiday behind double 11 over the last few years.
JD even opened up its logistics arm, JD Logistics, for investment in February 2018. It was able to raise $2.5 billion at a $13.5 valuation. It’s logistics arm has given it a competitive advantage among competing China shopping apps.
JD’s worth is further proved by its collaboration with Walmart. Since 2016, the retail giant was confident enough to hand over all of its Chinese e-commerce business to JD, in exchange for a 5% equity share. Speaking of shareholders, JD is also backed by Tencent with maintains an over 21% equity stake.
JD.com is a leader in terms of luxury sales among China online shopping sites. With its well-developed logistics network, it is on its way to expanding its business empire globally by bringing more overseas brands into the Chinese market.
More and more foreign luxury brands including Swiss independent luxury watch brands ORIS, Tissot and TITONI, Italian fashion house MOSCHINO, etc, have also confirmed strategic partnerships with JD. For luxury buyers looking for security in their purchasing and exposure to overseas brands, JD.com is the ideal China shopping app.
#4. Top China Shopping Apps: XiaoHongShu – Content-driven Ecommerce Platform
The Logo of XiaoHongShu
Average Monthly Users (MAUs): 85 million
Install Penetration Rate: 4.8%
Launched in 2013 by Miranda Qu and Charlwin Mao, XiaoHongShu, literally the “Little Red Book”, is a social ecommerce app with over 250 million registered users as of 2019. With a focus on beauty and fashion, it acts as a platform for people to post and share shopping tips, product reviews and lifestyle stories. With the aim of authentic information sharing, the platform has successfully developed into a trusted source of advice and recommendations for its users (mainly female shoppers).
Noticing users’ demand for buying foreign goods, XiaoHongShu launched its own cross-border ecommerce platform, the “RED store” in 2014. It connects Chinese consumers with global brands by enabling users to buy overseas products directly through the app. Since then, XiaoHongShu has formed strategic partnerships with many overseas brands including Lancôme, Swisse and Innisfree (Brands can open a brand account/digital store on XiaoHongShu). As of 2017, the platform has reached 6.5 billion yuan sales..
App Interface of XiaoHongShu’s “RED Store”
XiaoHongShu has been very successful in building a community of user-generated content (UGC). It has created a shopping cycle on the platform, which users –
(i) Read shopping guides/product reviews from other users
(ii) Make a purchase through the app
(iii) Publish product reviews about the product
(iv) Communicate with other users about their shopping experience
To maximize the power of content marketing, XiaoHongShu invited famous celebrities and KOLs to open verified accounts and share beauty tips to other users. For example, FanBingBing has amassed more than 10 million followers on XiaoHongShu. Her following is so active that every face mask she ever endorsed was sold out on the platform. With celebrities settling in, XiaoHongShu has generated considerable traffic and further boosted user commitment to the platform.
Still, with over 3 billion pieces of content on the platform, the sheer volume of content makes it very difficult for XiaoHongShu to monitor. As of July 2019, the app was removed from the Android App Store due to government intervention. It was accused of facilitating the sale of restricted, forbidden and fake products, which included tobacco, electronic cigarettes and medicinal products such as skin-injection skits. According to Baidu, there were over 95,000 articles related to keywords “Cigarettes”, “Smoke”, “Tobacco” etc. on XiaoHongShu. All the related content has been removed upon the outbreak of the scandal.
Such incident reveals the difficulty of monitoring a large volume of content for UGC platform. According to reports released in the second quarter of 2019, XiaoHongShu’s 500-person content audit team deletes an average of 4,285 notes a day, but it’s still not enough to prevent the outflow of inappropriate information. In fact, in recent years, some users have complained that the content on XiaoHongShu has become too commercialized, filling with advertisements and fake information. To rebuild people’s trust towards the platform, XiaoHongShu is actively participating in web cleanup campaign to get rid of spam, or any type of inappropriate content.
Brand accounts of Origins and Blackmores on XiaoHongShu
The obstacle that XiaoHongShu is confronting may be alarming. Still, it is undoubtedly one of the best UGC-driven ecommerce platforms with an innovative business model. To keep ahead of the trend of content marketing, XiaoHongShu has been enabling different types of content format, including short videos and live streaming, which are currently prevalent in the China market.
#5 Tmall: The Premium China Ecommerce Experience
Average Monthly Users (MAUs): 80.2 million
Install Penetration Rate: 8.4%
As an offshoot of Taobao, Tmall concentrates on the selling of branded goods with a B2C business model. It is, in fact, the biggest B2C platform in China. Compared to Taobao, brands on Tmall are seen as more trustworthy, as buyers are buying directly from businesses rather than individual sellers.
Tmall has two versions, the domestic Chinese version as well as T-mall global. Getting onto Tmall global can be incredibly difficult as it can be difficult to get on the platform without being directly invited by Tmall Global itself.
Tmall and JD.com together account for over 80% of B2B China ecommerce transactions. With B2C ecommerce transactions making up nearly 60% of all online purchases and spending reaching an estimated 8 trillion renminbi, it’s clear to see why this platform makes the top 5!
Only companies with an overseas business license or domestic Chinese business operations can set up a Tmall store. With Alibaba as an agent, brands can manage their own sales and website. Among the top 5 shopping apps, Tmall is the one closest to shopping in an actual shopping mall. The brands run their business on Tmall in the form of a “flagship store” which is heavily customizable allowing brands to maintain their image and showcase their brand values.
Even the homepage of Tmall looks more premium, with less text, clutter, and daily deals on the homepage. All of this contributes to Tmall’s image as the premium China Shopping App.
In 2019, Alibaba expects to help another 1,000 international brands to launch their Tmall stores. For overseas brands who depend heavily on their brand values and maintaining their brand image, Tmall one of the best options China ecommerce platforms to get started with. For more information on opening a Tmall store check out the blog below.
China E-commerce Trends: What you NEED to Know for 2019
Emarketer reports that in 2018 Q1 2017 reports that Chinese national online retail sales of goods and services reached 1.4 trillion. RMB. That was an increase of 32.1% compared to data from three months prior to that. Several research organizations state that with the rising number of Chinese gaining international exposure by going aboard and concerns around local product safety, more and more consumers are turning to cross-border sales and domestic ecommerce.
According to data from China Internet Watch, the population of consumers who buy foreign goods online is estimated to exceed 200 million by 2020, and total online sales are predicted reach 1.9 trillion RMB.
Thanks to the tremendous number of shoppers in China, the country keeps setting records for global retailing and has become a must-win market for retailers and online businesses alike. While having a strong understanding of the various China shopping apps is important, it’s also very important to understand the latest trends. To identify opportunities in the market, it is essential to know the latest China ecommerce trends, so check out the next section below!
The rise of lower-tier cities: New battleground for Ecommerce players
Ever since China embarked on economic reforms decades ago, the 1st tier cities like Shanghai and Shenzhen, have been taking the lead in contributing to the country’s development. However, in recent years, the 3rd and 4th tier cities, which made up 50.3% of China’s population, have turned into fuel for China’s next stage of consumption growth.
Contrary to the slowdown of development in 1st tier cities, the lower-tier cities are undergoing rapid economic growth. According to Invesco’s report, the major cities Beijing and Shanghai both registered a 6.6% rate of growth in 2018, while smaller cities such as Chengdu and Xi’an recorded 8% and 8.2% respectively – faster than the top-tier cities and above the national growth rate 8. The faster rate of growth in less developed regions has led to faster income growth. For 2018, growth of rural disposable income per capita was at 8.8%, while for the urban population it was at 7.8%. With higher disposable income, people are demanding more goods with higher quality, which turns the non-1st cities into new battlegrounds for ecommerce players.
Growth in spending in lower-tier cities is higher than in top-tier cities
The growing demand from lower-tier cities was evident across platforms during the 618 shopping festival. Alibaba’s gross merchandise volume (GMV) from 3nd to 5th tier cities grew by 100% year-on-year during the period. Beitun and Tumxuk, county-level and prefectural-level cities from China’s northwestern Xinjiang autonomous region, topped the of the 10 fastest growing areas during Alibaba’s 618 festival this year. Similarly, transaction volume growth was twice as high in lower-tier cities than the overall growth of transaction volumes on JD.com.
One of the significant factors contributing to the spike in sales is an expanding Ecommerce user base from lower-tier cities. Alibaba recorded a 100% year-on-year jump in the number of users from lower-tier regions on its platforms during the festival. Furthermore, the ecommerce giant recorded an increase of 102 million annual active consumers for the fiscal year ending March 2019, while more than 70% of them were from lower-tier regions and below.
As mentioned above, Pinduoduo has successfully become one of the Ecommerce giants in China by tapping into smaller cities with a team-buying business model. Noticing the market potential, other companies are also sharpening their focus on this market segment. For example, Dada-JD Daojia, the on-demand delivery arm of JD, has brought its one-hour delivery system to more than 50 lower-tier cities since mid 2018, the company has also launched its own group-buying app to compete with Pinduoduo. With China’s lower-tier cities becoming richer and more eager to spend, we can foresee the tense competition among ecommerce platforms in the coming years.
When It Comes to The China Ecommerce Market, Youngsters Rule.
Millennials and Gen Z accounts for 85.1% of the online sales in China, according to China Internet Watch. From a numbers perspective, this means that 85.1% of China ecommerce users are aged between 16 and 35 years old. When we look at users on a generational level, we can clearly see that these two generations are incredibly important for businesses that rely heavily on ecommerce, so this should be taken into account when forming a marketing strategy.
Born in the age of Chinese economic reforms and under the one-child policy, the overwhelming majority of this young generation grew up with the undivided attention of their parents and grandparents. Since many of them are still studying or only recently graduated most are still unfamiliar with the working life and find themselves searching for ways to gain recognition from their peers or a sense of achievement. These generations have had a tremendous amount of foreign influence, as compared to previous generations, with many traveling or studying abroad. This foreign exposure has led to a craving for international brands and luxury goods.
The younger generations in China are difficult to advertise to. As they’ve grown up around the internet and been under a constant barrage of advertisements their whole lives, they’ve learned to tune out most traditional advertisements. Brands have had more success with more engaging and interactive campaigns created specifically to target them. They’re online behavior is also more fragmented meaning they visit a range of different sites for different purchases. Choosing the right China shopping apps for your products can be essential to getting your product in front of them.
Experiential Marketing & Pop-Ups have proven effective for targeting the younger generations of Chinese consumers
In terms of categories, they are willing to spend a considerable amount of money for the pursuit of beauty and health. This has led to drastic increases in the YoY sales volumes of products in the cosmetics, skincare, and supplement categories. These generations are also having an enormous impact on the luxury industry, with brands scrambling to create marketing strategies to attract their business.
The Pet Economy: Pets Have Become The Masters
The growing popularity of pets in China has made the country a magnet for companies in the industry. The China Pet Product Association reported that the rate of pet ownership has been growing at 15% per year. Since over 70% of Chinese pet owners are Millennials this has also led to a significant increase in pet products being purchased through online shopping sites.
The younger generations in China have increasingly put off getting married and as a result many live alone or with their parents. Many Millenials and Gen-Z have turned to pets as a solution to offset loneliness and offer companionship. The market for pets and pet-related goods has tripled in the last 5 years.
According to You Chong Research, the pet market in China reached RMB 175 billion in 2018 and is on track to grow to 198 billion in 2019. However, this trend is really only just getting started. With the number of pets owned standing at only 0.065 per person in China, far below the 0.57 rate in the US, the market has enormous potential and will certainly see growth as more and more Chinese choose to add pets to their families.
There’s plenty of options for pet owners on China Ecommerce platforms like Taobao and others
New Growth Avenues: FMCG and Grocery Ecommerce
China’s ecommerce market is reaching saturation in categories like clothing and cosmetics, while growth opportunities for some categories are still untapped. According to a report conducted by PwC, the ecommerce penetration rate of the fast-moving consumer goods (FMCG) and grocery sectors is around 5%, which is foreseen as the next major growth driver in the market. In PwC Total Retail 2017 Report, surveys indicatesdthat 62% of Chinese consumers (29% globally) would research grocery products online, while the same proportion of them (62% in China V.S. 22% globally) also prefer to buy their groceries online.
One of the key enablers of grocery ecommerce is the well-developed logistics system throughout China. Several Internet giants, such as Alibaba (Cainiao Alliance) and JD.com (JD-DaoJia), provide same day or next day delivery service in over 200 cities.
Within the FMCG category, fresh food is the largest segment but also the most difficult one to operate online, due to the perishable nature of the goods and the costly cold chain logistics requirement. Still, although the market of online fresh food is underdeveloped, some platforms have already sparked keen competition, including ecommerce giants, traditional supermarkets (FeiNiu, a part of RT Mart etc.) and various well-funded startups (YiGuo and Fruit Day etc.).
YiGuo (易果生鲜) sells fresh fruits and other groceries online
Apart from the logistics issues which is more related to the speed of delivery and freshness of food, safety and quality are also some of the most important attributes for consumers. Such concerns have greatly increased the demand for imported foods. For example, Australian brands like Blackmore and Swisse have been thriving in China’s booming nutritional supplement market. It is worth noticing that in 2014, fewer than 2% of Chinese shoppers had made a cross-border purchase. However, according to a report from Deloitte China, international ecommerce penetration has risen sixfold to 10.2% in 2017, which again indicates great opportunities for international brands.
While with products of good quality, leveraging on a trustworthy, high-quality online platform to sell your products is also essential. PwC survey indicates that 40% of Chinese consumers shop with their favorite retailer simply because they trust the platform. Therefore, it is advised that brands should cooperate with ecommerce platforms whose brand names have been well-established in China.
The Rising Popularity of Social Ecommerce
More and more Chinese consumers have begun to tune out traditional advertisements due to the overwhelming amount of them they see on a daily basis. This trend has led to the increasing popularity of a new form of China Ecommerce, Social Ecommerce.
If you wanted to define Social Ecommerce in a simple way, it’s essentially just the combination of Ecommerce and social media. People ask for comments and reviews of products in their personal networks and receive recommendations from people they know about and trust.
Weibo Window is an example of ecommerce and social media combined. Users can view product recommendations, make their purchase, and show it off all on one platform!
This greatly simplifies the customer’s deliberation process and helps quicken the customer journey. Along with these social media elements users now have access to advanced payment methods like WeChat Pay and Alipay, making the entire shopping process incredibly smooth. All of this has led these apps to become increasingly more popular. Platforms like XiaoHongShu are growing rapidly, and it’s likely we’ll see it get into the ranks of the top 5 China shopping apps in the coming years.
XiaoHongShu has skyrocketed to popularity in recent years. Particularly among young female millenials and Gen-Z
While consumers have always used social media to do their product research and look for recommendations platforms like XiaoHongShu (Little Red Book) allow users to find authentic reviews from their network and make a purchase all on one platform.
Social commerce has been found to be a major driver of impulse purchases. In a recent report from Nielsen China where they interviewed 3,531 online shoppers, they found that 54% spent more on online shopping than they anticipated and 80% stated that social recommendations drove impulse purchases.
Wechat Stores, Weibo Window, Pinduoduo and Xiaohongshu are all examples of this growning new trend of social ecommerce.
Read more about these sites with the links down below!
For more on Xiaohongshu:
Omnichannel fulfillment – Seamless online-offline integration for New Retail initiatives
At Alibaba’s 2016 Computing Conference, Jack Ma focused his speech on five areas that are being transformed by technology, which included new finance, new manufacturing, new technology and new energy with New Retail at the center.
New retail is Alibaba’s strategy to redefine commerce by enabling seamless engagement between the online and offline world. It’s not about converting online users to offline customers or vice versa, but building a retail ecosystem that blends online and offline channels in a unified way for better customer experience.
In light of the maturation of online sales, companies have started to open bricks-and-mortar stores to bring their ecommerce offline. Still, it is not simply a traditional offline store, but an experiential marketplace with more advanced services, such as in-store virtual reality experiences and product customization.
In 2018, China’s popular social Ecommerce XiaoHongShu, decided to take some of its most highly-ranked products and brands to the community by opening its first offline concept store RED Home in Shanghai. Given that the core feature of XiaoHongShu app is product reviews. Instead of having customers pulling out their phones to search for reviews online, digital screens are installed throughout the store that customers can check the details and reviews of a particular product just by bringing it to the screen. Besides, customers can test out beauty products by interacting with an augmented reality make-up tool, which greatly drives purchase intention.
XiaoHongShu’s RED Home in Shanghai
To encourage customers to spend more time in the store, it features a café and ice cream shop deliberately located adjacent to the home goods department, offering customers a social space for hanging out with friends.
RED Home offers some key insights on how offline retail spaces can integrate technology in a way that complements the seemingly one-way ecommerce business, and capture the attention of young Chinese consumers. In fact, apart from XiaoHongShu, many Ecommerce giants are also tapping in the field of experiential offline stores. For example, JD.com is planning to open one million unstaffed convenience stores which allow customers to pay with facial recognition. Luxury e-commerce platform Secoo created “offline experience centres” that provide high-quality membership services to heighten consumer experience.
Another popular way of immersing online and offline experience is by combining ecommerce with offline events. During the Double 11 Shopping Festival in 2017, Tmall organized the “See Now, Buy Now” online fashion show with famous brands like M.A.C, Pandora and TAG Heuer. While watching the show, audiences could purchase outfits they saw on the catwalk in real-time, either by a link shown on left side of the screen on Taobao or Tmall, or by shaking their phones to visit the product page if they were watching it on TV. Online games were also provided that players could get product discounts for purchase during the festival.
“See Now, Buy Now” fashion show
To ensure seamless unification, one of the basic measures is to integrate brands’ offline loyalty programmes with online platforms, such as Tmall, to ensure customers would be able to claim benefits wherever they are shopping. For example, coupons released by JD.com can be used in the brand’s online JD store, WeChat stores, as well as offline stores. Consumers’ memberships and corresponding discounts can also be converted freely online or offline. It creates a seamless purchase experience in diverse channels.
The New China Ecommerce Law of 2019: The Death of Daigous?
China has long had a reputation for producing and selling fake, counterfeit, and “Knock-off” products. This latest law is an effort from the Chinese government to clean up the country’s reputation and hold platform operators, third-party merchants, and individual online retailers accountable.
There have always been laws preventing the sale of illegally sourced online goods, but under previous laws, only individual sellers could be charged. With this new law in place, the Chinese government has given ecommerce platforms and shopping apps the responsibility of policing their own sites to ensure that counterfeit goods are not sold on the platform.
While the primary reason for the law is clear, including in it are provisions for other important aspects of ecommerce, like consumer protection, data management, cybersecurity, and more.
One area that consumers and businesses alike may notice significant changes in is the daigou industry. What is a daigou you ask? Have you ever seen Chinese shoppers in foreign countries purchasing large amounts of luxury goods, baby products, or a local delicacy? Chances are you’ve spotted a Daigou, which roughly translates to “Buy on Behalf”.
Daigous stuffing products into suitcases is a common sight in Hong Kong, Japan, Korea, and elsewhere.
Daigous are individuals who operate in a sort of “grey market,” purchasing goods overseas and selling them to domestic Chinese buyers in exchange for a fee. Due to high Chinese taxes, this process is often cheaper than buying something domestically. Many businesses and research institutes estimate that the daigou industry is worth tens of billions of dollars each year, and since goods brought back are designated as “personal items” the government misses out on some large potential tax revenues.
However, this new law aims to change that, by forcing daigou merchants to register and pay taxes on goods that they bring back to China or face massive fines. This has the potential to hurt China’s ecommerce growth and businesses that rely on daigous in the short-term.