China's Expanding E-Commerce Market Benefits Smaller Retailers Selling Imported Goods

As Chinese people continue to choose going online rather than going outside to buy their goods, Chinese e-commerce websites have been cashing in big time. However, in order to retain China’s millions of online consumers, tailoring products to China’s evolving tastes is becoming increasingly important.

Chinese consumer tastes are changing, and along with that, China’s increasingly popular online retailers are shifting their businesses to match preferences. Right now, that means bringing goods from abroad to the doorstep of customers. Fueled by China’s quality control issues, Chinese consumers are increasingly interested in the quality of foreign-made products and the convenience of digital retail.

In 2013, after melamine scares and nationwide recalls, getting your hands on baby milk formula in mainland China was extremely difficult. According to a New York Times report at the time, the milk formula shortage within the country had many parents turning to imported and more trustworthy brands from the Netherlands and New Zealand, a good number of them using online retailers to buy from abroad. The shortage in China rippled overseas, forcing retail chains like Britain’s Sainsbury’s to enforce a two-can limit per customer. A similar policy was put in place in Hong Kong for those traveling out of the territory, as prices and demand soared. The milk shortage is just one example of the considerable purchasing power of China’s consumers.

E-commerce sites willing to join cross-border ventures were given a boost by the government when it rolled out a program in 2013 that would allow for special tax breaks, lower tariffs and more lenient customs procedures for products coming from overseas. As a result, it has given way to smaller Chinese e-retailers that specialize in selling foreign products. Chinese financial magazine Caixin says companies like Metao.com and Miyabaobei.com are just some of those meeting the customized demand for imported baby formula and childcare products challenging the mass appeal tactic of e-commerce giants like the Alibaba Group-owned Taobao.com or JD.com.

But the market exists beyond just baby formula. In fact, interest in imported goods is staggering. According to Caixin, citing Chen Naike, the vice chairman of the Zhejiang Federation of Returned Overseas Chinese, nearly 20 million Chinese bought 1 trillion yuan ($161.42 billion) of foreign products last year. By 2019, data by Forrester Research estimates that e-commerce sales alone will drum up 1 trillion yuan. According to research by consulting group Bain & Co., cosmetics, designer bags and accessories, and specialty food items are popular if certified authentic because they are so frequently counterfeited within the country. Another service called Ymatou connects independent buyers with sellers that have been verified by the website -- after all, foreign quality standards still seems to be the biggest draw of imported goods.