China's E-commerce Market Landscape
China’s e-commerce market has experienced surprising speed in the last decades thanks to the well-developed logistics system. By 2023, China will contribute to 63% of the global online shopping market with an estimated value of over 2 trillion USD. Well-functioned electronic payment operations and a powerful mobile terminal segment have also made this market cover a wider range of clients.
Due to the customers’ preferences, Chinese e-commerce platforms are still the key players in the online shopping field. According to a survey in 2023, only one foreign e-commerce player, Amazon, was ranked in the Top 15 e-commerce platforms in China. Consequently, using local platforms remains the most effective way to reach Chinese online shoppers for marketing and branding.
Together with Hongda, let’s see how to get your online shopping platform account registered with complete e-commerce solutions to expand your market in China.
Is an ICP License Required for E-commerce Activities?
The full name of an ICP License is an ‘Internet Content Provider’ License, which is issued by the Ministry of Industry and Information Technology. An ICP License can be further categorized into two types: ICP filing (for non-commercial purposes such as personal websites or blog posts) and ICP Business License (for commercial purposes such as online selling). Whether an ICP License is required depends on the channels where you will be selling your products.
- If you want to sell your products by e-commerce platforms, such as Taobao, JD, Tmall, or Temu, the platforms already hold an ICP license, so you will not need to apply for an individual ICP License of your own.
- If your products are displayed and presented on your independent website for marketing or branding purposes, or if the purchases are made and paid OUTSIDE the website (such as through bank transfer), an ICP license will not be necessary.
- If you want to build an e-commerce platform like Taobao or JD, where the consumers conduct transactions with the sellers, you will need to apply for an ICP license to ensure legal compliance.
Steps to Start E-commerce Operation in China for Foreigners
As mentioned above, opening an online shop in China may require the presence of a Chinese company as the operating entity. To help you from the very beginning, Hongda can help you with our comprehensive e-commerce launch service package!
Step 1: Company Registration and Bank Account Opening
If your chosen e-commerce platform requires a company to register for a shop, the first step is to register a company. You can choose to form a WFOE in mainland China, or set up a Hong Kong company if you plan to engage primarily in cross-border trade. A bank account will also be necessary for receiving and making payments. In some cases, opening a WF account might be an ideal choice, especially for businesses operating through a Hong Kong company.
Step 2: Import and Export License Application (for international traders)
Rather than being a certification, the import and export license is more like a licensing process in which a company undergoes qualification review and registration with government departments to legally conduct import and export of goods or technology. If you want to import overseas goods in China and sell them to Chinese customers, or if you want to sell the Chinese local products to foreign countries or regions (including Hong Kong, Macao, and Taiwan), the import and export license will be compulsory.
Step 3: Intellectual Property Protection
Protecting your trademarks and intellectual properties is important, especially for those big brand owners. By registering a trademark in China, you can obtain the legal protection to indicate the source or ownership of your brand and guarantee that the goods or services are of good quality. Remember to register your own trademark!
Step 4: Online Store Establishment
Hongda can help you quickly list and present your products to potential buyers by helping you set up and design stores on e-commerce sites like Temu, JD, Tmall, and Taobao. In addition, we can recommend suitable website building platforms (such as WordPress and Shopify) based on your needs and provide services like website development, UI/UX design, etc.
Step 5: Payment Processing (Bank Transfer or Payment Gateway)
To help you quickly receive payments from customers, we can assist you in selecting the appropriate online payment platform and integrating it into your store or website. You can choose from online payment methods such as PayPal, Alipay, Stripe, or Airwallex, or you can opt to use your company’s bank account for traditional bank transfers.
Step 6: Online Marketing and Promotion
Hongda can provide marketing strategies across multiple platforms depending on your target client group, helping you enhance brand awareness, attract traffic, and raise revenue. To help you swiftly attract clients, this may involve paid advertising campaigns, search engine optimization (SEO), and social media marketing (e.g., Facebook, Instagram, TikTok).
Step 7: Send Your Profits Back
Making money in China is important, but hold on, have you ever considered the question of how you should repatriate the profits to your home country? Due to the foreign currency control in China, sending money overseas can be difficult without carefully planning. You can read our previous blog on ‘How to Repatriate the Profits Earned in China to Overseas!’ or book a meeting with us!
E-commerce Platform Selling
Tmall Store Registration
Tmall is the largest B2C platform in China, with over 500 million registered customers and over 50000 merchants, taking up over 50% of China’s B2C e-commerce business. Tmall is the great choice for brands who are looking to open their official shops, especially when you have a luxury brand or high-value products. For international companies, Tmall can be a useful e-commerce platform to help increase their sales as well as to promote their brand. Luxury brands not only have access to Tmall and Tmall Global but also to Tmall Luxury Pavilion, which is an “app within an app” that enables top-selected clients to get access to the most premium and luxury brands with dedicated flagship stores.
However, running a Tmall shop can be more expensive than other platforms, including:
- Deposit of a Tmall Flagship store costs between 50,000 RMB and 100,000 RMB
In terms of technical services, you will have to pay between 30,000 RMB and 60,000 RMB per year
Sales commission for Tmall can represent 0.5% to 10% of sales (although most of the time it will be around 2% and 5%)
JD Store Registration
Jing Dong is the largest self-operated e-commerce enterprise in China. Compared with other e-commerce platforms, you can find about everything on JD, with a strong focus on electronic devices. What is setting it apart from Alibaba’s Taobao and Tmall is its fulfillment service. JD has the most advanced fulfillment infrastructure among all Chinese e-commerce companies, allowing same-day delivery. If your company focuses on the trading of electronic products, JD can be the best choice for you because of its huge client population who are consistently interested in digital devices.
The fees of opening a JD store may include:
- Shop Deposit: 30000 RMB, 50000 RMB, or 100000 RMB depending on the categories of products
Technical fees: ranging from 500 to 1000 RMB per month
Sales commission: 2% to 8% of your sales amount
Xiaohongshu Store Registration
Xiaohongshu, or the Little Red Book, has at least 200 million active users. Both in the desktop and mobile terminals, the Xiaohongshu community information is presented in a Pinterest-style layout, which makes the contents distribute to more related clients. Combing with video and live broadcast functions, users can also share product reviews and text introductions of travel destinations, during which users grow interested in a product or lead to purchase.
The fees of opening a Xiaohongshu store may include:
- Shop Deposit: 20000 RMB for domestic companies or 3500 USD for international and overseas companies
- Technical fees: charged at 5% for any sales amount exceeding 10,000 RMB
