E-commerce and Online Shop Establishment

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.

Legal Requirements for Selling Your Products Online in China

You may also know that when it comes to e-commerce, you often hear the term ICP certificate. This is a legal compliance requirement that you must consider when planning to engage in e-commerce.

An ICP Certificate (Internet Content Provider Certificate) refers to a permit that must be obtained by website or app operators in mainland China to legally provide internet information services. The main purpose of the ICP certificate is to manage and supervise the operation of internet content service providers.

In China, all entities or individuals that provide website construction, operation, and content publishing services must apply for an ICP record with the relevant authorities. According to the type of service, the ICP record certificate is divided into two categories:

• Commercial ICP License: enables you to host a commercial website in China (will usually be an e-commerce website). If you are looking to build an e-commerce website (JD.com, TMall, Taobao), you will need to apply for the commercial ICP.
• Non-Commercial ICP License (ICP Recordation): sites that are used for informational purposes only. This license does not include direct sales.

However, there is a workaround if your company is looking purely to sell goods on platforms such as JD.com or TMall (not needing to build a website). If your company is content with selling goods on a platform without a website, an ICP is unnecessary. Although this seems less work and hassle, registering for an ICP is not troublesome and comes with benefits.

Benefits of an ICP Filing

An ICP filing allows you to setup a Chinese website if you decide it will be helpful to do so, and it provides these benefits:

• Your site will be less likely to be blocked by China’s firewall as it is hosted in China itself.
• Due to local hosting, Chinese site visitors will have a better experience as it will load more quickly. 
• Chinese search engines like Baidu and Sogou (yup, Chinese users don’t/can't use Google) will be more likely to rank listings from locally hosted sites.
• Having a domain ending with “.cn” provides enhanced credibility for local consumers over foreign-hosted sites.
• Local sites can publish apps on local app stores.

Additional Restrictions for Obtaining an ICP Licence: 

• Foreign companies without a local business license cannot apply for an ICP license
• Registering for an ICP takes approximately 2-4 weeks for approval.
• Registering for an ICP license is only available in simplified Chinese, and the named contact for the website should be able to speak Mandarin. 

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 shore 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 shore 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

Social Media Selling

1. WeChat

WeChat has been referred to as China's "app for everything." To China, WeChat is what Facebook, WhatsApp, Twitter, Paypal, and Amazon are to the rest of the world. Therefore, it is inevitably going to be a big part of your marketing strategy.

WeChat can offer the ability to create your own mobile website on the WeChat platform and potentially reach over 1 billion users! More importantly, WeChat can also drive traffic back to your own website to create more leads for your business and increase brand awareness. 

WeChat also enables immediate reach for brands through the use of the "Service Account," allowing them to publish official notifications and interact with potential customers. In terms of foreign companies ability to sell through WeChat, you would have to set up a WFOE to reap the full benefits of what WeChat has to offer. 

2. Weibo

In short, Weibo is the Chinese version of Twitter. Weibo is a very visual entertainment and news platform, therefore, it is essential for your business to have gripping content to publish in order to gain visibility and brand recognition in China successfully. Weibo's user base is utilised more by the younger audience in China, with more than 50% of users being under the age of 25. 

3. KOLs

Key Opinion Leader (KOL) marketing is China's version of 'influencer marketing' and is key to reaching the younger target audiences. KOLs in China are typically Chinese celebrities and social media influencers who have a large following. More and more consumers are moving towards purchasing products that are endorsed or recommended by KOLs as a means to filter out the mass information and advertisements they are shown daily. 

Two of the most important platforms used for KOL marketing in China are the major social media channels, WeChat and Weibo. However, there are several others that are specific to different industries.

Weibo's KOLs have high authority and high engagement with their fans, making Weibo a powerful marketing platform. Weibo users can comment and like the content KOL posts, the interaction and engagement make their relationship meaningful, having great influence over users purchasing decisions.

Since the search function is still in its infancy and KOLs largely post via official accounts, WeChat still has a lot of untapped potential. That said, reaching a larger audience through KOLs on WeChat is definitely possible—especially in popular B2C sectors such as luxury and cosmetics.

Paid Advertising

1. Baidu

Baidu is the Google of China, with millions of companies promoting their businesses on Baidu successfully. Marketing on Baidu includes search marketing and content network marketing and can allow you to reach over 700 million users—a huge potential audience for targeting Chinese consumers. 

As a foreign enterprise, you can use paid ads as an effective way to enhance brand recognition and increase reach in China. While Google prioritises organic results, Baidu's top search pages are full of ads.

2. Toutiao

Unlike the two major social media platforms, WeChat and Weibo, Toutiao is a news and information content platform, offering personalised content to each of their users, making it a great platform for ads. 

With around 120 million daily active users, most of whom are young people ranging from ages 18 to 30 years old, Toutiao can be an exceptional platform to enter the Chinese market and advertise your product to the younger generation. 

Toutiao offers more than just a bulk amount of information to its users. They utilise new AI content techniques by analysing user behaviour to provide valuable, personalised information to users in China. Toutiao is a good option for foreign enterprises in China to increase brand recognition.

In terms of costs, the cost per click on the majority of formats ranges between RMB 0.2 and 1.0. In contrast, the CPC on WeChat ranges between RMB 2-5 CPC, making Toutiao a more reasonable option to advertise on.

Register Online Payment Platform Account

When running online shops in China, an online payment account is something you must have to receive money from your clients. Let’s see which account is the best choice for you!

Alipay Account Registration

Today, Alipay is the largest independent third-party payment platform in mainland China. It is one of the mainstream payment methods in mainland China. Most people in mainland China have replaced Alipay with cash or credit cards. Alipay has 1.2 billion global users, making it the world's second largest mobile payment service provider in the world. In addition, according to statistics in the first quarter of 2020, Alipay occupies 55.40% of the third-party payment market in mainland China and shows a continuous growth trend.

What Hongda can help you (about 5-7 working days):

• Guidance to prepare all the required materials;
• Alipay account registration;
• Corporate information registration and bank account verification;

WeChat Pay Account Registration

WeChat Pay is a mobile payment and digital wallet service by WeChat based in China that allows users to make mobile payments and online transactions. Users who have provided their bank account information can utilize the app for various financial transactions, such as paying bills, making purchases, transferring money to other users, and even conducting in-store payments if the stores support WeChat payments. These services are offered by verified third-party entities called "official accounts," which create mini-programs or "apps within the app" to provide specific functionalities. Users can link their Chinese bank accounts to enable seamless transactions through the Visa, MasterCard, and JCB.

What Hongda can help you (about 5-7 working days):

• Guidance to prepare all the required materials;
• WeChat Pay account registration;
• Corporate information registration and bank account verification;

Choose Method for Marketing and Branding

WeChat

WeChat has over 1.2 billion active users, making it the largest Chinese instant messaging application. Together with its social media and mini-program functions, it is also the most popular social media platform in China.

• All-in-one platform with active user engagement
• Embedded leading CRM tools with real-time connection with clients

Douyin

A rapid-growing short video platform with over 600 million daily active users. It has become a popular choice, especially within the younger population, who can act as content creators and viewers at the same time, leading to hot trends in China.

• Young client pool with higher level of consumption ability
• Engaging short video contents

Xiaohongshu

Xiaohongshu is a user-generated content platform that focuses on word-of-mouth advertising. This Chinese version of Pinterest and Instagram is a safety net for users to share and read authentic product reviews, especially for international luxury cosmetics. The in-app e-commerce platform RED Store allows users to purchase credible products, given the prevailing counterfeit market trend in China.

• A trustworthy platform leads to satisfying sales
• Seamless shopping experience on Xiaohongshu

Weibo

Weibo is the second-largest social media platform in China, with more than 550 million monthly active users. Weibo gives you a wide choice of advertising forms, including organic content marketing like short videos, live streams, and microblogging. You can also invest in paid advertising on Weibo.

• Facilitate omnichannel user experience
• Search Engine advertising is available
  
  

Comparsion of E-commerce Methods