Chinese shoppers continue to flock to Western brands—but they are not just seeking out aspirational names in fashion and technology. Millions of China’s shoppers are also looking to buy everyday items such as food and personal care products from international brands—and they are turning to online marketplaces to buy these categories directly from overseas brands and retailers.
Chinese demand for imported international brands has created a huge, high-growth market for cross-border e-commerce. Some 24% of China’s digital shoppers will make a cross-border purchase this year, according to eMarketer’s estimates, lifting the market’s value by 15% year over year, to $115.5 billion. However, that means three-quarters of the country’s online consumers will not be shopping across borders this year, suggesting that there is still plenty of opportunity for Western names to generate demand and capture share in China.
We see three primary supports to the growing Chinese demand for imported goods. First, it is often cheaper for Chinese shoppers to buy Western brands from cross-border platforms than to buy them in Chinese shops. Second, the continuing increase in disposable incomes and living standards in China is pulling ever more consumers into the market for imported brands. Third, following years of concerns over counterfeit brands and the safety of some domestic products, many Chinese consumers perceive overseas brands to be of higher quality.
Reflecting the demand for safe, trusted brands, some of the most popular categories for cross-border purchase are those where brand authenticity and product quality are important. There is particular demand among China’s cross-border shoppers for groceries and consumer packaged goods, including beauty and personal care products, mother and baby items, and food and healthcare products.
We have already seen a number of American and European grocery-focused retailers tap this demand through China’s major e-commerce platforms. Alibaba Group’s Tmall Global platform styles itself as the “gateway to China,” and it has been the first choice for many international brands and retailers looking to sell in China, including Aldi and Costco. At the World Retail Congress 2018 in April, Jet Jing, President of Tmall, noted that 18,000 international brands have sold on Tmall in the past few years. Tmall’s major rival, JD.com, offers retailers cross-border selling through its JD Worldwide site. Walmart is one major US retailer that sells on the platform, following the establishment of a partnership with JD.com in 2016.