The Chinese e-commerce market, which is the largest worldwide, with a value of 1.9 trillion dollars and a revenue equal to 863 billion dollars in 2019, is expected to experience a strong growth trend over the next few years, according to the estimated CAGR (compound annual growth rate) of +13%, which will move towards 1,558 billion dollars in 2024. Impressive numbers, above all when compared to the other main markets worldwide: the USA in second place at 360 billion dollars, Japan at third with 88 billion, followed by the UK (82 billion) and Germany (74 billion).
China can count on a consumer base of 926 million users, with a penetration of 64% and with 40% of consumers that search for a product online before making a purchase. Fashion is the first category in net sales on Chinese e-commerce channels, with 218 billion dollars spent, of which 14% is footwear, 20% bags, and 66% clothing.
To better intercept the business opportunities that the Chinese e-commerce channel can offer Made in Italy, the ICE Agency has cemented a series of partnerships with the main Chinese platforms and marketplaces. The aim is that of offering Italian SMEs, which on their own would not have the financing and resources needed to approach this market, effective tools for reinforcing the penetration of their products on the Chinese market.
This was a topic in the webinar, “How to do business online in China” promoted by the Italian Online Academy in collaboration with ICE, this past 24 February, which saw the participation of Gianpaolo Bruno from ICE Peking, Massimiliano Tremiterra from ICE Shanghai, and Nicola Canzian from Digital Retex.
Gianpaolo Bruno indicates four factors for success in developing e-commerce in China: “the presence of an extensive and young market, advantages of scale and users who are excited about the new opportunities on offer, players with large amounts of capital (Baidu, Alibaba, and Tencent) that have created a rich digital ecosystem that continues to grow even beyond them, and the support of the government in developing the sector also through investments in digital infrastructures”. To these can be added the acceleration of the online penetration rate of Chinese consumers as a result of the Covid emergency, which has included new categories of digital consumers, divided by age, social background, lifestyle, and value system.
Alibaba with its Taobao (538 billion dollars in sales in 2019) and Tmall (472 billion) marketplaces is the leading player worldwide (Amazon is the third marketplace at 339 billion), and JD.com is the fourth (at 295 billion). It is precisely here that ICE has focused its promotional activities, as well as on the Tencent WeChat app, which is the most popular in China. The main sales method adopted is cross-border, which allows access to the Chinese market without any kind of brokering by Chinese businesses, while taking advantage of the logistics networks of these leading e-commerce platforms and a special tax regime.
Here, as follows, are the projects presented over the course of the webinar.
Italy National Pavilion
Launched from the collaboration with the second Chinese e-tailer with over 387 million active users, JD.com, the Italy National Pavilion is “an extraordinary showcase for the promotion of Made in Italy, which offers companies services of cultural mediation, digital advertising, sales and post-sales assistance, invoice management, order processing and returns, and payments to Italy. – explains Gianpaolo Bruno – With a vast ecosystem that features multiple points of contact with retail sales, social media, financial services, marketing, technology, and a network of physical stores, JD.com has its very own logistics network that guarantees delivery in 24 hours”.
Among the categories admitted are also fashion and accessories, which can present up to a maximum of 40 products. The requirements for entry are: you must be a company with Made in Italy production, have dedicated personnel, have a revenue that includes exports, an active e-commerce channel, be able to ship out to specific collection points in the EU or China, and have trademark registration in accordance with the JD policy. Costs for membership are relatively low: ICE will cover 6,000 euros, while the part to be paid by the company was recently renegotiated, passing from 11,000 to 6,000 euros. At the same time, there are also the following expenses to be considered: sales commission, logistics, duties and VAT, and expenses for brand registration. The two kinds of e-commerce on offer are either general trade (through local partners) or cross-border.
The pavilion on the Tmall e-commerce platform since 2018 “was the precursor of marketing activities for the acquisition of traffic and the inclusion of Italian businesses in stores. – explains Massimiliano Tremiterra – We offer sales support in the stores already present, along with Made in Italy communications, to present a more extensive vision of the Italian product (in collaboration with ENIT and other entities), with contents that change every two months. The space has 5 product group areas that are promoted with adv., banners, and direct invitations. We make use of big data and efficient profiling campaigns, while also taking advantage of Chinese consumers who are more relaxed about privacy policies. Sales are cross-border”.
Among the activities of Hello Italy, there are also offline events, lives streaming, media buy campaigns, workshops, and data analysis. A channel that has yielded results: total sales of the pavilion were 62 million, with a +67% compared to the previous year, for a total of 4.6 million euros, while there has been an increase in followers, which have now arrived at around 136 thousand.
ICE Pavillion Italia
Account created in partnership with Retex on the Tencent WeChat app, with over a billion active users and an average of two hours spent on this platform, has set itself the goal of “promoting Made in Italy Storytelling and reinforcing the Italian presence in the WeChat ecosystem, offering high visibility to the products of Italian companies. – explains Nicola Canzian – The strategy of reinforcement calls for the creation of a communication campaign and the creation of engaging contents geared towards Chinese users, while making the most of the high targeting capability of WeChat”.
ICE Pavilion Italia is the official digital space where brands transmit their world and values, and directly communicate with their followers thanks to the editorial plan and customer assistance services. At the same time, the Mini Program is the sub-application of WeChat, which allows brands to provide users with advanced e-commerce features.
The services offered by the pavilion range from company profiles, with a presentation of the relative products (maximum 50, for clothing and fashion this includes different colours/sizes), to cultural mediation, Chinese customer care, translations, management of payments, stock management in Italy, and cross-border logistics management.
The amount needed to become a member is 8,500 euros paid by ICE, 5,000 paid by the company (lowered from 9,000 euros), and 12% for each sales transaction. A maximum number of 300 companies can join.