Chinese e-commerce majors target emerging market expansion

Chinese e-commerce companies are expanding worldwide, partnering up and acquiring start-ups that can enable their growing access to consumers in emerging markets. As a result, business transfer agents are likely to be active in aiding these Chinese giants acquire businesses in segments such as logistics, payments and IT.

After building logistics and marketing expertise domestically over a decade, China’s e-commerce majors are launching a concentrated assault on emerging markets via international e-commerce. The likes of Alibaba and Tencent are taking advantage of growing demand for online offerings in markets where Internet penetration is reaching critical mass, and where low-cost Chinese goods are able to outprice local competitors and appeal to low-income homes. Armed with apps, social commerce know-how and partnerships with regional payment providers, Chinese players look better equipped to dominate web traffic and sales in developing economies than their US counterparts.

As Chinese e-commerce majors have essentially reached saturation point domestically, they have turned their multi-channel capabilities and huge liquidity to the global markets. Alibaba, which clinched the world’s biggest ever IPO in mid-2014, has spearheaded this drive through its B2C third-party seller cross-border platform AliExpress (over US$4.5 billion in sales worldwide over the mid-2013 to mid-2014 period).

AliExpress’s strategy, mimicked by rival Chinese player, is focused on full localisation that includes:

  • Full translation of the website to the local language, including customer care services and assistance communicating with sellers;
  • Developing partnerships with local payment operators, since most emerging markets remain largely cash economies with underbanked populations. Offering consumers the option to pay via mobile phone or an electronic currency is vital. In Indonesia, for example, the banked populace amounted to only half of the population aged 15+ in 2014;
  • Building partnerships with local postage operators, both private and public, to ensure smoother delivery and customs procedures;
  • Utilising social marketing strategies to ensure a strong presence on the most popular local social networks and rolling out mobile apps in markets where smartphone penetration is sufficient.

This localisation drive is enabled by Chinese companies able to find common agreements quickly with local logistics players, more efficiently than Western players such as Amazon or eBay have been able to do in emerging markets. As a result, in just a few years, Chinese firms have emerged as major players globally.

There is clear demand among low-income economies for cheap goods, especially apparel, telecom accessories and kids’ goods, and the “Made in China” label is not as unattractive to emerging market consumers as it is to homes in advanced economies. In Russia, AliExpress became the most visited e-commerce site in the country in 2014, while the Chinese major is the dominant cross-border retailer in markets such as Brazil, Indonesia and Turkey. Since November 2014, the Chinese major has recorded much more dynamic growth in global web traffic than either eBay or Amazon, overtaking both to become the most visited e-commerce site globally as of April 2015, according to web traffic specialist SimilarWeb.



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