China e-Commerce market ready for Canadian business

As China continues to rebound from COVID-19, the demand for Canadian-branded products is strong when they sell to the Chinese market through e-commerce platforms.

China is the world's largest e-commerce market. e-commerce revenue in China is expected to grow to $1.09 trillion in 2023, making it the world's first trillion-dollar e-commerce market.

It is critical for Canadian exporters to have regular updates on these trade models, and Canadian companies need to learn China first before they go to China's e-commerce market, according to Monica Chang, director of customer success at WPIC Marketing and Technologies.

"China is the world's second-largest economy, and is growing so fast with rising incomes, disposable incomes, urbanization, demographic changes and policy support," Chang told a Webinar titled ''China Ready 2022 Series'' organized by the Canada China Business Council on Wednesday.

According to Chang, China's population consists of 983.3 million social media users, or 68 percent of the total population. People in China use an average of eight social platforms a month, and 95.9 percent of internet users are social media users.

"My 60-year-old mom can use WeChat and Xiaohongshu to make a payment just with her phone. It's cool!" Chang told the audience.

However, instead of using service providers like Google, Amazon or Instagram or Facebook, most Chinese customers use Tmall, Taobao, WeChat and Xiaohongshu.

"It's a challenge for Canadian brands tapping into the Chinese market," Chang said. "You have to be like an investor to build brand through Chinese version social platforms."

China's e-commerce is mainly driven by innovation of e-commerce platforms like Tmall, Taobao, JD.com and the major players include internet giants such as Alibaba and Tencent.

"They all build up their ecosystem to disincentivize users from leaving their comfort zoom to access other additional services," said Chang.

Through the major payment transaction service providers Alipay and WeChat pay, Chinese customers make the most online revenue by purchasing goods such as beauty and personal care, sports, food, beverages, fashion and electronics from around world.

As a digital ecosystem with businesses comprising China and international commerce, Alibaba now has a fulfillment center in Toronto and multiple centers in the US.

Nicole Lin, business development country manager of Alibaba Group in Canada, said their services support Canadian brands and companies selling to China through cross border e-commerce.

"Our service is not only domestic China but also different markets around the world through different business models and methods," Lin told the Webinar.

Lin said Alibaba's Tmall Global, a leading Chinese cross-border e-commerce application, is a unique platform for customers in China and abroad.

"It connected over 100 million active consumers and more than 29,000 international brands from 87 countries and regions. Eighty percent of brands use it to enter the China market," she said.

In 2021, during the biggest shopping festival in China -- Single Day -- also known as Double 11, a total of 290,000 brands and 900 million consumers participated across Alibaba's various platforms. Tmall recorded CAD $108.5 billion in transactions over the 11-day event season from Nov 1-11.

"As the world's largest e- commerce retail market, China's annual retail e-commerce market size is larger than top 2-10 countries combined last year, this shows how mature and how advanced e- commerce is in China," Lin said.

Given the low entry hurdle and easiness of setting business to cross border e- commerce, she suggested Canadian brands use the platform like Tmall global as a first entry to China's market.

"We have seen Canadian health supplements and pet food are the two driving forces of Canadian products using the cross-border e-commerce to China," said Lin. "And this season more and more Canadian beauty and personal care products are exported to China. We also see a great potential for Canadian fashion to pick up the pace."

Asking what Canadian exporters need to know if they trade through cross border e-commerce in terms of trademark protection and intellectual property, both Chang and Lin advised that every company needs to get their brand trademark registry in China and have local legal consultation before signing a contract.

"And we do have the Alibaba intellectual property portal, where international companies or brands can file a complaint to make their case heard," said Lin. "We also work with the legal department to investigate the case and see if the complaint is legitimate and help you clear out."