Supplementary Materials

Cross-Border E-Commerce in China: A Key Driver for International Brands

1. The Cross-Border E-commerce in China

The change in Chinese consumer needs and Chinese governmental support has propelled the popularity of cross-border e-commerce in China. International brands that wish to gain a piece of this pie must act quickly before the market gets too concentrated.

With the ever-increasing technology advance, the world is much more connected than ever before. Communication and business are no longer limited by proximity or space because Internet and technology simply eliminate those gaps. China, along with many other countries and regions, is heavily influenced by the development of technology. Particularly, technology has altered the way Chinese market operates.

Firms are turning to technology to expand their customer reach as well as to provide a larger variety of products with online stores. This phenomenon is not only involving domestic platforms as e-commerce has breached borders and extends its supply overseas. Therefore, it is no surprise that cross border e-commerce is the new trend in China, which in 2015 is at 259 billion RMB, a 6% of China's total e-commerce consumption. Tmall, owned by the technology leader Alibaba, has a global site aimed to serve other countries and regions around the world. It is seeing international success similar to the one it enjoys domestically with Costco from U.S. and Lotte Mart from Republic of Korea as their clients. However, China is not the only country who is breaching borders in terms of e-commerce, other countries and regions are using this opportunity to do business in China from elsewhere as well. Amazon, the U.S. e-commerce giant, recently started the Amazon.cn specifically catering to the Chinese market with shipping option to China and descriptions in Chinese. As cross-border popularity rises in China with the help of the change in consumer needs and governmental support, more and more firms are joining in the race of e-commerce.

2. Change in Consumer Needs

With development of China, more disposable income is available in the Chinese market. Many said customers are looking for foreign products that are either not available in China or merely not yet. Purchasing goods from the online store in its origin country (region) allows consumers to purchase goods that are otherwise not available in China. Furthermore, buying directly from the online store itself guarantees the authenticity of the products, which cannot always be assured when buying things from some oversea purchasing merchants who are providing procurement service. With the help of customs inspection, the quality of products can be better guaranteed. As such, both the need to purchase unavailable goods and the wish to guarantee authenticity drive Chinese customers to indulge more in cross-border e-commerce.

3. A Governmental Support

Countless imported personal goods are enjoying a favorable tax rate in some cities, with more cities predicted to follow. E-commerce firms, realizing this business opportunity, help speed up and facilitate passing the customs process to further incentivize consumers to purchase. This coupled with the change in consumer needs and tax cut. Cross-border e-commerce has been enjoying immense popularity in China. Brands, hoping to join the bandwagon, are not too late since the market is projected to continue growing for the next few years. This represents an excellent opportunity to expand customer base into a new market, therefore generating higher revenues. With the trend unlikely to stop anytime soon, cross-border e-commerce is the key driver for international brands success.

Exercises

Skim the passage and find the key sentence of each part of the passage.

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