THE ASIAN DOOR: How lucrative is the Chinese diaspora for e-commerce. Águeda Parra.
Among economic analysts there seems to be some consensus that the Chinese economy is slowing down, registering a growth of 6.7% year-on-year in first three quarters in 2018, two tenths less than what was registered in 2017. The protectionist policy of the Trump administration, with its doctrine ‘America First’, has led to a trade war with China that, within 20 weeks of its entry into force, may be coming to an end in light of a foreseeable announcement of agreement during the next G20 Summit in Argentina at the end of November. However, in the meantime, the Chinese economy has taken good note of the vulnerabilities of its economy to import certain products.
In view of this unforeseen situation, China has adopted the motto ‘Every crisis is an opportunity’, and has relied on e-commerce giants to reverse the slow economic downturn the country is experiencing, and that also affects domestic consumption due to the devaluation of the yuan. A situation that, however, does not apply to the vast Chinese diaspora distributed all over the world, constituting a lucrative opportunity for e-commerce in China.
In the transition from a manufacturing and export-led economy to a consumption-driven one, China has discover that new technologies have become one of the great facilitators for change. The development of the digital ecosystem is part of the daily life of the population to perform almost any kind of activity, but also allows the Chinese diaspora to maintain their habits as if they continued to live in China, acquiring products through e-commerce they cannot find through Amazon. It is estimated that the number of Chinese citizens living outside the country exceeds 100 million people; a diaspora spread mainly by the Southeast Asian countries and the United States that constitutes a new market that emerges as an alternative to the trade war started by Trump.
To that end, Alibaba has launched a new modality of sea freight as a shipping method of its e-commerce platforms that allow the distribution of consumer goods, including Chinese brand furniture. The option is implemented for the diaspora residing in Australia, where 1.2 million people live, of which 15% are Chinese students who study overseas, in addition to the more than 600 million consumers in the Southeast Asian countries. A shipping method that allows increasing sales, but also gets to internationalize Made in China products in international markets, improving the perception of Chinese brands abroad.
The promotion choice used by the Chinese technological giants is to create a pop-up store, an ephemeral store aimed at making the public aware of new options, such as the ones created in Melbourne and Sydney to promote its new sea freight options, and the one inaugurated in Madrid on the occasion of the celebration of the Single’s Day this year. JD.com is another of the platforms the Chinese diaspora is taking advantage of to offset the effects of a slight decrease in domestic consumption. Unlike the Alibaba platforms only available in Chinese, JD.com has gone a step further in adapting its international e-commerce platforms to local language in countries like Russia and Indonesia.
Thanks to the world market of e-commerce, Alibaba promotes the Chinese diaspora can get products that are closely tied to their lifestyle by buying the country’s own products through Tmall and Taobao, but also enable the international companies hosted on its platforms to offer their products to a growing Chinese middle class that demands quality international products. This is the reason for the JD.com office in Paris or the one that will launch on Google’s shopping platforms by the end of the year, which on one hand allow developing the brand portfolio present in its e-commerce platform, and on the other hand connects its local partners to access the 270 million active Chinese consumers on JD.com.
This type of promotion of China’s tech titans platforms in foreign markets is highly lucrative for Chinese e-commerce companies, as has been displayed during the celebration of the tenth anniversary of the great e-commerce Shopping Festival organized by Alibaba on the occasion of the Single’s Day in China. In this last edition, Spain has managed to reach the eighth position in a ranking that leads Japan, followed by the United States, South Korea, Australia, Germany, United Kingdom, France, and completes New Zealand and Italy in the ninth and tenth position, highlighting the great opportunities e-commerce offers for international brands to improve their positioning among Chinese consumers.