You may have heard of Alibaba in China – it’s the online player in China like eBay and Amazon in the US. Alibaba owns the biggest domestic online platforms such as Taobao (www.taobao.cn), Tmall (Tmall.com), and now also Tmall Global (www.Tmall.hk).
The platform Tmall
While Taobao is operated on a customer-to-customer (C2C) base. Tmall is the largest business-to-consumer (B2C) retail platform in Asia, and most visited B2C online platform in China. This platform enables businesses to sell directly to millions of consumers throughout China. Tmall has established itself as the destination for quality, brand-name goods catering to increasingly sophisticated Chinese consumers. For a foreign brand to operate on Tmall, you will need a Chinese legal entity, a Chinese trademark, a Chinese corporate bank account, governmental product approvals, and a warehouse and logistics within China.
Why Tmall Global?
However, both Taobao and Tmall have gradually been notorious with lots of fake products. Various factors have driven the development of a cross-border e-commerce platform:
- The growing economy
- A greater demand from Chinese consumers to buy authentic genuine products with a higher quality
- An increased Chinese middle class that can afford to travel abroad and buy famous foreign brands that are not available in China
These factors have let to the birth of the platform Tmall Global.
Trendy cross-border trade – an opportunity on Tmall Global
Tmall Global was launched in February 2014. The platform enables oversea brands to sell directly to Chinese consumers. The principle of supplying products via direct mail or bonded-warehouse eliminates the distrust of Chinese consumers. It also offers international brands access to the same customers as Tmall, yet with lower barrier to enter China. Until 2016, over 14,500 international brands from 63 countries and regions sell their products on Tmall Global, while 80% of them were introduced to the Chinese Market for the first time.
A low cost way to test the market
Tmall Global is positioned as a low-cost way for international brands to enter the market. Foreign brands do not require a China business license to join the platform. Without creating a Chinese legal entity, registering Chinese Trademark, or figuring out warehouse and shipment within China. Tmall Global is an easy entry to test the Chinese market for international brands.
New tax regulation in favor of cross-border trade
The Chinese government had announced a new tax regulation in April 2016, which is in favor of cross-border trade. Instead of paying the full tax to import products to China, the products bought online via cross-border e-commerce platforms like Tmall Global will get a discounted integrated tax rate. This means that the retail price can be more competitive for Chinese consumers.
How to enter the platform Tmall Global?
Brands on Tmall Global are currently by invitation. This means that Alibaba decides which brands they want on their platform. Depending on the brand they either recommend to set up a brand store or team up with an umbrealla store. For small and medium sized businesses the opportunity is to find a partner with an online umbrella store, like Ehubnordic’s Web Shop. Think of it as a department store with various categories, where Nordic products are sold together and where every brand enjoys the benefit of synergies. Ehubnordic allows brands to leave management and operation challenges such as payment, marketing, customer service, return address, logistics and language to us, and thereby you as a brand owner can focus on what you are best at, and we can help you generate sales in China with a low risk and a fairly little investment.
Sources: Alizila, Tmall.com