Very interesting article on The China Observer about Taobao.com, the largest C2C/B2C e-commerce platform in China.
The China Observer View
Marketers seeking to sell their products online in China should think twice before investing in independent online shopping portals. Taobao is where Chinese consumers prefer to shop online – rather than try to convince them to shop on your site, consider opening a branded online store on Tian Mao where consumers are already shopping.
Additionally, marketers should keep an eye on the rise of mobile e-commerce in China. “M-commerce” will continue to grow in importance in the coming years; however, for now it is a form of payment limited to relative early adopters.
And if you are considering starting online sales in China, I capture here a few lines from a previous post entitled “Retail in China:Choosing your Business Model”
a) Recent history
Joint Ventures and WFOEs have been allowed (theoretically) to engage in retail activity through the internet since 2004. The reality has been quite different though. Central MOFCOM had to approve these activities and approvals have either been put on hold or suspended.
Foreign companies used to navigate this difficulty in two ways:
- Avoiding setting up in China: but there are a number of hassles (logistics, currency exchange …)
- Partnering with a local broker
b) Update on Law & Regulations
This type of retail activity has now seen some encouraging signs. MOFCOM issued on 19 August 2010 the ”Circular on Several Issues Concerning the Approval and Administration of Foreign Investment in Sales via the Internet and Automatic Vending Machines”. The main changes that this circular represents are:
1. For established FIEs:
Internet sales are regarded as an extension of an FIE’s regular sales activities and can be conducted without any need to obtain additional approvals.
2. For Companies trading only through the internet:
Applications for the establishment of an FIE specialising in Internet sales are to be submitted for approval to the appropriate provincial-level agency under MOFCOM instead of central MOFCOM, which has two positive implications:
i) speeds up the approval process, and
ii) promotes competition among regional administrations to capture foreign investment.
3. Some requirements on-line businesses should meet:
i) Display its business license in a prominent position on its website home page or on the website where it conducts sales activities.
ii) Establish a comprehensive system for the return or replacement of goods.
iii) Strictly protect consumers’ personal privacy.
iv) Abide by China’s consumer laws and regulations.
So, do you have an online presence in Taobao? What about online presence?
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