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Suning Will Likely Adopt Amazon’s Cross-border E-commerce Model

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Suning Appliance Company has set up a cross-border e-commerce unit and plans to build its own cross-border e-commerce system by the end of this year, to compete with the direct mail operations of Tmall and Amazon, Shanghai-based China Business News reports, citing unnamed sources from the company. The success of the venture will hinge on whether Suning can establish a complete overseas supply chain and whether it can get preferential treatment from policymakers domestically, said Lu Zhenwang, an independent e-commerce observer. The first international courier license in China was issued to Suning in February, which first suggested the company was interested in cross-border e-commerce operations. These kinds of operations were launched in China for the first time this year with two main models, the first being a third-party platform for other couriers and the second being a self-operated model, Lu said. Tmall is a good example of the platform model. The company allies with domestic third-party partners to complete customs clearance and logistics, while Amazon has adopted the self-run model, using its own logistics system to transfer and distribute goods via the Shanghai Free Trade Zone, Lu said. Lu believes Suning will most likely adopt a similar model to Amazon, as competition with Tmall would be too fierce if it were to adopt a third-party platform. According to a report by market researcher Analysys International, China’s cross-border e-commerce transactions totaled 3.1 trillion yuan (US$505 billion) in 2013, accounting for 12.1% of the nation’s total trade value. In the next three years, China’s cross-border e-commerce trade is predicted to maintain a yearly average growth of about 30% to reach 6.5 trillion yuan (US$1.1 trillion) in 2016, expected to represent some 19% of total trade. According to PayPal statistics, in 2013, Chinese consumers making overseas purchases totaled 18 million with total transactions worth 213.6 billion yuan (US$34.8 billion), suggesting the formation of a cross-border purchasing market. Cross-border consumers are expected to reach 35.6 million in 2018 with a market scale of 1 trillion yuan (US$163 billion), PayPal stated. Domestic internet companies such as Alibaba Group, Jingdong Mall, and Tencent have begun their layout in the field since early this year. Yihaodian, a Chinese online grocery business, on Sept. 2 launched its overseas purchase service, joining in with the competition for cross-border e-commerce. Yihaodian, with the cooperation of a third-party payment firm, will import foreign goods with a bonded model to the Shanghai Free Trade Zone for stocking, and deliver the goods after customs clearance. Source:Want China Times

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