In July 2018, China’s E-commerce Research Centre (ECRC) tracked the positive growth of 13 cross-border e-commerce pilot zones.

These strategically located zones are designated to facilitate and support cross-border e-commerce. The first zone was launched in 2015, followed by another 12 in 2016, and another 22 new pilot zones in 2018.

There are pilot zones in well-known cities like Beijing and Shanghai, and in up-and-coming cities like Kunming and Changsha.

Zones bring about individual advantages for businesses. Geographic location, speciality, and policy are vital considerations for exporters pinpointing the ideal point of entry.

Like in every market, as more foreign brands establish themselves, domestic businesses will also seek ways to boost their own innovation, efficiency and quality to maintain their place in the market. Chinese consumers will have more choice of products, potentially developing loyalty towards more successful, more visible brands.

China’s trade regulations are undergoing upgrades to streamline and foster a stimulating trading environment. Tax-free limits on cross-border e-commerce transactions, for consumers, have risen across pilot zones.

The core approach is knowing the market, recognising which platforms work best for your brand, and understanding where your demographic is concentrated.

China’s comprehensive pilot zones are a prime opportunity for foreign brands to tailor market strategy. We’ve listed the top three pilot zone performers, ranked by the ECRC on transaction volume, growth potential, and the number of accessible industries & platforms.

Top 3 Performers

Shenzhen

In Shenzhen, the port of mainland China to Hong Kong, there are around 100,000 product types traded by 500 businesses. Cross-border e-commerce transactions in this zone reached US$ 49bn in 2017, increasing 21.84% year-on-year.

Shenzhen is an electronics hub often dubbed the tech capital of the world. Exporters in the digital technology sectors can a demographic of enthusiasts within it. It’s also home to the number 1 ’Sam’s Club’ supermarket in China – a member’s only store specialising in imported foods. Shenzhen was the biggest importer of fruits in China in 2017.

This pilot zone can be a gateway to Chinese foodies, with growing disposable income and interest in imported goods. As well as the city’s significant population of expats.

Brands in this zone benefit from four import models, including direct purchase import. Shenzhen’s network of bonded warehouses is a ’global central warehouse’ with aims to reduce storage and logistics costs for exporters.

The most popular product categories are healthcare, baby & mum, and cosmetics.

Guangzhou

Guangzhou, a Southern China port city, boasts a prime location and well-connected transport system.

There’s a cross-border e-commerce cluster between the zone, Nansha Bonded Port and Baiyun Airport Comprehensive Protection Area. Together, they boosted Guangzhou’s cross-border e-commerce trade volume by 55.1%, increasing to ¥22.77bn in 2017 compared to 2016.

This city hosts the renowned Canton Trade fair, so an import tradition is already established.

Guangzhou’s pilot zone has simplified the process of purchasing import declaration lists and the import of goods into the area. Its ’7 special measures’ supports exporters by bolstering the international cross-border trade flowing through it.

Businesses can export through this zone with reduced procedural barriers.

Hangzhou

Hangzhou, headquarters of Alibaba and major logistics and e-payment systems, was the first pilot zone. It’s fostered the growth of some of the largest e-commerce platforms such as Tmall and Kaola.

This zone’s ’one district thirteen parks’ includes thirteen industrial parks acting as strategic trade channels. As of February 2018, nearly 8,000 foreign trade and manufacturing enterprises engaged in cross-border e-commerce through it.

It features a comprehensive range of products and specialises in clothing, home furnishings, and lighting.

Hangzhou has a five-year plan to develop into an international artificial intelligence and robotics hub. It also has a thriving textiles industry, particularly silk.

Next Step

Understanding China as regionally diverse is key for exporters wanting to build a strong, long-term presence in the market.

Entering China through smaller regional markets with dedicated pilot zones, before building national visibility, can be a cost-effective, rewarding strategy.

ACOLINK services launch brands on social visibility pathways to optimise sales and accelerate growth through the Chinese market. Contact us to find out how or sign up for our Let’s Do China workshops.