E-commerce finds markets overseas

Companies test water abroad as domestic market getting tougher, Chen Limin reports.

While e-commerce companies have plunged into ever-increasing competition in the Chinese domestic market, some are trying their luck outside China to find other ways to fuel growth. A number of Chinese e-commerce players, including Jingdong Mall, dubbed China's amazon.com, and online clothing retailer Vancl (Beijing) Technology Co, have already stretched their reach globally with different approaches. 

Jingdong Mall's English-language website, offering nearly 400,000 products, went online in October. Supporting delivery to 35 countries, it attracts most of its overseas customers from North America, Western Europe and Australia.

Vancl started even earlier. It began its overseas expansion in 2010 by providing an English version of its website, and in September, it teamed up with Vietnamese online payment company ECPay to provide a Vietnamese-language website and set up local operations.

"Vietnam is quite representative of Asian markets: Fast-growing with a considerable market size and similar in culture," Luan Yilai, Vancl's associate president, said. 

"We think we can grow quickly if we start in Vietnam." 

Luan said Vancl is considering expanding its global footprint to more markets, and Russia, where it is looking for possible cooperation, will probably be next.

Jingdong Mall also has a Russian-language website and sells products to the country through cooperation with a local partner, said a report by Nanfang Metropolis Daily that cited unnamed sources. Jingdong Mall didn't comment on this.

E-commerce companies are the latest batch of Chinese Internet companies to spread their global reach. The earliest ones to go global were online game providers, which started overseas adventures in 2003.

Chinese e-commerce companies tend to provide an English website targeting US and European customers when they start to go global, said Chen Dong, the China head of large merchant sales at PayPal, the online payment arm of online marketplace Ebay. 

However, emerging markets represent a bigger opportunity for e-commerce businesses that expand overseas, as is evident in the huge growth in exports by e-commerce businesses to Latin America, Eastern Europe and the Asia-Pacific region, Chen added.

From July 2011 to June 2012, exports by Chinese e-commerce companies to Argentina increased by 96 percent, to Israel by 72 percent and to Ukraine by 71 percent, according to PayPal figures.

Global strategies

Although China is expected to become the world's biggest online retail market this year, according to officials of the Ministry of Commerce, e-commerce companies' global expansion comes as an important supplement to their business in the home market.

"Vancl is, and will be, focused on its domestic market, but the intention to go global is quite natural, whether it's the brand or the manufacturing that goes outside China," said Luan.

Last year, Vancl moved some of its clothes production to Bangladesh, and it was also approaching manufacturers in Indonesia and Cambodia for possible cooperation, Hu Haishen, who is responsible for Vancl's clothes manufacturing, said in August. 

There were 31 million people accessing the Internet in Vietnam by the end of September, representing 34 percent of its population, according to the Nhan Dan newspaper.

China, in contrast, had an Internet population of 538 million by the end of June, representing nearly 40 percent of its population, according to the quasi-official China Internet Network Information Center.