Food from Finland Pre-study: B2C cross-border E-commerce in China.

1. B2C Cross-border E-commerce, China
Food from Finland Pre-study

2. Table of Content 1/4
1. Executive summary
2. Market overview
1. Market Dynamics and trends
2. Internet penetration
3. Consumer behavior & demographics
4. Growing demand for imported Food
5. Marketplace VS Brand Store
6. Main players
7. Mobile Commerce
8. Digital Payment
9. E-commerce and Government support
10. Double 11 Festival

3. Table of Content 2/4
3. Cross-border e-commerce
1. Trends & Development
2. Consumer
3. Tax Rates
4. The Main Players
5. Fulfillment model
6. Why Do Brands Choose Cross border
4. Tmall Global
1. Group & Value Network
2. Page Location & Traffic Source
3. Who can sell on Tmall Global?
4. Store Models

4. Table of Content 3/4
5. JD Worldwide
1. Group & Value Netowrk
2. Page Location & Traffic Source
3. Who can sell on JD Worldwide?
4. Store Models
6. Cross-border VS Local Trade

5. Executive summary
• Although China’s economy has suffered from a great deal of instability this year,
its ecommerce sector is and will remain a major driver of economic growth.
• The typical Chinese online shopper is 20-35 years of age and live in urban coastal
areas. Women make a majority of the online purchases in a family household.
• 40% of Chinese consumers buy food online, in contrast to just 10% of the US
consumers
• The food currently offered online is dominated by dry packaged or canned food.
The product categories of imported fruit and other types of fresh food are
among the fastest growing categories in urban areas.
• Chinese consumers are looking for quality & safe imported food products. The
demand for health food and supplements is also growing. Domestic food
scandals and concern for food safety are some of the key drivers of the demand.
• B2C e-commerce in China is dominated by marketplaces, such as Tmall and JD.
Almost all large B2C shopping platforms largely consist of products which are
offered by a third party – brand owner, wholesaler, distributor etc.

6. Executive summary
• Cross-border retail ecommerce has grown strongly in China in recent years as
the number of channels, payment methods and offerings has improved.
Meanwhile, targeted government support has also encouraged new entrants into
the sector.
• In China, cross-border mainly operates through two models: the direct shipping
from overseas model or the bonded warehouses model.
• Guaranteed product quality is the prime reason behind cross-border purchases
made by Chinese consumers.
• Cross-border e-commerce is an opportunity for brands to enter China without
having any physical presence or trademark license in China.
• Tmall Global and JD Worldwide both offer cross-border models for foreign
brands. There are also many smaller, specialized players. O2O is slowly
developing.

7. Market Overview

8. Market Overview
2.1 Market Dynamics and trends
• China’s macro economy has showed sustained signs of weakness throughout 2015
and the country’s gross domestic product (GDP) is forecast to grow 7% in 2015, the
slowest pace in 25 years.
• However, China’s retail sales value rose 10.4% on the year in H1 2015 to RMB14.16
trillion ($2.30 trillion), according to the National Bureau of Statistics China.
• This is believed to be the result of the government’s long-held policy aim of driving
domestic consumption to reduce reliance on investment and exports.
• E-commerce is a primary driver of China’s retail sales growth. In a report from
eMarketer, the research firm estimates that retail ecommerce sales, excluding
travel and events tickets, will rise 42.1% in 2015 to $672.01 billion, easily making
China the world’s largest e-commerce market. China is believed to account for just
over 40% of the world’s retail e-commerce sales this year.

9. Market Overview
2.1 Market Dynamics and trends
According to eMarketer study (July 2015) e-commerce will continue to represent
a growing share of retail sales in China, rising from 15,9% in 2015 to nearly 30% in
2018
$472.91
$672.01
$911.25
$1,208.31
$1,568.39
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
0
200
400
600
800
1000
1200
1400
1600
1800
Y 2014 Y 2015 Y 2016 Y 2017 Y 2018
BillionUSD
Year
Retail eCommerce sales in China 2014-2018
Retail eCommerce Sales
% Change
% of total retail sales
Source: www.eMarketer.com

10. Market Overview
2.1 Market Dynamics and trends
Some of the most outstanding trends in the e-commerce industry are:
• MOBILE. The use of smartphones for e-commerce purchases is growing faster in China than in any
other developed market, including the US. In 2015, mobile will account for about half of all retail
ecommerce sales in China.
• GROWTH IN RURAL AREAS. Meanwhile specialized retail categories are likely to continue to grow in
major Tier 1 cities (Beijing, Shanghai, Guangzhou and Shenzhen), China’s rural areas will be a major
area of growth for mature categories, due to increased internet penetration in rural areas. Mobile is
the preferred device for rural e-commerce activities, as almost two-thirds transacted via
smartphones.
• THE RISE OF CROSS-BORDER E-COMMERCE. Cross-border retail ecommerce has grown strongly in
China in recent years as the number of channels, payment methods and offerings has improved.
Meanwhile, targeted government support has also encouraged new entrants into the sector
• FROM C2C TO B2C. China’s e-commerce sector is currently undergoing a shift from C2C to B2C in
terms of retail sales. The trend is a result of the consumers constantly becoming more concerned
with the quality of the goods sold online. The trend is expected to continue through to 2018, when
B2C sales will account for almost two-thirds of the overall retail ecommerce market.

11. Market Overview
2.2 Internet penetration
• According to China Internet Network Information Center (CNNIC), China’s total
online population rose by 18.9 million in the first half of the year alone, taking
the total to 667.7 million.
• Research agency eMarketer projects that the online population will reach
674.3 million by the end of this year, up 4.1% on the year.
• China’s internet penetration is still to reach 50%, and is lagging behind the
internet-connection levels seen in Asia-Pacific’s most developed economies (like
Australia, Hong Kong, Japan, Singapore and South Korea) where internet
penetration is at or above 75%.

12. Market Overview
2.2 Internet penetration
 eMarketer forecasts that China’s Internet penetration rate will pass 50% next year, when just over
700 million residents will go online at least monthly.
 A February 2015 report by McKinsey & Co. suggested that largest share of internet users in China
in fact live in rural areas.
617.60
647.70
674.30
700.10
736.20
778.20
827.20
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
0
100
200
300
400
500
600
700
800
900
Y 2013 Y 2014 Y 2015 Y 2016 Y 2017 Y 2018 Y 2019
millions
Year
Internet Users and Penetration in China, 2013-2019
Internet users
% of population
% change
Urban Rural
2007 26,00% 7,40%
2008 33,90% 12,30%
2009 43,00% 15,50%
2010 49,60% 18,60%
2011 54,60% 20,70%
2012 57,40% 24,20%
2013 60,30% 28,10%
2014 62,80% 28,80%
% of population in each group
Source: www.eMarketer.com

13. Market Overview
2.3 Consumer behavior & demographics
• According to Nielsen research, the typical online buyer
of imported products in China is female, younger than
30 and with an income of more than RMB 11,000
(approx €1600) per month.
• Frequently cited reasons for shopping online include:
– Accessibility.
– Convenience.
– Low prices.
– Greater assortment.
– Detailed product information & customer reviews.
– Confidence: consumers place higher levels of trust
in the authenticity of purchases made on major
B2C platforms such as Tmall, JD.com and Yihaodian.

14. Market Overview
2.3 Consumer behavior & demographics
• Chinese customers are disloyal to brands, as they like to switch
between product providers, and often try new brands and
products.
• Some 40% of all online sales are believed to be assisted sales.
Also, they often leave reviews.
• Chinese customers are demanding in terms of communication, as
they prefer frequent contact with the product provider – more
than 70% uses customer service before placing an order.
• Individuality is becoming increasingly important to them, as the
Chinese customers are progressively targeting purchases which
reflect their individual identity, which leads to development of
brand awareness and diversification of tastes.

15. Market Overview
2.4 Growing Demand for Imported Food
• 40% of Chinese consumers buy food online, in contrast to just 10% of the US consumers
(Mckinsey).
• The food currently offered online is dominated by dry packaged or canned food. The
product categories of imported fruit and other types of fresh food are among the fastest
growing categories in urban areas.
• Chinese consumers are looking for quality & safe imported food products. The demand
for health food and supplements is also growing.
• Improved delivery time has driven the increased frequency in food purchases. Today,
some 40% of retailers in China are offering same- or next-day delivery, up from only 29%
in 2011.

16. Market Overview
2.4 Growing Demand for Imported Food
• By 2018, China is expected to become the top importer of foreign food products,
with the total value of food imports set to reach RMB 480 billion (US$77 billion).
• Edible vegetable oils, cereal and milk products account for roughly half of all
food imports.
• Of particular interest among food imports are organic food items. The organic
food market in China has tripled since 2007 to currently account for 1.01 percent
of total food consumption, which is still lower than the 5 to 8 percent of the
market in areas like Europe and the U.S.
• Current rough estimates for the market value of organic imports are around
US$20 million, with consumers typically middle and upper class Chinese with
children.

17. Market Overview
2.4 Growing Demand for Imported Food
The increased demand is a result of:
• Recent domestic food scandals and food safety issues.
• Environmental issues (poor air quality and dead pigs in Shanghai’s Huangpu river –
the city’s main tap water source).
• China has a growing middle class with more purchasing power.
• The good image of western food and its superior quality.
• Growing healthy lifestyle/ work life/balance trend in China –the Chinese are
looking for healthy food products & supplements.
• The expanding consumption in combination with China’s resource constraints.
China is expected to soon become the largest importer of agriculture and food
products in the world.

18. Market Overview
2.4 Growing Demand for Imported Food
Apparel is the most popular product
category for online purchases, however,
however, the most frequent online
purchases are packaged and fresh food (34
times a year vs. 22 times for apparel)

19. Market Overview
2.5 Marketplace VS Brand Store
• B2C e-commerce in China is dominated by marketplaces, such as Tmall, JD, etc.
• Almost all large B2C shopping platforms largely consist of products which are
offered by a third party – brand owner, wholesaler, distributor etc.
• Many brands (especially fashion retail brands) have a marketplace store, as
well as a brand store. However, for most brands, 90% of the sales come from
the marketplace, compared to the brand store. Some brands do less than 1%
sales from their brand store page.
• Meanwhile marketplaces are volume driven, the brand store plays an
important role in branding, corporate communication, and marketing.
• Marketplaces (in general) generate vague search results on China’s top search
engine Baidu and other Chinese search engines, hence the need for a brand
store.

20. Market Overview
2.5 Marketplace VS Brand Store
Marketplace store (Tmall, JD)
• 90% of all sales
• 50% of the brand’s SKUs (mainly
bestsellers)
• Heavy marketing
• Needs a perfect quality of service (chat
function, etc)
• Sales are public
• Volume driven
• Enclosed world –the marketplace owns
the customers and the data
• Vague search results on Baidu
Brand store (.cn store)
• 10% of all sales (some brands have
less than 1% sale on their own
website)
• Full assortment of SKUs
• Branding
• History
• Values
• E-magazine
• Shop locator
• OmniChannel
• eCRM

21. Market Overview
2.6 The Main Marketplace B2C Players
Source: www.eMarketer.com
B2C e-commerce in China is dominated by marketplaces, such as Tmall and JD.
These two large players controls 80% of the B2C market.
0% 10% 20% 30% 40% 50% 60% 70%
Tmall (multi)
JD.com (multi)
Suning (Electronics)
vip.com (Flash sales)
Gome (Electrical Appliance)
Yihaodian (Groceries)
Dangdang (Electronics)
Amazon.cn
Yixun (Electronics)
Jumei (Beauty)
Other
Retail eCommerce Sales Share in China, by Site, 2014

22. Market Overview
2.6 The Main Marketplace B2C Players
• Alibaba is the biggest marketplace player in the Chinese e-commerce industry.
Clearly the number one platform on the B2C market is Tmall.
• According to iResearch, Tmall accounted for more than 60% of China’s retail
ecommerce sales in 2014, up from just over 50% the year before
• The second largest online retailer in China is JD (Jingdong). Their product covers 12
main categories with thousands of brands.
• JD.com also increased its market share in 2014 to 18.6% from 18.3%.
• Yihaodian, which sells groceries digitally and is majority owned by Wal-Mart, is
another interesting e-commerce marketplace for food companies.

23. Market Overview
2.7 Mobile commerce
• The use of smartphones for e-commerce purchases is growing faster in China than in
any other developed market.
• A report from eMarketer estimates that mobile will account for about half of retail
ecommerce sales in China in 2015, compared with 22% in the US and 33% in the UK
(according to data from RetailMeNot’s June 2015 “Mobile Retailing in Europe and
North America” report).
98.50% 94.20%
85.50%
66.30%
49.40%
38.90%
32.40% 28.80%
1.50% 5.80%
14.50%
33.70%
50.60%
61.10%
67.60% 71.20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Y 2011 Y 2012 Y 2013 Y 2014 Y 2015 Y 2016 Y 2017 Y 2018
Retail and C2C eCommerce transaction share in China, Desktop/Laptop vs. Mobile
2011-2018
Mobile
Desktop/laptop
Source: www.eMarketer.com

24. 86.20%
4.20%
2.10%
0.80%
0.50%
0.50%
0.40%
0.30%
0.30%
0.30%
4.40%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Taobao Market place and Tmall
JD.com
cip.com
Suning
Jumei
Yihaodian
Gome
Amazon.cn
Dangdang
Maimaibao
Other
Retail and C2C mCommerce Sales Share in China, by Site, 2014
Market Overview
2.7 Mobile commerce
Source: www.eMarketer.com
When it comes to mobile commerce, Alibaba is the clear market leader.

25. Market Overview
2.7 Mobile commerce
• Mobile usage in China is high because 3G/4G is growing fast, and because many
people, especially in rural areas, are just moving directly from a feature phone to
a smartphone, completely skipping desktops.
Feature phone Desktop
Western
countries
China
Smartphone

26. Market Overview
2.8 Digital Payment
• Chinese consumers have been quick at adapting to new technology and have embraced
digital payment.
• In Q3 2014, total settlement transaction value of China third-party online payment market
was RMB2,237.6 billion (US$364.29 billion).
• The top three third-party online payment providers were Alibaba’s Alipay, Tencent’s
TenPay and China UnionPay Merchants Service.
• Alipay controls approximately 54% of the online payment made throughout China,
according to a report by market research firm China Skinny.
• Alipay wallet can easily be linked to individuals’ bank accounts given its compatibility with
more than 65 financial institution and credit circuits, including Visa and Mastercard.
• In 2014, Alipay processed more than 80 million transactions per day on average, thanks
not only to payments made on online marketplaces but also to brick-and-mortar retailers
that offer Alipay as a mean of payment.
• TenPay, which is the payment solution of the social media and gaming group Tencent,
controls about 20 per cent of the market.
• Both Alipay and Tenpay are highly advanced and allows consumers to make online
purchases, pay bills, and pay for taxi rides. Consumers also use Alipay and Tenpay for
making instant funds transfers.

27. Market Overview
2.8 Digital Payment
• The same way as they bypass desktop, the Chinese bypass credit card
payments, opting for digital payment solutions such as Alipay or Tenpay.
• Both Alipay and Tenpay are optimized for mobile.
Digital payment
Credit card
Cash payment

28. Market Overview
2.9 E-commerce and Government support
• The Chinese government is encouraging use of the Internet in foreign trade, as
well as entrepreneurship and innovation in hopes on the sector as a new
growth engine for the economy.
• The State Council released a guideline on June 20 2015, saying the customs
administrator will streamline customs procedures for e-commerce exports and
imports to make the processes simpler and quicker, while the quality
supervision authorities will allow collective declaration, examination and
release of goods, according to Xinhua News.
• The government will keep export taxes low while formulating import tax
policies with the aim of increasing domestic consumption, promoting fair
competition and strengthening import tax management, it said.
• It will also encourage domestic banks and institutions to launch cross-border
electronic payment businesses and advance pilot overseas payments in foreign
currencies.
• The move to boost cross-border e-commerce comes as China’s economy grows
at its slowest pace in three decades and is seeking ways to shift its growth away
from a dependence on manufacturing toward higher-value services.

29. Market Overview
2.10 Double 11 Festival
• China’s Singles Day/Double 11 festival is the world’s largest online shopping
frenzy, that takes place annually on November 11.
• Tmall.com invented the 24-hour sale five years ago to take advantage of the wildly
popular Singles Day, when young people in mainland China either celebrate or
lament “being single.”
• Tmall.com started the sales with 27 merchants in 2009. Since then the festival has
grown and the Double 11 2015 was held by both online and offline companies,
including Alibaba, Suning, Tencent, Jingdong, Amazon, Yihaodian and others,
• The Singles Day sale starts from midnight (Beijing time) on November 11 and goes
on for 24-hour. Brands that take part in the festival see their selected goods go on
a 50% discount.
• The total online retail transactions on Double 11 2015 in China reached 122.937
billion yuan (US$19.34 billion). The total single day’s transaction value on Tmall
on reached 91.217 billion yuan (US$14.34 billion), 74% of total; 68.67% came
from mobile. On average, Alibaba processed 85,900 transactions per second.

30. 3. Cross-border
e-commerce

31. Cross-border e-commerce
3.1 Trends & development
• International e-commerce is called cross-border ecommerce.
• Cross-border retail ecommerce has grown in recent years as the number of
channels, payment methods and offerings has improved.
• China already has 18 million cross-border shoppers.
• The primary advantages of cross- border sales are reduced import taxes and
simpler quarantine and inspection procedures.
• Examples: healthcare products are not required to carry China’s mandatory ’Blue
Hat’ certification.
• Companies with no presence in China qualify for cross-border e-commerce.
• 35% of China’s online shopping consumers bought cross-border products online in
2015, and 73% respondents said the price was the main reason for cross-border
shopping according to PayPal and Ipsos research.

32. Cross-border e-commerce
3.1 Trends & development
• China’s leading e-commerce marketplaces Tmall and JD have both launched
cross-border sites Tmall Global and JD Worldwide.
• Cross-border online shoppers’ top shopping destinations: US (84 %), Hong
Kong (58 %), Japan (52 %), UK (43 %), Australia (39 %).
• Top-selling international product categories include baby and maternity
products, apparel; cosmetics; electronics and home appliances; health and
nutrition; grocery and fresh foods such as Washington State apples,
California wine, and seafood from Ireland.
• 2015 has also seen the arrival of bricks-and-mortar stores set up by cross-
border e-commerce operators, and this 020 trend is expected to carry on.

33. Cross-border e-commerce
3.2 Consumer
• Guaranteed product quality is the prime reason behind cross-border purchases made by
Chinese consumers.
• Lower prices, improved product range and access to brands and products that are not
available from domestic sources are other motivating factors.
67.8%
65.5%
53.0%
52.0%
46.7%
39.6%
0.4%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Assured product quality
Cheaper
Brand preference
Scarcity of products: not available on domestic sites
Diversified products
Bought the product when traveling overseas and willing to buy it again
Others
Major Reasons for Cross-border Online Shopping in 2014
Source: www.eMarketer.com

34. Cross-border e-commerce
3.3 Tax rates (compared to ordinary trade)
Cross-Border e-
Commerce Trade
Ordinary Trade
Personal Postal Articles Tax
Rate
Customs tariff rate VAT
Food, Beverage
Food
10%
10% - 35% 17%
Beverage 10% - 65% 17%
Liquor 50% 40% - 65% 17%
Tobacco 50% 40% - 65% 17%
Testile & Manufactured
Goods
Clothing
20%
9% - 36% 17%
Acceossory 9% - 36% 17%
Home Textile 9% - 36% 17%
Others 9% - 36% 17%
Leather Wear & Accessory 10% 25% 17%
Luggage & Boot
Lugagge
10%
25% - 35% 17%
Satchel, Packsack, Handbag 25% - 35% 17%
Wallet, Key Case 25% - 35% 17%
Others 10% 17%
Boot 25% 17%
Source: JD (JingDong))

35. Cross-border e-commerce
3.4 The Main Players
• China’s two largest e-commerce players, Alibaba and JD, have both launched
specific sites for brands that wish to operate cross-border e-commerce to
China: Tmall Global and JD Worldwide.
• There are also several other cross-border players, such as Kaola, Ymatou and
KJT.
• Many foreign brands start their cross-border journey on Tmall Global, before
expanding to JD Worldwide (stores can easily be integrated by a TP) and
YMatou.

36. Cross-border e-commerce
3.5 Fulfillment model
Customer places an order on
the site and make the
payment to site owner
(Tmall/JD)
Seller ship to customer as
individual parcels from their
own fulfillment center or via
freight forwarder
Customer acknowledge
receipt; sellers receive
payments
Customer places an order on
the site and make the
payment to site owner
(Tmall/JD)
Sellers collect multiple
orders and ship in bulk to a
specific fulfillment center at
TFZ.
Individual orders packaged
in TFZ; China customs
release and domestic
carriers pick up parcels.
Customer acknowledge
receipt; sellers receive
payments
Sellers ship to and store
inventory at a specific
warehouse at TFZ, in
advance of orders
Customers place orders on
the site and make payment
(Tmall/JD)
Individual orders packaged
in TFZ; China customs
release and domestic
carriers pick up parcels.
Customer acknowledge
receipt; sellers receive
payments
1
2
3
Direct shipping from Finland
Through Bonded Warehouse at FTZ
Inventory kept at Bonded Warehouse (FTZ)

37. Cross-border e-commerce
3.6 Why do brands choose cross-border?
• Cross-border e-commerce is an opportunity for brands to enter China without having any
physical presence or trademark license in China.
• In some cases it requires less efforts and investment than opening a store on a local e-
commerce site (Tmall Global VS Tmall local)
• It’s a good place for companies to start their marketing strategy in China and to learn
about what’s needed for selling online to Chinese consumers..
• A good platform for building the image of being an imported, premium and quality
brand.
• It’s not a unique sales channel –brands can easily add other online or offline sales
channels. Many brands use multiple channels to build volume.
• A way to sell to consumers without attracting the 35% import duty.

38. 4. Tmall Global

39. Tmall Global
4.1 Group & Value Network
• Tmall Global is an that belongs to Alibaba Group. It was launched in February
2014.
• Tmall Global (www.tmall.hk) is a solution that enables companies based beyond
China’s borders to directly advertise and sell to millions of Chinese consumers.
• Overseas companies without China business licenses are eligible to apply to
Tmall Global.
• Orders can be fulfilled and shipped from outside of China, and customer
payments are settled in the preferred native currency (USD, EUR, JPY, etc).
• Companies are required to provide a China-based product return arrangement
and Chinese-language customer service support.
• There are three store types for Tmall Global: Flagship, Specialty & Franchise
store.
• All sales on Tmall Global are transparent (just like on Tmall)

40. Tmall Global
4.1 Group & Value Network
Tmall Global is part of the Alibaba empire

41. Tmall Global
4.1 Group & Value Network
Source: Web2Asia

42. Tmall Global
4.2 Page location & traffic source
Tmall.com
landing
page
Direct link
to Tmall
Global

43. Tmall Global
4.3 Who can sell on Tmall Global?
Requirements for Merchants
• Company must be registered in Foreign
Country
• Merchants should own trading license
• Brand ownership supporting documents
• Merchants should ave 100% authentic
products
• Well-Known Foreign B2C merchant /
retailers
• Well-Known Foreign brands who have no
official presence in China
• Must have a turnover of over CNY
100,000,000 in the previous year
Operational Requirements
• Overseas brands must provide Chinese
customer service
• Any product returns should be handled
in China
• All Products on Tmall Global must meet
specific standard. For example, Product
Title must include “brand name” +
“product name” + “other descriptions(
specification/style/material)”

44. Tmall Global
4.4 Store Models
Tmall Global promotes three modes of operation:
• Authorized/Franchise Store
• Flagship Store
• Specialty Store
Source: Bysoft

45. 5. JD Worldwide

46. JD Worldwide
5.1 Group & Value Network
• JD Worldwide belongs to JD
(Jing Dong), that claims to be
the “The Largest Online Direct
Sales Company in China” (since
Alibaba does not actually
function as a retailer but rather
as a platform for retailers)
• It has a self-operated
nationwide fulfillment
infrastructure
• JD is renowned for good
customer service and for
providing outstanding user
experience.
• JD has “zero-tolerance” policies
over counterfeit products Source: JD.com

47. JD Worldwide
5.1 Group & Value Network
• JD launched JD Worldwide in April 2015
• Similar to Tmall Global it offers overseas brands and merchants an easy entry way to well to
Chinese consumers.
• JD Worldwide claims that they will offer a range of support to retailers to enable them to take
full advantage of the JD Worldwide platform, including support on marketing to JD.com's
nearly 100 million active users and access to JD.com's unparalleled nationwide logistics
network
• JD has developed the JD Worldwide model to help foreign companies leverage the new
policies of China’s Tariff Free Zone (TFZ, 保税区), which is practice means:
– No Chinese legal entity required for overseas companies
– Receive sales proceeds in foreign currency
– Reduced customs duty
– No income tax
– The foreign companies do not need to have a legal entity or bank account in China.
• The platform offers two operation models: Reseller model & Platform Model
• JD Worldwide, unlike Tmall Global, does not disclose sales

48. JD Worldwide
5.1 Group & Value Network
• In March, 2014, JD and Tencent
publically announced their
strategic partnership. Tencent is
China’s largest social media
company, and the company behind
the immensely popular social APP
“Wechat/Weixin,” used by 600
million Chinese.
• The strategic partnership enabled
JD to tap into Tencent's significant
mobile and Internet user base, and
Tencent to leverage JD's e-
commerce services to offer its
users superior user experiences.

49. JD Worldwide
5.1 Group & Value Network
Source: Web2Asia

50. JD Worldwide
5.2 Page location & traffic source
JD landing
page
Link to JD
Worldwide

51. JD Worldwide
5.3 Who can sell on JD Worldwide?
Mandatory criteria
• Must own an overseas legal entity
• Must have qualification for retailing
and trading overseas
• Must be brand owner, franchiser,
authorized distributor or trader with
full supplier chain documentation
Admission priority
• Must be brand owner, franchiser or
reputable retailer
• Must sell reputable overseas products
• Must have excellent operation team and
e-commerce experience
• Must be reputable B2B/B2C online
company, or brand owner or e-tailer with
good e-commerce experience
• Must have the following categories:
maternal and baby, apparels and
accessories, cosmetics and personal care,
heath supplements, food, bags/luggage,
watches and etc.
Source: http://www.advangent.com (April, 2015)

52. JD Worldwide
5.3 Who can sell on JD Worldwide?
Requirements for products and service
• Products: Must be authentic products, originated from or intended to be sold
overseas, shipping to China through China custom with approved procedures
• Product page/details: Product information must be in Chinese language and use
metric unit, must provide Chinese-speaking customer service staff
• Must dispatch product within 72 hours after order being placed by customer.
Products can be delivered to China directly via international parcel service, or
shipped from bonded warehouse in China. Parcel information must be trackable.
• Must provide product return address in mainland China
Source: http://www.advangent.com (April, 2015)

53. JD Worldwide
5.4 Store Models
JD promotes 3 modes of operation:
• Franchising Business Partner. This module allow merchants to set up store in JD and get
facility to use JD warehouse to stock their products. JD takes the full responsibility
providing warehousing, delivery and customer service.
• Licensing Business Partner. Merchants may set up store and complete packaging in
order to ship the order. JD will supervise customer service and process invoice.
• Self Operation Partner. Merchants may sell on the JD platform, although warehousing
and delivery must be handled by the merchants themselves
• Warehouse: Merchants can use a warehouse service provided by JD through selected
packages.
• Logistics: Merchants can use a logistic service provided by JD through selected packages.
JD’s 211 same-day and next-day delivery program covers 135 and 951 counties and
districts, respectively.

54. 6. Cross border
VS local trade

55. 6.1 Cross-border VS local trade
Local trade Cross-Border E-Commerce
Tmall local JD local Tmall Global JD worldwide
Commission charge on sales 2-5% 3% to 6% 2% to 10%
Tmall depost (once) Tmall tech 15000 - 150 000 CNY 25 000 USD 10 000 - 15 000 USD
Maintanance fee (yearly) 10 000-150 000 CNY 5000-10 000USD 1000 USD
Target consumer Mainland china Mainland China
Legal entity and tax registration Within China Outside China
Corporate bank account Within China Home country bank account
Warehouse Within China Outside China
Trademark Registered in China Any Country
Shipment & delivery Within China Overseas Directly to Chinese consumers
Shipping to China In bulk (by sea)
Ship (by air) as individual parcels to end consumers or in bulk
(by sea)
Order fulfillment Originates from within China Originates from overseas or bonded warehouses
Customs clearance Regular requirements Relaxed requirements for food and health supplements
Delivery time 0-1 day 5-20 days
Shipping cost / order Low Medium - High
Import duty rate Mostly 30-60% Mostly 10-20%
Customs clearance hurdle Generally Higher
Relaxed requirements for food, cosmetics, and health
supplements
Return process Returns must be handeled locally (in China) Returns must be handeled locally (in China)
Store types
Flagship store
Speciality store
Franchise store
Franchising
Licencing
Self operating
Flagship store
Speciality store
Franchise store
Franchising
Licencing
Self operating
Payment methods Alipay Tenpay / JD pay Alipay Tenpay / JD pay
Suitable products
- Well known brans in China with demonstrated potential to
achieve large sales volumes in China
- Proven sales track record
- New brand or products to China
- Small to medium businesses in China
- Both high volume and long-tail products
- Food, cosmetics and health supplements
Other
- Orders must be shipped and
traceable within 72 hours of
- Orders must be shipped and
traceable within 72 hours of
- Orders must be shipped and
traceable within 72 hours of
order placement
- Orders must be shipped and
traceable within 72 hours of