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Analysys's Analysis: The scale of China's cross-border retail e-business market reached RMB 95.71 billion in 2016Q4, favorable policies boosted market recovering
According to the data in 2016Q4 Quarterly Monitoring Report on China's Cross-border Importation E-business Market released by Analysys, in 2016Q4, the market scale of China's cross-border importation retail e-business market was RMB 95.71 billion, with a quarter-on-quarter growth of 37.7%.
  • 09 May, 2017
  • E-commerce
  • 90
According to the data in 2016Q4 Quarterly Monitoring Report on China's Cross-border Importation E-business Market released by Analysys, in 2016Q4, the market scale of China's cross-border importation retail e-business market was RMB 95.71 billion, with a quarter-on-quarter growth of 37.7%.

After continuous fluctuation and repetition of the policies and markets in the previous three quarters, the cross-border e-business field finally embraced the great opportunity of quick growth in Q4.  During such period, the policies became further favorable and the market confidence and activeness of the market also increased continuously.
I. New tax policies on cosmetics were implemented and the overall market scale of ordinary cosmetics is expected to be increased.
The new tax collection provisions on cosmetics were implemented in October 1. Two adjustments were made compared with previous policies: 1. The consumption tax of ordinary cosmetics were canceled and the taxable item was changed from "Cosmetics" to "High Quality Cosmetics".  2. The tax rate of "High Quality Cosmetics" was adjusted to 15%.  Meanwhile, clear definitions were made on "High Quality Cosmetics".  According to Analysys's analysis, the policy adjustments will lower the overall prices of the imported cosmetics and bring changes as follows to sales of overseas cosmetics:
1. Under bonded mode, in short term, as there may be price difference before and after the implementation time of the policies, some users may be motivated to purchase. Therefore, the transaction volume of the entire market may increase to some extent. However, in the long run, as the policies will affect the entire importation, the prices online and offline will be lowered simultaneously, it is expected that it would not be possible that online channels compete for the share of offline channels by lower prices. Therefore, the possibility that prices are used to boost the size expansion of the bonded cosmetics markets.
2. For skin care products, before the adjustment of policies, the tax rates applicable through bonded methods are uniform. However, after adjustment, the cosmetics are further classified to be ordinary or high end. The tax rate of high quality class will be increased greatly. Therefore, the consumption population of such goods will be diverted and the total sale volumes may be lowered accordingly.
3. For direct mail e-business companies available to clear the custom by luggage and mails, the adjustment of tax rate enables them to buy goods of more types or quantities within the threshold of tax payment, therefore, the adjustment of policies may somewhat boost the cosmetics sales.
II. The transitional period was extended, laying foundation for cross-border e-business to step out the policy bonus.
One month after the implementation of the new policies of taxation on cosmetics, the Ministry of Commerce release a message that, to work on the transition of the supervision modes of cross-border e-business, the transitional period would be extended to the end of 2017. According to Analysys's analysis, the extension of the transitional period was based on the following reasons:
1. The "48 New Policies" in 2016 did bring relatively great impacts, should the implementation of the new policies be recovered with the total industry not getting well prepared, this would for sure bring relatively great influence on the cross-border e-business industrial chain once again, which is inconsistent with the original intent of the country to encourage cross-border development and attract the return of the consumers.
2. During the suspension of implementation of the "48 New Policies", each pilot cities on cross-border e-business had make successive breakthroughs on innovation of supervision methods and enhancement of supervision efficiencies and such cities had borrowed ideas from each other.  The supervision layer hoped to make evaluation and summarization on the implementation effectiveness based on different supervision methods explored by different cities and then formulate laws and regulations more suitable for the supervision of cross-border e-business. 
The extension of the transitional period was the conclusion of related governmental departments by widely asking recommendations from the industry and based on the development features of the industry, according to Analysys's analysis, the extension of the transitional period is expected to bear influence on industrial development on the following aspects:
1. The related companies will make necessary preparations positively in the remaining time of the transitional period, adjust the product types and categories and assist the manufacturers in obtaining necessary permits for registration.  
2. For cross-border e-business policies for 2018 and later, the government will release 3-6 months before the expiration of the transitional period, so as to give sufficient preparation time to the manufacturers and related implementation units.
3. The new policies so released will further normalize and balance the development of cross-border importation without excessively impacting the markets or remarkably lowering the efficiencies, for example, replacing "positive list" with "negative list", increase the upper limits of single time and annual cross-border consumptions.
4. More pilot cities and areas will be established based on the current experiences summarized.  Especially in line with the strategic implementation of the B&R Initiative, more cities in the middle and western parts of the city will enjoy the bonuses of cross-border e-business.
III. Year-end great promotion, the cross-border markets entered multidimensional competitions
The promotion campaigns of cross-border e-business were started as early as at the end of October, of which JD Worldwide took repeated and cyclic snap-up and "seckill" of the national hall to warm up, which Tmall Global initiated the pre-sale for the upcoming November 11 promotion. And NetEast Kaola announced resources of RMB 400 million for the "Super Overseas Goods Festival".  When it came to November, sales of the companies continuously break the records for the November 11 Great Promotion. Tmall Global witnessed its first cross-border seller with single day business turnover reaching RMB 10 million; the amount of orders of JD Worldwide was increased by 170% on a year-on-year basis. NetEase Kaola took only 23 minutes to finish the sales volume of the same day previous year on November 11 and exceeded RMB 150 million just at 1 a.m.  Meanwhile, more and more companies joined the hot carnival of the "Black Friday": Amazon Global launched the "True Black Friday Carnival for 72 hours" and offered free shipping of Prime members if the order amount reached RMB 200. Ymatou started "2016 Global Black Friday Carnival" and the Little Red Book launched the promotion of "Red Friday".  In addition, in December, cross-borders of the cross-border companies seized the last promotion windows at the year end to launch their December 12 promotion events.  According to Analysys's analysis, the reasons that the cross-border e-business companies positively participated in large-sized year-end promotion activities mainly because of in-depth factors of the following aspects:
1. With publicity and market cultivation for several years, online shoppers have formed relatively fixed online shopping consumption habits and demands, and "Black Friday" promotion activities of various types also stimulate demands of the Chinese users in an all-round manner.  To win clicks and favorable impressions from the users, cross-border e-business companies are also required to closely follow the paces of industrial markets and plan innovative and unique promotion activities based on the users' demands on prices and types.
2. Price promotion is still the most commonly used methods with relatively high effectiveness to attract the users, especially in case of hot products of same or similar types with multiple sales channels. Companies would commonly take such products as entry points for low prices, indicating quite remarkable intent to exchange traffics with prices.  In such a competition for traffics, target products with same quality and specifications become quite ideal as standard competitive products. Such competition in nature is the competition of comprehensive powers such as supply chains and company resources reflected by prices.
3. Competition of non-standard competitive products are important weights for companies to compete for specific markets, specific users and profit spaces. They're the "city moat" for promotion campaigns with distinct characteristics and styles.  Selection and placement of non-standard competitive products can examine the precision understanding of the true demands of the target users. In addition, differentiated competition will more easily highlight the features and superiorities of the company.

In 2016Q4, competitions of the companies on markets are still intensive, of which the two cross-border platforms under Alibaba, Tmall Global and Taobao Global, ranked first and second with the market share of 18.9% and 15.4% respectively.  JD Worldwide and NetEase Kaola that acted aggressively in year-end promotion campaigns ranked third the fourth with the market share of 11.8% and 11.6% respectively.  The four cross-border platforms above collectively take up about 60% of the total transaction volumes of the industry in China and are the dominant leaders of the entire markets. 

In the competition of cross-border importation retail e-business platforms under main websites, Tmall Global and Taobao Global also have relatively remarkable leading advantages and rank top 2 with the share of 26.1% and 21.2% respectively. JD Worldwide followed them closed at the third place with the share of 16.3%. There're relatively great gradient gaps between other companies and the top 3 companies, while the gap between VIP Global (ranking fourth) and Amazon Global (ranking fifth) was relatively small. 

In the competition of independent cross-border importation retail e-business platforms, NetEase Kaola ranked top at dominant position with the share of 42.4%.  And the Little Red Book specialized in community-based operation ranked second with the share of 18.3%.  The Ymatou setting roots in the market with quite characteristic C2C modes ranked third with the share of 11.7%. The three companies basically decide the trend of this subdivided field and nearly 3/4 of the markets were controlled by them.
Research Notes
Industrial analysis provided by Analysys is made mainly based on macroeconomic industrial data, final quarterly user survey data, historical data of the companies, quarterly business monitoring information of companies, etc. by Analysys's industrial analysis models with reference to market research, industrial research and company research approaches. And such analysis mainly reflects the market status quo, trends, break points and rules as well as the development status quo of companies.
Analysys believes that the data drawn according to the abovementioned industrial research approaches is within the recognized acceptable error range within the industry and can accurately reflect the industrial trends and change rules.
Such research outcomes made based on professional research approaches aim to provide decision reference. For the actual data of a specific company, please refer to the financial reports released by that company.
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Analysys is a leading big data analysis company in the Chinese market.  Since the establishment, Analysys has established the big data and analysis service ecological system cored by massive digital user assets and algorithm models. Analysys has been dedicated in providing product services such as digital user portraits and competition analysis and assisting in product operation for enterprises; and assisting enterprises in increasing revenues, saving expenditures, increasing effectiveness and evading risks by operation and management on digital user assets of the enterprises.  The products in Analysys Family include Analysys Qianfan, Analysys Fangzhou, Analysys Wanxiang and Analysys Boyue. By December 31, 2016, Analysys had covered 1.51 billion intelligent terminals and monitored over 1.56 million mobile APPs.
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