Soledad Aaron Dustin Chua WSZS2019003

If you want to sell on Tmall Global, what things do you need to notice? List them and tell me why.

If an entity wants to to sell at Tmall global, one must first satisfy the entry requirements of Tmall
Global. These entities must have:

a. A registered corporate entity outside of China

b. Have the necessary qualifications for retail and trading overseas
c. Have the relevant stock certificate
d. Be the brand owner, authorised distribution agency, or possess the brand purchase voucher

According to the videos, since Tmall Global is said to be the largest B2C shopping site in China, it gives
a lot of opportunities for overseas companies to take advantage of China’s internet traffic. This opens a market
for companies targeting Chinese consumers which one can call the Chinese Cross- Border E-Commerce (CBEC)
market. This market is exclusively established for foreign entities that sell their products directly to Chinese
consumers.Moreover what I noticed is the cost involved in registering an entity in Tmall Global.

Although Tmall Global offers an obvious mechanism for gaining entry to the Chinese market, one
should be aware of the costs associated with the Tmall Global marketplace. The costs associated with
operating on Tmall Global can be divided into a Security Deposit, Service and Technology Fees, and an Alipay
Service Fee:

a. Merchants opening any of the store types must submit the required security deposit of U.S. $25.000.
b. The annual fee ranges from U.S.$5.000 to U.S.$10.000, depending on the particular product category.
Tmall Global also charges a commission fee based on the category of the product sold, calculated in
the following way
i. Commission Fee = ((Product Price) + (Logistics Fee)) * Applicable Commission rate
c. Alipay charges a 1% service fee, which is applicable to each transaction via Tmall.hk, calculated
accordingly - Alipay Service Fee = ((Product Price) + (Logistic Fee)) * Applicable Commission Rate

As one can observe, not everyone can easily enter and register in Tmall global. Tmall global targets
already established companies who are looking to expand their revenue and reach with having a marketing
plan and logistics plan for marketing in the CBEC market. The nature of the entry requirements in combination
with the costs associated with establishing a presence on the platform are a number of entry barriers posed to
companies who are interested to expand their reach in the CBEC market. Therefore, one should carefully
assess one’s own company whether it is financially and logistically prepared to enter this hypercompetitive
market because foreign brands are not only competing with local brands in China, but also with providers from
all over the globe. Therefore, a compelling product proposition (ex. why this product?) and brand proposition
(ex why this brand?) are two critical questions in this line of industry.

What is Cross Border Ecommerce?

 Cross-border ecommerce can refer to online trade between a business (retailer or brand) and a
consumer (B2C), between two businesses, often brands or wholesalers (B2B), or between two private persons
(C2C). Cross border e – commerce can be between businesses and businesses like relationships of suppliers
and distributors. Consumer to consumer transactions can also be widespread from websites like Amazon,
Ebay and even Facebook Marketplace and the like. Locally, these C2C relationships can be widespread in the
Philippines from applications from popular apps like Carousell, and Facebook. But what is the most prominent
is B2C relationships where businesses employ online channels to further their reach towards local and
international attention. Cross – border e – commerce can be understood as one type of international e –
commerce involving two or more countries transacting with each other.

Cross-Border B2B E-Commerce

Unlike traditional international trade, cross-border e-commerce takes advantage of Internet

technology, which brings convenience to both sellers and buyers in acquiring product information, causing
information cost to decrease. Negotiation becomes easy for both sellers and buyers to compare products and
carry out transactions on a cross-border e-commerce platform. It decreases a large amount of time and money
spent on negotiation. Therefore, the negotiation cost decreases. Transportation methods for both traditional
trade and cross-border B2B e-commerce are very similar. Both deliver the goods by means of transportation by
sea. Hence, there is no significant difference in transportation cost between B2B and traditional trade. Tariffs
of B2B are almost the same as those in traditional trade. The General Administration of the People’s Republic
of China has implemented some regulations to integrate the information platforms of customs and the
information platforms of cross-border e-commerce; cross-border e-commerce will be conducted on the
Internet, which leads to more stringent monitoring and management of cross-border e-commerce by customs,
and therefore the tariffs cost of B2B increases. The middlemen cost decreases in cross-border e-commerce
because the Internet technology connects sellers and buyers easily, reducing the intermediate steps of
transactions and price differences among sellers.Therefore, transaction cost will decline when and only when
the increase of tariffs cost is less than the decreases of other costs.

Cross-Border B2C E-Commerce

The change of information cost, negotiation cost, tariffs cost and middlemen cost in B2C is similar to
that in B2B. Therefore, in B2C part, we focus on the change of transaction cost. In B2C, as orders are small, and
the goods are usually delivered by air, transportation cost is a serious burden for consumers. Therefore,
transportation costs will increase.

In short, transaction cost will decline when and only when the increases of tariffs cost and transportation cost
are less than the decreases of other costs.
Why Online Sellers Should Expand Internationally?

E – commerce is the fastest growing area in the global economy. The Internet economy globally is
growing at a rapid rate due to the rise in market penetration and the population demographic, with millennials
being the dominant working force in 2025. Moreover, according to the 2017 KPMG Global Consumer Report,
the online retail sales as a percentage of total retail sales are steadily increasing at an average of 1.44%
annually from 2015 - 2019. By 2019, the percentage of online retail sales to total retail sales amounts to 13%.
One might think that the number might be small a percentage as compared to the total retail sales, but the
online presence of an organization still highly contributes to the total retail sales of an organization. When
comparing the impact of online vs offline reach in creating the first moment of purchase from the customer, 52
percent of the consumers were triggered by at least one offline channel while 59% were triggered by at least
online channel. One can see that online channels have a wide customer reach that bring up awareness of the
organization be it local based or international based. Cross – border e – commerce has the potential to reduce
trade barriers and promote growth in the industry of international trade. In 2019, e – commerce is said to be
valued at approximately 3.3 trillion dollars and the cross border e – commerce market has reached over 1
trillion dollars in 2020 which is composed of almost 30% of the e – commerce market. By that year, nearly 1
billion people around the world are projected to be shopping online across the borders, and their transactions
will account for one-third of all global B2C transactions. In the E – commerce and international businesses, a
company’s business model is usually based on the customer’s requirements. But for the developing countries,
poorer quality goods, counterfeit products may stimulate these countries to purchase their goods
internationally. Furthermore, due to the recent international trade liberalization laws like the European Free
Trade Agreement and China Free Trade Area, the advantageous policies will open up markets for trades,
including those from developing countries. In addition to that, international e - commerce is also protecting an
entity from economic crises because when a local economic crisis happens to their own country, the demand
for its own goods and services will not be affected heavily as he is also catering to consumers globally and not
just locally. The wide reach that international e - commerce provides can protect an entity from these risks and
hazards along the way.

Learn How to Clear Customs Everywhere

In an international environment, it can be difficult for sellers to fulfill their promise to customers of
on-time delivery at a predictable cost. In large part, that’s because customs regulations and processes
worldwide were designed for large-scale, repetitive industrial shipments, not for the small, unique orders that
form the bulk of e-commerce transactions.

One way of clearing customs will be for the seller to pay the duties relevant to the shipment and
incorporate the costs involved to the sale price. Another way would be to establish a pre-clearance process
with customs authorities. Instead of declaring each shipment individually at the time of arrival, the logistics
service provider submits to customs a manifest covering multiple shipments before they arrive in the
destination country. By consistently providing all relevant information to customs in advance, the merchant
allows the authorities to either give the go-ahead for the entire batch prior to arrival, or identify specific
shipments that require further review. Another method is to employ established shipping services such as
FedEx or DHL who are already experienced and well - versed in sending packages globally.