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ChinaFile: China's E-commerce Boom

Nov. 11, the newly anointed Single’s Day in China, saw sites across the country throw a Sale of the Year party for all the singles in front of their computers.

Nov. 11 is the newly anointed Single’s Day in China. This is because November in Chinese is “the eleventh month” and numerically Nov. 11 is written as 11.11 — all signs.

To celebrate 11.11, e-commerce sites across the country decided to throw a Sale of the Year party for all the lonely singles at home in front of the computer screen: Everything, or almost everything, is at half price. The scores are back today. In 24 hours, Jack Ma’s taobao.com and tianmao.com alone did a whopping 19.1 billion yuan of business (about $3 billion). OK, the amount of traffic did crash his servers despite serious preparation, but still, 19 billion in a day is not a bad score at all.

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So Nov. 11 was really a debutante party for e-commerce in China. Finally, retailers are ready to recognize the next wave of consumer spending in China is online. Although Italian and French dominate high-end retail shops right now in China, online high-end retail will most likely be dominated by American and British operations. For one thing, online consumers in China can already shop on Web sites operated by major U.S. retailers such as Saks Fifth Avenue, Macy’s and Bloomingdale’s. The Chinese Web site of Neiman Marcus is expected to be launched early next year. In addition, e-commerce sites such as Net-a-porter.com and Yoox.com have either already launched in China or plan to do so soon. Affluent young consumers in China are usually fluent in English and many have already developed habits to buy online from international Web sites. I was told about a kid in Xinjiang, a far-away province in Western China, who buys regularly from Mr. Porter as well as My Habit. He is rich and does not mind paying for the high costs of shipping and customs clearance.

Another popular way to shop online is surrogate shoppers. There are special sites offering to buy specific items for Chinese who live in China. This could be anything, from Japanese rice to a gigantic jar of La Mer. These goods are bought in the States and hand-carried into China for a fee. About three months ago, an airline stewardess was sentenced to 15 years of imprisonment for smuggling goods into China as a surrogate shopper. Despite the heavy-handed penalty, most surrogate shoppers simply mail the goods directly to their buyer in China. It seems not all packages are taxed. Another way to evade tax is to mail the orders to an address outside of China. There are now online shopping services that offer addresses in the U.S. and U.K. for Mainland buyers. This is a holding bay of sorts for the goods, which will be hand-carried or repackaged for China to avoid tax issues.

There are Chinese Web sites that serve as a directory for Chinese who want to shop internationally online. These Web sites make recommendations in Chinese and provide links to international e-commerce sites.

In summary, it’s time to do another consumer insight study in Mainland China. You might be surprised to find that in the future, consumers will buy everything, from jewelry to potato chips, online.

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