E-commerce opens up new opportunities for Finnish food and beverages companies in China
According to Statista's latest report, online sales in B2C e-retail reached the US $499,150 billion, up from $403,458 billion in 2016. Enormous figures but consider that projected data for 2022 is at $956+ billion. The e-commerce user penetration is 72.3% in 2018, and is expected to hit 81% by 2023. The success is being driven by mobile consumer behavior, innovative social commerce models, trusted digital payment systems & innovation in 'new retail' through O2O (the increasingly seamless fusion between online & offline experience).
Source Statista; Retail e-commerce sales in China from 2016 to 2022 (in million U.S. dollars), projected an incremental rise in sales figures over this 6-year period.
Companies and sectors benefiting from this opportunity
- Finnish Food and Beverage companies
Solutions or products needed
- Dry, packaged food products
- Snack products
- Beer,and Non-alcoholic beverages
- Mother and Baby products
- Healthy foods
Team Finland activities available for Finnish companies
Food from Finland program is working with China's online players, to introduce companies interested in selling their products B2C at Chinese marketplaces.
Food from Finland program is also utilizing WeChat as a marketing tool to promote Finnish food offerings. With WeChat platform, Food from Finland is also helping to direct end consumers to market place like WeChat store, JD, Tmall, Hema and etc.
A pilot Wechat cross-border e-commerce store is also under construction. This will help to boost awareness of Finnish food to Chinese consumers. It is potential to help brands to gain more attention from other e-commerce platform operators.
Trade fair and buyers meeting in China to meet the potential buyers from online Channel.
For more information, please contact Fan Cuilu, Senior Advisor, Cuilu.firstname.lastname@example.org, +358 505692591 and Jianing Lu, Advisor, Jianing.email@example.com, +86 18801793699
Read more about this opportunity
Food scandals and concern for domestic food safety are some of the key reasons why more and more Chinese choose to purchase imported food. Now that Chinese consumers are more aware about healthy eating habits and have high purchasing power they are ready to pay for foreign produced healthy, save food products to steer themselves away from domestic food safety issues.
Due to strict food export compliance to China, many foreign food and beverage brands have difficulties in exporting to China through general trade. However, Cross boarder market entry in China comes with a whole different set of toolkit where integrated marketing on digital and offline channels is the key. It's not easy to grab attention of customers who are spoiled in the digital world, daily bombarded with extensive quality content, used to paying conveniently in cashless environment and follows trustworthy KOL advice. Although, connecting seamlessly with Chinese urban netizens need carefully sketched digital marketing strategy to uplift the products and services from the market competition. It is true for companies pursuing to enter Chinese market digitally, is also cost effective rather than taking the offline door. Especially when the brand is unknown in Chinese environment, since digital is the only platform that can be used to draw attention of Chinese consumers.
China's consumption habits are shifting and now consumers are making safe and informed choices when it comes to packed edible items. A growing demand has also been noticed in foreign brands FMCG. Packaged food which includes; biscuits, chocolate, instant noodles, candy, chewing gum and infant formula, milk, yogurt, juice, beer, ready-to-drink (RTD) tea, carbonated soft drinks (CSD) and packaged water, these items these contribute to 80% of China's FMCG purchases.
Chinese online shopper profile
According to the Digital Market Outlook, the number of e-commerce users in China is expected to grow to 1.123,0 million in 2023.
The typical Chinese online shopper is 20-45 years of age and lives in urban coastal areas. Women make a majority of the online purchases in a family household.
Data shows that 95% of China's internet users use their mobile device, and mobile e-commerce accounts for 71% of China's total e-commerce. Chinese consumers are highly dependent to their mobile device because they can do almost everything with it.
It is essential to offer your Chinese consumer a payment option that they us on a daily basis. The most popular payment options are Alipay and WeChat Pay, added together they dominate the mobile payment market in China, representing 92% of the market share.
E-marketplace or an online brand store
B2C e-commerce in China is dominated by marketplaces, such as Tmall and JD covering 80 % of the market and offering third party (brand owner, wholesaler, distributor) products. There are also product group specific e-markets as Yiahodian that concentrates on food products. The platform YUNJI focusd on doing business by Wechat store. Many brands (especially fashion retail brands) have both, a marketplace store, as well as their own .com brand store. In 2018, more brands opened their Wechat official account and linked to Wechat store.
Marketplaces are volume driven but the brand stores play an important role in branding, corporate communication, and marketing. For most brands, 90 % of the sales comes from the marketplace, compared to the brand store. Some brands do less than 1 % sales from their brand .com store page. More and more brands chose to enter China market using E-commerce as the first step.
Growth in cross-border commerce
For Chinese consumers guaranteed product quality is the prime reason behind cross-border purchases. For international brands, cross-border e-commerce is an opportunity to enter China without having any physical presence or trademark license in China.
Cross-border e-commerce has grown strongly in recent years as the number of channels, payment methods and offerings has improved. Targeted government support has also encouraged new entrants into the sector. Smaller, specialized players, Tmall Global and JD Worldwide all offer cross-border models for foreign brands. There are mainly two operating models: direct shipping from overseas or the bonded warehouses model.
The renewal of E-commerce law is going to change the sales of goods online. Particularly the regulation on cross-border e-commerce and "Daigou", which is a term used to describe selling from abroad into China through travel or private posts. Private sales from oversea into China will be regulated. However, it also allow more product categories to be sold legally through authorized cross-border e-commerce platforms or channels. This is also to implement Chinese government goal of opening up the market and encouranging import and export into and from China.
Good potential for the Finnish food sector
Finnish food industry has quality products known also for their safety that could be sold through China's e-commerce channels. Cross border e-commerce can be a cost-effective way for the Finnish food sector SME's to start sales and test their products in China.