Chinese Companies, E-Commerce, and Coronavirus Pandemic

Online shopping has step-by-step become a part of modern life all around the world. Moreover, people hear about Amazon and Alibaba on a daily basis. However, online shopping remains a fraction of overall retail sales. According to official data, China’s online sales of physical goods still only account for about a quarter of overall retail sales. Nevertheless, some Chinese companies are willing to pay more attention to e-commerce amid trade tensions, as well as the coronavirus pandemic.

It is worth mentioning that more businesses are also tapping into e-commerce platforms to sell directly to consumers instead of relying on traditional store distribution systems.

For example, let’s have a look at Southeast Asia. The internet economy for a region of 570 million people off the southeastern coast of the world’s most populous country is expected to reach $300 billion in gross merchandise value by 2025. Moreover, that estimate came before the coronavirus pandemic. As a reminder, online shopping became more important due to widespread stay-home orders. Based on the information provided by cross-border financial payments platform Payoneer, in May and June, volumes tripled compared to the same period last year.

Online shopping is quite popular in China in thanks to Chinese companies. For example, household and consumer goods chain Miniso kept a plan to release 100 new products every seven days. The company shifted much of its business online, and this way Miniso was able to adapt to the new reality. At the end of 2019, the consumer goods chain had more than 3,900 stores located around the world.

Chinese companies and new opportunities

As mentioned above, trade tensions as well as the coronavirus pandemic, created issues for Chinese companies. Importantly, Chinese factories are exploring business-to-consumer (B2B) sales on e-commerce platforms. As a result, the factory has the opportunity to bypass wholesale distributors to sell directly to individuals.

Moreover, uncertainty regarding the U.S.-China trade tensions is a serious problem. Chinese companies started to explore different markets and different platforms.

Notably, the direct selling model is already growing in the world’s most populous country. Furthermore, Alibaba’s Taobao e-commerce platform launched a “Special Edition” in March, focused on factories. An initial call for export-oriented businesses attracted 300,000 Chinese factories and 110 million orders. As of July, at least 1.2 million factories joined the platform.

Furthermore, the delivery service benefited from online shopping. For example, the Chinese courier company SF Express reported an 84.22% growth in operation volume from June 2019 to June 2020. Moreover, DHL’s operating profit rose by 16% in the second quarter compared to a year ago and reached about 890 million euros.