China has been the world’s most populous country for most of recorded history, at present estimated to be home to over 1.4 billion people. Now, it’s fast becoming one of the wealthiest; according to the World Bank, Chinese consumers spent $5.60 trillion (£4.16 trillion) in nominal terms in 2019 on household final consumption expenditure, equivalent to 39 per cent of the country’s GDP.
In this growing consumer market, TMall is one of the best ways for overseas businesses to sell to consumers in mainland China. Owned by the Alibaba Group, and created in 2014, it aids in the selling of products to consumers all over the world, including those in mainland China itself. But TMall Global is an especially useful inroad for breaking into the Chinese market for companies based overseas.
In this article, we will help break down what TMall Global is and how it could help your business to capture some of the lucrative Chinese market.
TMall Global is the way to go
B2C trading to China has traditionally been a tricky pursuit for overseas brands, but TMall Global has opened up the market to these companies since 2014.
Despite operating for over seven years, the company doesn’t have a great deal of exposure internationally. If you start thinking of selling your products to the Chinese market, AliExpress is often one of the first names that springs to mind. But while AliExpress is based in the right part of the world to aid expansion into China, it does not facilitate the selling of products directly to the mainland. This is despite the platform hosting a number of Chinese-based businesses.
TMall Global, by comparison, is an eCommerce platform that meets the requirement, allowing foreign businesses to tap into the growing Chinese retail market.
Critically, unlike other platforms like TaoBao, TMall Global does not require you to register your business as a local entity on mainland China, or even to open a local bank account – two key factors in levelling the playing field for international business and making it easier to test and learn without administrative burden.
China in your hand
So, if China is your target market in 2022 or beyond, it pays to learn a little more about TMall Global and its footprint in the Chinese retail sector.
TMall Global is considered the predominant platform for those looking for cross-border B2C retail activities with buyers in mainland China. As a more direct comparison, Amazon might work if you’re selling to a European or North American consumer market, but the juggernaut’s Chinese offshoot, Amazon.cn, barely registers with Chinese consumers.
In 2011, Amazon.cn attracted a paltry 4.8 per cent share of B2C online retail in China. TMall Global, by comparison, dominated even then, with the site bagging a 47.6 per cent share in the space and considerably higher sales in Ren Min Bi (RMB) to go with it.
Switching from what you know to a platform with the strongest local footing is very often the most sensible bet and in the case of China, it’s almost essential.
The cost of TMall Global
Before you start accelerating your expansion plans, TMall Global does come with a few costs worth bearing in mind.
In fact, these setup costs are substantial. Being based overseas poses a risk to TMall Global, so the platform expects a deposit of $25,000 to be paid, fully refundable when you close your store, to cover the cost of any dispute between buyers and sellers. The reason for this deposit is the fact that you aren’t setting up a local entity within China, so the company will deduct any disputes or violations of the service agreement from this sum.
An annual fee, termed the service fee, is also payable, with the precise value depending on the type of products you wish to sell to consumers through the platform. For example, women’s and men’s clothing raises the cost of this fee, as opposed to food, skin care products and other apparel which come in at less. Selling across multiple categories of product will simply entail you paying whichever fee is the highest of the set.
It’s worth noting that TMall Global will take a percentage of your sales, otherwise known as commission, with rates for this between two to five per cent. Again, the commission rate depends on the category of products you wish to sell.
AliPay is one final cost consideration worth bearing in mind. Transactions are conducted over AliPay, which requires its own AliPay Service Fee. This is calculated at one per cent of the sales price of an item plus logistics.
An easier way to sell
There’s no denying that the costs are high with TMall Global. But if your company is looking to push a larger operation to Chinese consumers, there are plenty of benefits. For starters, there is no need to coordinate shipping through local warehouses from within China. Instead, you can simply ship goods directly to the consumer from abroad. Payment can be made in US Dollars or any local currency you prefer straight to your bank account in your own country of origin. And of course, you do away with the need to set up a Chinese entity.
Breaking into China in 2022
With tools like TMall Global, many businesses can forget about burying themselves in the paperwork and legalities that come with setting up a base of operations on Chinese soil. It’s not right for every company, but it certainly evens out the playing field for a lot of international businesses keen to break into China.
Perhaps TMall Global could be the platform to help your business crack the Chinese market too?
As part of your journey, don’t forget to consider the language translation services you’ll need to market and sell your product in China. Huge proportions of Chinese consumers don’t speak English, so an accurate and careful translation is your best solution if you want to make an impact. We’re sure you’ve seen the examples of products on Amazon with poor translations that have made you laugh, cry or at least question whether the product will do what it claims! Get in touch with us today for an instant quote.
