Chinese shoppers are rushing online to buy products from Overseas - A trend called "Hai Tao." Increasing support for domestic consumption has lead to the establishment of the Shanghai FTZ which makes cross-border ecommerce easier and cheaper. And increasing liberalisation of global credit cards (and online payment systems) has further improved the prospect of going outbound to shop. Its a very high growth space, with forecasts of RMB1.0 Trillion in Chinese outbound shopping by 2018.

1. China outbound shopping

2. Chinese are
going
outbound
to buy

3. The problem to be solved.
Chinese travelers are going overseas . . .we know that.
100million travelled globally last year.
at the same time, chinese shoppers are also rushing online
to buy products from overseas - a trend called “hai Tao.”
hand carried products from around the world have been
filtering into china for decades and have fueled the
growth of taobao. but it seems now that chinese shoppers
are getting the itch for more.
they want the genuine goods at good prices but they also
want novelty. they want more and want to share in the
stories of where things come from.
About this presentation

4. outbound
offline
Tourists Overseas
online
Ecommerce From China

5. outbound ecommerce
In search of products from around the world online.
“HAI TAO” - Ocean Search
The term in China for the shopping trend to going online
...ordering direct from global Websites.

6. 150 140
48
2010 2011 2013 2014e
125
100
75
50
154
74
77
2012
Source: 100EC, *2013 China Online Retail Market Insight Report*, 2014,3
Source: China Internet Watch, 2014,8
B
B
Overseas Shopping
Market Value (RMB, Billion)

7. China’s
Outbound Online
Consumption to reach
1.0 trillion
RMB
by 2018
Nielsen report

8. why
now?

9. ftz
Government support for outbound shopping
The Shanghai Free Trade Zone is the first sign of more openness. Merchants
selling through the FTZs are able to offer prices in the range of 30% lower than
those sold in stores (reduction of tariffs).

10. online payment options are growing quickly
Penetration is growing: (1)Credit cards (Visa/MC) are becoming more available,
(2)Alipay/TenPay are near universal, (3)Alipay’s global ePass may also facilitate
greater access.
T
Credit Cards Alipay Tenpay

11. $
better prices for authentic goods
Due to tariffs, retail prices for authentic branded products can be 30%+ more
expensive inside China. And, while deals (promos/sales) can be found in China,
there is a high risk of buying fakes from second-hand merchants. By going
direct, overseas, customers hope to find good deals on genuine products.

12. growing interest in new products & places
As the number of Chinese overseas travellers is growing, increased freedom is
resulting in a growing sense of exploration and discovery. Taobao has done a
good job (until now) of satisfying “discovery” for products but consumers are
looking for more unique experiences.

13. maturing international logistics
While end-to-end shipments of products to consumers in China can be
lengthy (still), there are a growing range of options to make the process quicker
and more reliable - drop-shipping, transhipment, etc.

14. who
is shopping
overseas from China

15. buyer profile - who is shopping
She is 29 years old, working in a 1st-tier city, and is
married with kids.
She has a good sense of style (fashion), likes
dressing up ...and experiments with lots of beauty
(skin) products.
Outbound shopping helps to satisfy her curiosity for
new things from places she wants to visit. She also
shops overseas to get a better selection and find
genuine products.
The fear of fakes from China is a serious motivation
for her to buy products overseas for her kids.
66% are female
48% are married, with kids
82% are between 23 - 36yrs
61% spend between US$160 - 801 per month

16. 12.2%
shandong 7.2%
13.2%
zhejiang 5.2%
9.2%
jiangsu
4.0%
fujian
3.7%
hebei
Where The Buyers Live
Percent Overseas Orders by Location
~30%
tier-two
cities
A new trend has emerged with
more and more online
shoppers coming from Tier-2
cities or below. These “lower-tier”
shoppers account for
nearly 30% of the total
outbound online shoppers
population.
Source: 100EC, *2013 China Online Retail
Market Insight Report*, 2014,3
Beijing
Shanghai
14.1 %
Guangdong

17. 10 .se
Source: China Internet Watch, 2014,8
1 .us
.uk 9 4 .nl
7 .jp .kr 5
.hk 2 8 .tw
.my 3
Online Destinations
Top 10 - Countries for Shoppers
.dk 6

18. Purchase Categories
Top 5 - Bought Overseas Online
9.4%
12.9% 12.6%
Source: iResearch, “2012-2013 Cross-border e-commerce report”, 2013.9
16
12
8
4
0
16.0%
7.7%
Fashion Personal Care Baby Products IT/Tech Digital Media
Strong concerns about quality (worries about
fakes in china) drive sales in: Baby Products,
Personal Care and Fashion.

19. Shopper Motivations
Top Reasons for Shopping Overseas
Product Scarcity
Product Quality
Better Prices
Friend Recommendation
More Variety
Better Service
Security
Better Logistics
Easy to "Click & Buy"
Easy to Return
Others
52.0%
50.6%
50.3%
Reasons (Multiple Choice)
Main Reason (Exclusive Choice)
21.2%
21.8%
20.3%
34.5%
8.2%
31.8%
6.0%
30.4%
5.7%
5.5%
26.2%
23.6%
22.9%
19.4%
3.8%
2.9%
2.7%
2.3%
2.2%
0 15 30 45 60
Source: iResearch, “2012-2013 Cross-border e-commerce report”, 2013.9

20. Shopper Needs
Challenges of Buying Overseas
What are the current problems?
Feedback from Chinese buyers on how to improve:
current problems what they want
43% - Long Delivery Times
33% - Hidden Costs
31% - Language Barriers
27% - Uncertain Reliability
26% - Difficult Returns
1. Simpler Shopping Process
2. More Detailed Product Information
3. Chinese Language Customer Service
4. Faster/Cheaper Shipping to China
5. Secure Payment Systems
6. Better After-Sales Support
7. Product Authenticity Guarantees
Tmall Global Report

21. how
do chinese
buy online
from overseas

22. PURCHASE DELIVERY AFTER- SALES
GLOBAL SITE
Back to Global Site
to buy or track
purchase.
“Hai Tao” Journeys
How Chinese Navigate to Buy
?
Multiple roadblocks at this stage;
Language, Payment Info, Trust...
Chinese sites act as; (1)portals to buy overseas
products, (2)provide ratings/reviews of overseas
sites, (3)BBS for support on process.
Buyers can choose
(1)Direct Shipment,
(2)Trans-shipment.
HAITAO SITE EVALUATION
GLOBAL SITE
search purchase

23. Haitao Sites vs Direct
Options for Buyers
Buy Direct or use an intermediary site?
Options for Chinese shoppers ...depending on access.
china “haitao” sites Global “Direct” sites
Provides interface for Chinese to:
1. Get basic information on buying overseas
2. Peer support through BBS/Community
3. Evaluation of overseas sites for being “China Friendly”
4. Provide payment & shipping solutions
5. Buy from select global sites inside portal
Questions for Direct Sites:
1. Is the language gap covered?
2. Is there a payment option (Alipay, Credit Card)?
3. Does the site ship to China?
4. Is there relevant content (Chinese models, scenes)?

24. leading global “direct-to-China” sites
leading overseas sites selling into china support
Chinese language, currency conversion, free shipping to
China, and include chinese payment methods…

25. leading china based “Haitao” sites
Outbound “haitao” sites act as guides to shopping
outside china, providing how-to, listings/rating of sites,
sales alerts, intermediary services (payments, shipping)...

26. Payment Preferences
Top Overseas Payment Methods
Domestic Online System (Alipay...)
Credit Card - Online
Global Online System (Paypal...)
Credit Card - Offline
Online Bank Transfer
Mobile Payment
Offline Debit Card
Offline RMB/Cash
Electronic Remittance
Foreign Currency/Cash
Fixed-line Phone Payment
53.9%
48.2%
45.0%
44.0%
50.6%
Main payment (Multiple Choice)
Main payment (Exclusive Choice)
23.9%
16.4%
16.4%
15.4%
12.3%
24.0%
3.4%
3.0%
24.2%
24.4%
2.8%
2.6%
21.3%
19.6%
2.5%
11.2%
1.2%
0 15 30 45 60
Source: China Internet Watch, 2013,11

27. leading Chinese trans-shipment companies
trans-shipment services help to receive packages
overseas and manage fulfillment to end customer in
China.

28. in-depth look at
leading sites

29. Hot Recommendation,
Product Categories…
Promotions
Navigation Bar
Promotion, Haitao, Discover,
Experience, News
Log-in
APP
App for both IOS &
Android system.
Push content could
help to generate more
leads and drive more
sales.
Direct Linkage
“Hai Tao” Guide Website
SMZDM.COM
KEY FEATURE

30. Search Box
Navigation Bar
Categories
Chinese description, Likes/
Favourites/Comments, direct link
beginner’s guide
It encourage users to
post any promotions they
find worth buying, which
could help to increase
their credibitliy, and keep
users engaged.
Discover
Sharing
Products
“Hai Tao” Guide Website
Juchaozhi
KEY FEATURE

31. Search Box
/Recommendation
Navigation Bar
Categories
Special Event
Logistics Shipment
Tracking
Holiday Events
Products
Guidebooks for
Beginners
user Content
It encourage users to
post any promotions
they find worth buying,
which could help to
increase their credibitliy,
and keep users
engaged.
“Hai Tao” Guide Website
123 Hai Tao
KEY FEATURE

32. Direct-to-China Sites
REVOLVE
Navigation Bar
Buying Guide
Banners
KEY FEATURE
Chinese CRM
Payment Methods
user images
Involving users in
campaigns to show-off
products bought from
REVOLVE ...both inside
Chinese SNS and
outside.
Email Registration
Leave your email
Those who leave
anemail address are
more likely to buy from
REVOLVE.
KEY FEATURE

33. Navigation Bar
Language
Search box
Banners
Products
Sharing
Group Buying
Group buying
campaign offers
users more
attractive price
Group Buying
Chinese CRM
Direct-to-China Sites
Cosme-De
KEY FEATURE

34. Intro for Beginners
Direct-to-China Sites
iHerb.com
KEY FEATURE
Chinese Community
Account Info
Navigation Bar
Banners/Promotions
Features detailed
shopping guides,
promotions, CRM,
active user
communication, online
campaign…

35. Official Account Promotion Community After-Sale Service
Verified subscription account
with promotion, shopping
guides, community, after sale
service just in WeChat…
Direct-to-China Sites
Key Feature: iHerb on WECHAT

36. recommendations for global sites
1. Get the Basics Right
While the tools (payment systems) and access (understanding of foreign languages) are
improving for Chinese, there are still some big obstacles for Chinese Buyers. Get your site
properly adapted for Chinese (not just translated but well written for China). At the same time,
providing support in Chinese language (customer service) is a HUGE advantage for companies
looking to make a deeper impact in the market. Integrations of Alipay, Tenpay, China
Unionpay ...are all important.
2. Community
Provide an open space where users can talk, ask, and share. This is helpful both for customers
and for the brands (website operators) as a good way of bringing the service offering closer
together with Chinese expectations.
3. Get On Social
Chinese netizens are extremely active on social media (it’s probably how they will find you in the
first place ...eg. recommendations from previous customers), so it’s very important to monitor
and respond regularly on Weibo, WeChat. These same social media are essential tools for
building awareness and driving sales through offers/promotions. WeChat is a MUST!

37. Chris Baker, Managing Director
Email: chris@totemmedia.net
Twitter/WeChat: Talktototem