NRI Papers
No.163 June 1, 2011
  Strategic Use of Online Sales Aimed at China's Rapidly Growing Consumer Market (Volume 2)  
Hisao NAKAJIMA, Tomoyoshi KUZUSHIMA, Xiaoge Guan

In August 2010, China's Ministry of Commerce published a circular that eased the regulations imposed on foreign investment. Based on this circular, it has become possible for Japanese manufacturers, their sales agencies and retailers to directly engage in their own online sales as extensions of their existing sales activities.

In China, "third-party payment platforms" offering an escrow function are widespread. These platforms are commonly used to collect payments for online sales. Accordingly, the collection of payments would not cause a major hindrance to Japanese companies entering the market. In the field of product delivery as well, the entry of private-sector home delivery companies into the market largely expanded the coverage of product delivery and improved quality of service.

China now has several companies that offer to undertake all of the operations necessary for online sales such as building and operating a shopping site, receiving orders, handling customer inquiries and processing returned goods. For Japanese companies, such outsourcing services provide an environment where they can promote online sales without increasing fixed costs.

The most important factor in achieving success in online sales is to improve recognition of the company's website. Recently, given their high cost effectiveness, the use of Internet communities has been attracting considerable attention in China.

When we look at recent tie-ups among companies, we see that it is very likely that online shopping markets will expand on a scale of all of Asia in the future. Japanese companies must be fully prepared by acquiring the expertise necessary for online sales in the Asian market, which is exhibiting remarkable growth in terms of both volume and momentum.

Contents
I Dealing with the Chinese Government's Regulatory Control of Foreign Companies
II Setting up a System of Business Operations that is Suitable for the Situation in China
III Promotional Activities Tailored to the Characteristics of Chinese Internet Users
IV Future Developments in China's Online Sales and Responses of Japanese Companies

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