Premium goods surge on cross-border apps

Growing rapidly

The country's cross-border e-commerce hit 2.11 trillion yuan ($295.5 billion) in 2022, a year-on-year increase of 9.8 percent, according to the General Administration of Customs.

China has been optimizing the list of imported retail goods for cross-border e-commerce. Last year, 29 product categories with strong demand from consumers, including ski equipment, dishwashers and tomato juice, were added to the list, according to a statement jointly issued by the Ministry of Finance and seven other central government departments.

Sales of imported wine sets jumped 193 percent year-on-year in 2022, according to Tmall Global, the cross-border e-commerce site of Chinese tech heavyweight Alibaba Group. It said that residents living in third and fourth-tier cities contributed the fastest growth in purchasing imported, high-end and niche household products.

Chinese consumers are favoring an increasing number of overseas brands that represent new lifestyles. Tmall Global said it introduced more than 6,400 new overseas brands last year, with the turnover of imported wine sets, urban cycling products and motorcycle helmets doubling from a year earlier.

"With the expansion of domestic demand and advances in emerging retail technologies, China has introduced preferential policies, such as lowering import taxes and expanding the range of goods allowed to be imported," said Zhang Tianbing, head of Deloitte Asia-Pacific consumer products and retail industry.

The boom in celebrity livestreaming has spurred cross-border e-commerce purchases by domestic consumers, Zhang said, adding that "Overseas brands are moving to cross-border platforms as they expand their distribution channels in light of COVID-19 disruptions to offline retail."

"The penetration rate of cross-border e-commerce in lower-tier cities and townships has been increasing in the past few years. Chinese consumers are demonstrating rising demand for diversified, personalized and niche products from abroad," said Chen Tao, an analyst with internet consultancy Analysys in Beijing.

He said online shopping via livestreaming videos — an easy way for domestic consumers to find detailed information on overseas products — is popular among the post-1980s and post-1990s generations of consumers.

Market consultancy iiMedia Research said that with China's further opening-up, gradual improvement in logistics and deliveries, and rising incomes, as well as demand for imported goods will continue to increase and provide a big boost to upgraded consumption.

Li Yanchuan, head of Amazon China Global Store and Prime, said young Chinese consumers, especially Generation Z (those born in the mid- and late 1990s and into the 2000s), think and judge independently while choosing brands, and prefer to pursue niche lifestyles and personalized products.

He noted that the sales of fishing, skiing, camping and other outdoor sports products have witnessed rapid growth, while virtual reality equipment, hand-drip coffee products, and tableware and kitchen utensils with unique designs have been favored by Chinese shoppers in recent years.

Moreover, orders of online cross-border shopping are still mainly being placed in first-tier cities, but residents in second- and third-tier cities have shown rapidly growing purchasing power. Amazon will further enrich cross-border shopping scenarios based on consumers who share similar interests and hobbies, Li added.

Amazon stepped up its localization push in China by launching its WeChat mini program in 2019, which is specially designed to build a social commerce experience for Chinese consumers and covers fields like livestreaming, social networks and content.

It launched a group-buying function within its WeChat mini program during last year's Black Friday promotional gala and strengthened cooperation with key opinion leaders.

"As a new form of foreign trade, cross-border e-commerce has witnessed rapid growth during the COVID-19 pandemic, and become an important driving force for stabilizing China's foreign trade," said Zhang Zhouping, a senior analyst on business-to-business and cross-border activities at the Internet Economy Institute, a domestic consultancy.

Consumption recovery has become the main driver of the nation's economic rebound this year, experts said, highlighting that the optimization of COVID-19 control measures will significantly bolster consumption growth and stimulate demand for travel and spending this year.

According to the tone-setting Central Economic Work Conference in mid-December, China will focus on boosting domestic demand by prioritizing the recovery and expansion of consumption in 2023.

China's retail sales — a major gauge of consumption — rose 18.4 percent year-on-year to 3.49 trillion yuan in April, and expanded by 7.8 percentage points from the level in March, data from the National Bureau of Statistics showed.

NBS Spokesman Fu Linghui said that with the restored consumption scenario, people have exhibited an increasing propensity to consume, and service-related consumption has been on the rise.

"The consumption recovery is still in the primary stage, and there is room for the improvement of consumption power and people's willingness to spend money," Fu noted. Moreover, online consumption remained a bright spot as online retail sales rose 10.4 percent on a yearly basis in the January-April period.

"Consumption plays a fundamental role in China's economic development and is the main driving force boosting economic growth," said Wang Yun, a researcher at the Academy of Macroeconomic Research, which is affiliated with the National Development and Reform Commission, the country's top economic regulator.

Wang said she is optimistic that consumption momentum will be maintained this year, with the growth rate expected to exceed 6 percent.

"China boasts a sizable consumption market, with immense development potential and resilience. The key to stabilizing economic growth is maintaining stable consumption growth," said Zhao Ping, deputy head of the Beijing-based Academy of China Council for the Promotion of International Trade.

Zhao urged more efforts to encourage enterprises to use new-generation information technologies, such as big data, cloud computing and artificial intelligence to create new types of green and intelligent consumer goods and cultivate new consumption growth points.

"We expect China's economic growth in 2023 to be much higher than that of the previous year, mainly driven by consumption," said Robin Xing, chief China economist with Morgan Stanley, expressing optimism that services-related consumption will grow this year.