U.S. brands Ocean Spray and Carlson Labs enter e-commerce in China
26.10.2015 330 views
China has made it easier in recent years for its citizens to order products from overseas websites, and that has led brands based in other countries to forge alliances with Chinese companies to meet the growing demand from China’s middle class for imported goods.
Two more U.S. companies announced their entry into e-commerce in China this week: Carlson Laboratories, a maker of vitamins and nutritional supplements, and fruit and juice brand Ocean Spray Cranberries Inc.
In both cases, the U.S. companies are shipping products into free trade zones the government has established in the past two years in nine Chinese cities. Once a Chinese consumer orders one of these products online, the item is put through an expedited customs clearance process and delivered to the shopper. Products sold in this way, which the Chinese government refers to as “cross-border e-commerce,” do not have to be approved for sale in China—a process that can take a year or more—as long as they are certified as safe in their home country.
Nor do products imported this way have to carry labels in Chinese. In fact, Chinese consumers prefer products with labels in foreign languages like English and German because that gives them confidence they’re getting authentic products, says Patrick Bucaro, Carlson’s national sales director. “They don’t trust their own production in China,” he says of Chinese consumers. “They much prefer the U.S.-branded product.”
Carlson has established agreements with two Chinese companies to sell its products online in China, and would like to find a half-dozen more distributors there, Bucaro says.
One of the companies Carlson is working with is Beijing Tongrentang Group, a pharmaceutical conglomerate. The Chinese company has created a new subsidiary called Tongrentang International to market foreign nutritional products to Chinese online shoppers. The company says it now offers nearly 700 nutritional products from 40 overseas brands at its Tien Ran Tao shopping portal. Products are shipping into the company’s warehouse in the Hangzhou free trade zone, then delivered to Chinese consumers who order them online.
As part of its deal with TRT International, Carlson has launched a new line of probiotics—products made with live bacteria or yeast meant to improve digestion—for sale in the United States and China. Carlson gave TRT exclusive rights to sell these products in China for six months after the Chinese company placed an initial order for more than $30,000 worth of the products, Bucaro says. “For a brand new company with us, that’s a very nice pipeline-filler of an order,” he says.
Carlson also is distributing its products through another Chinese company, Naughty Baby Co. Ltd., which is based in Nanjing and operates warehouses in free trade zones in three cities, Bucaro says. He says the Chinese companies will sell Carlson products on their websites as well as on such big online marketplaces in China as Tmall Global, the Alibaba Group portal for products sold under the cross-border e-commerce rules, and the similar JD Worldwide marketplace operated by Alibaba rival JD.com Inc.
Ocean Spray is selling its Craisins dried cranberries as well as beverages through a branded store on Tmall Global. It plans to participate in Alibaba’s big annual online sales promotion, Singles’ Day, which takes place every Nov. 11. Alibaba says consumers in China purchased $9 billion worth of merchandise on its Chinese marketplaces, Taobao, Tmall and Juhuasuan.
Export Now, a company led by former U.S. trade official Frank Lavin that has been facilitating sales for overseas brands on Tmall since 2009, is managing the Ocean Spray store on Tmall. Ocean Spray stages products at a warehouse in the Ningbo free trade zone. Orders are delivered to consumers in three to seven days, Ocean Spray says.
Ocean Spray is a good candidate for participating in cross-border e-commerce because it’s a well-known brand, and getting all its products approved for sale in China would be a lengthy process, Lavin says. While most of the brands he handles go through the process of getting products approved for sale in China so they can be stocked inside the country, facilitating faster delivery, Lavin says, “Ocean Spray is a great example of where the offshore solution works better.” Products held in warehouses in the free trade zones are technically “offshore” in that they do not clear China customers until a consumer orders the product.
For an in-depth look at the growing opportunity for overseas brands to sell to Chinese online consumers see the article “Open door policy” in the soon-to-be-published November issue of Internet Retailer magazine.
Source: Internet Retailer