China’s cross-border e-commerce, or Haitao, grows on search for exclusivity and thrift
To buy a couple of Carhartt T-shirts, Bilibili fashion KOL @吕政懋Maomao went on a convoluted global journey, involving two different websites, two shipments, one courier and more than a month of waiting.
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In the end, Maomao paid $149 for the T-shirts, or just a third of what he would have paid authorised Chinese retailers, according to a video he published to document the process.
Maomao’s purchase journey is a classic example of Chinese consumers’ great lengths to buy overseas products online. Since Haitao, or cross-border e-commerce, started as a niche consumer trend in the late 2000s, the practice has grown to include a community of 211 million shoppers in China, which roughly equals half the European Union’s population.
In 2019, cross-border e-commerce sales reached $1.8 trillion (RMB 12.7 trillion), according to research firm iiMedia.
On the lifestyle app Xiaohongshu alone, the word Haitao generates more than 200,000 tutorial posts.
The practice itself has endured substantial transformations. The first Haitao community in the late 2000s started as a response to product scandals in China, like the 2008 Chinese milk scandal, which led consumers to distrust domestic brands’ production standards.
Groups of personal overseas shoppers, or daigous, began to procure products from overseas, selling them at a premium for quality assurance.
As more Chinese brands outgrew a cheap, made-in-China stereotype, the daigous gradually expanded their focus from baby products to personal beauty and luxury fashion. Scouting overseas for products became less a necessity than a lifestyle choice. According to a Haitao report from Taobao global, Alibaba’s cross-border service provider, niche indulgences like Moroccan essential oils and Polish facial masks were the fastest-growing categories in 2018.
Data from Chinese e-commerce giant JD Global’s most recent 618 shopping festival, which takes place each June, showed that sales of imported beauty, fashion and health products grew more than 100 per cent year on year. “In recent months, our platform has seen a spike in sales of men’s premium gaming products and high-end beauty,” says Frank Yu, JD Worldwide’s head of marketing and operations.
The greatest joy of Haitao for me is that I get to buy products that are not available in China.
Yu says that today’s growing consumer base is seeking a wider choice of more sophisticated, pleasure-oriented products, and seamlessness throughout the shopping experience, whether it is live streaming, discount interaction, tractable shipping or customer service. He describes Haitao’s evolution in four words: bigger, faster, better, handier.
Thrift and exclusivity
Thrift, particularly the practice of diligently searching for the best deals, remains deeply ingrained in Chinese consumer culture, despite China’s rising middle-class population and relatively strong consumer confidence. Even when it comes to luxury, most Chinese buyers are ruthless bargain hunters.
In August 2018, when the Turkish lira dropped to a record low due to geopolitical turmoil, Chinese shoppers flocked to Turkey overnight to take advantage of an 11 per cent lower currency change. Thrift is also at the heart of Haitao economy as the practice allows consumers to avoid brands’ expensive China charges, caused by import taxes and market setup costs, and to enjoy discounts available to consumers abroad. No matter if it is Hermès or Carhartt, shoppers say that saving an extra buck is what brought them to Haitao in the first place.
“The greatest joy of Haitao for me is that first, I get to buy products that are not available in China. Second, I can shop some hot-selling pieces at a much lower price,” says Maomao. “Many brands are still not available in China, and when they are, their domestic price point is too high.”
In full-price season, luxury products in Italy or France cost around 30 per cent less than the same products in China, explains EU-market business consultant Steven Ding, who previously worked for e-commerce sites Shangpin.com and OFashion. During sales, European products cost 60 per cent less than Chinese products, incentivising Chinese consumers to resort to Haitao, Ding says.
Product exclusivity and a more sophisticated range of products available only in specific marketplaces are also significant Haitao drivers.
“A community of serious fashionistas is constantly growing in China, and they want niche, unique brands to represent their identities,” says Ding.
Sought-after brands like Maison Margiela, he explains, still tend to stock a limited, more “conservative” collection in the country, bringing loyal customers to use Haitao to find more premium and edgier pieces.
The money that consumers save through discounts and the excitement of finding exclusive pieces that are unavailable back home balance out the logistical, transactional and time-consuming barriers of Haitao.
Haitao is expected to maintain its growth momentum despite the disruption of the Covid-19 pandemic, which in the early months of global lockdowns delayed shipping times and disrupted supply chains.
“The overall Covid-19 impact on Haitao should be positive,” says Ding, adding that Chinese consumers are eyeing the higher-than-usual discounts that European and American websites are offering. Those markets haven’t rebounded as quickly as China.
Similarly, brands are investing increasingly in upgrading their e-commerce processes, as they now rely on online sales to compensate for offline retail losses. These improvements have meant even more convenience for Haitao shoppers.
The ethos of thrift, and more significantly, the desire for personal distinction are likely to fuel Haitao’s continued growth.
“There is still untapped potential in this mega-sized market, especially for brands who can provide novelty to consumers, like those specialising in pet products, wine, sportswear and lifestyle,” says JD’s Yu.
Source : Reuters | Photocredit : Google