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E-commerce in China is mega bucks!

For most of us around the world November 11th is a day just like any other, but in China this day (alsoknown as “Single’s Day”) is a day where online shopping takes precedence over the whole country, withonline shopping networks raking in big time!

In 2015, Alibaba, one of China's E-commerce juggernauts saw sales worth 91.2bn yuan ($14.3bn; £9.4bn),a 60% increase from 2014. China's capitalist holiday offers Chinese people the opportunity of purchasingmost of their favourite products on online sales platforms such as Taobao and TMall at a 50% discount.

The growth of e-commerce in China has been exponential to say the least over the past decade, withChina now the largest online retail market in the world. To give you a better idea, China and the USaccount for 55% of the total market, with China set to exceed $1 trillion in retail e-commerce sales by 2018,accounting for more than 40% of the total worldwide.

E-commerce is where the money is at and many foreign companies have truly begun to recognize themonetary potential of setting up their own online retail business in China. But, it hasn't been that easy forforeigners to set up on this side until earlier this year.

In June of last year, the Chinese government released a statement saying that they are allowing foreign

companies to have full ownership of e-commerce businesses in the region. This move came as Chinaseeked to open their e-commerce market further to foreign competition, as well as to the huge amount ofinvestment that comes with it.

exceed $1 trillion in retail ecommerce sales by 2018, accounting for more than 40% of the total worldwide.- See more at: http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765#sthash.qa9G4XTk.dpuf

This has made entry into the market a whole lot easier for big players in the online space such as Amazon,and has made it a whole lot more accessible to individuals looking to set up their own e-commercebusiness in China. Read on as we take a look at what has facilitated the huge growth in the market, andlearn about the type of company foreign business people can open for their e-commerce business fromanywhere in the world...

China's middle-class and online shopping

Millions more Chinese households are being propelled into the middle-class each year as China becomesmore urbanized, higher paying jobs are being created, and optimism that incomes will continue to riseremains prevalent. According to a report released earlier this year by Pew Research Centre, themainland's middle income class grew by 203 million people in the 10 years after 2001. This staggeringgrowth will see the middle class more than double its spending by 2030, lifting consumption as a portion ofGDP to nearly 50 per cent from just 38 per cent in 2014.

See the full infographic here!

The success of online shopping in China is that it provides this ever growing market with great prices and

discounts (who doesn't love a good bargain), the convenience of shopping within one's home or directlyfrom their mobile, and greater access to a wide range of products, particularly foreign brands.

Whilst most top-tier cities now enjoy greater access to foreign brands through traditional retail outlets,many of the lower-tier cities do not, and the allure of shopping for these products online is something that isbecoming more of a trend. Things such as food safety issues, an increasing interest in health andwellness and a growing willingness to spend on children (the end of the one child policy) have madeorganic or fresh fruits, meats and vegetables, and baby-related products top spending priorities this year.

The middle-upper-middle-class make up the bulk of online shoppers (not just students or people lookingfor a bargain) and the demand for foreign products are growing. As more Chinese consumers start to findthemselves with more money to burn, the full potential of e-commerce in China will be realized for thosequick enough to get involved.

How can I get in on the action?

Foreign companies or individuals looking to start their retail business online will need to fully understandthe following:

The legal side of things when it comes to setting up an online shop

Any foreign company looking to set up an online shop can do so by registering a China WFOE with atrading business scope for their physical store, otherwise known as a Foreign Invested Commercial-Enterprise (FICE).

A note for FICE owners:

We recommend that one invest capital of 100,000rmb (this is only a recommendation, there is nominimum registered capital required). This is to ensure that the business and its operations runsmoothly and so that it doesn't run out of money before it has even begun to take off

Owners that are looking to set up from where they are will be required to register a virtual office asproof of an office address. It does, however, only cost 5000rmb per year

Owners will have to declare 3% of sales as tax to the government

Once a FICE has been registered owners can establish their online store with their products. Owners willalso need to go to the telecommunications administration authorities for ICP (Internet Content Provider)filing.

Where to host an online shop

China has a bunch of e-commerce platforms that one can register and host their online shop on, namelyTMall, JD, Yihaodian, Taobao and even on Tencent's hugely popular messaging app WeChat.

Each of these different platforms have their own entry requirements and commission charge on sales.Here is a great comparison table on TMall, JD and Yihaodian that compares these factors to help you get abetter feel of which platform/s might be the way for you to go.

Click here for more details on the platforms above

Once owners have decided on which platform/s to use and gone through all of the other aspects of runningan online shop such as the logistics, warehousing and payments they should be ready to make their ownmark in the growing market that is e-commerce in China, and position themselves to make a killing onceNovember 11th rolls around again this year!

Get our checklist to see what you need to register your own WFOE today!

Hongda Business Services has compiled a checklist to help business owners track everything they need toopen a WFOE and start their very own e-commerce business from anywhere in the world. Click below todownload our checklist or speak to us today to find out how we can help you set up everything you wouldpossibly need to run your own business!