The term “Made in China” has become synonymous with cost-effective manufacturing, and China’s population, production, and economic power demand attention around the world. The nation’s vast population of over 1.4 billion people fuels an immense consumer market and more than 40% of global ecommerce transactions. This foundation has propelled China’s rapid ecommerce growth, with giants like Alibaba and JD.com revolutionizing online retail. However, the rise of ecommerce also presents significant challenges, notably the proliferation of scams and counterfeit goods that impact both domestic and international markets alike. As we’ll discuss, businesses need a firm understanding of the risks and rewards of the Chinese market to stay safe and successful online.
Rather than speculating and guessing about these trends and dynamics from a Western perspective, the most valuable expertise comes with first-hand experience and boots on the ground. That’s why EBRAND’s so happy to have Sophia Lee, our Regional Head in China and East Asia, on board. Here, we’ll explore her perspectives on East Asian ecommerce trends, and how brands can combat online scams and protect themselves in China and beyond.
The Role of Chinese Apps in Ecommerce
China’s ecommerce ecosystem is immense, driven by the country’s vast population and tech-savvy consumer base. Crucially, consumer apps blur the lines between ecommerce, social media, and advertisements, including multi-functional platforms like WeChat and Weibo. WeChat, with its “super app” capabilities, allows users to browse, shop, and pay seamlessly within the app, while Weibo, a microblogging platform, leverages its vast user base to promote ecommerce through influencer marketing and direct product links. In the case of Weibo, legitimate users and scammers alike project advertisements and influence rather than selling products directly, posing unique concerns for brands and businesses. These platforms earn an indispensable place in the daily lives of Chinese consumers, making online shopping a deeply integrated social activity.
Several ecommerce platforms also play vital roles in China’s digital marketplace. Taobao, Tmall, and JD.com represent the three of the most popular offerings. Taobao, a consumer-to-consumer platform, attracts attention with its vast array of products at competitive prices. Tmall, a business-to-consumer platform under the Alibaba Group, focuses on higher-end branded goods, providing a premium shopping experience. JD.com, another leading platform, earns renown for its efficient logistics and quality assurance, making it a preferred choice for electronics and home appliances. Together, these platforms create a dynamic and comprehensive ecommerce ecosystem that drives China’s digital economy.
However, ecommerce never stays still, and since the pandemic, newer players increasingly take advantage of the flourishing market. Douyin and Pinduoduo pitch a similar angle to Taobao with low prices and broad offerings, meaning that brands must keep tabs on a variety of platforms to maintain a well-protected online presence.
Influencers, KOLs, and their Impact on Ecommerce
East Asian markets offer a few key points of difference from their Western counterparts, to which forward-thinking businesses around the world must pay attention. For example, Chinese ecommerce trends sway heavily on the say of celebrity influencers known as Key Opinion Leaders (KOLs). Their endorsements make or break sales trends, often shifting thousands of units in mere seconds. One China’s of most famous KOLs, Li Jiaqi the “lipstick king”, reportedly made more than 235 million Euros in sales in 2021 alone.
Platforms like WeChat and Weibo leverage KOLs to promote products, playing a fundamental role in shaping buyer intent and purchasing decisions. Platforms like Douyin and RED feature more KOLs because they are more popular among young people. The social platform RED almost serves as a search engine when people experience any problems in their daily lives.
Ecommerce Events: The Chinese Black Friday
When it comes to sales in China, events like November 11th (Double 11) exemplify the scale of Chinese ecommerce, often surpassing Black Friday in sales volume. These events routinely set global records, highlighting the immense purchasing power and digital engagement of Chinese consumers. Besides Double 11, the Chinese ecommerce calendar also comes to life again on June 18 (618). 618 presents another “Black Friday” level promotion in the middle of the year, showing Chinese ecommerce doesn’t need an off-season.
Alongside these impressive trends, the market also faces challenges such as scams and counterfeits. The rapid growth of online sales has attracted fraudulent activities, including fake products and misleading advertising. Both domestic and international consumers have encountered issues with product authenticity and seller credibility. Chinese authorities and ecommerce platforms have responded with stricter regulations and enhanced verification processes to combat these problems. Despite these efforts, combating scams and counterfeits remains an ongoing battle in China’s booming ecommerce landscape, crucial for maintaining consumer trust and sustaining long-term growth.
Production Hubs and the Birth of Superfakes
Key regions in China renowned for manufacturing play pivotal roles in global supply chains. These areas are hubs for diverse industries, from electronics to textiles, benefiting from skilled labor and infrastructure that support efficient production and export capabilities. Amongst these hubs lurks a dark underbelly of counterfeiting and ecommerce scams, where criminals skim huge swathes of cash from innocent producers and consumers alike.
For example, the rise of “superfakes” represents a sophisticated evolution in counterfeit production. These products mimic high-end brands with remarkable accuracy, often using advanced manufacturing techniques and materials that closely resemble authentic goods. Such “superfakes” exploit loopholes in intellectual property protections and pose significant challenges to both consumers and brand owners. The anti-counterfeiting efforts from the government and brand owners often tackle some of the “obvious counterfeits”, so counterfeit scammers upped their expertise around IP as well as manufacturing. Counterfeit listings now hide key information to avoid being detected and punished, so brands require much more effort to track them down online. When counterfeits outstrip the genuine article on manufacturing and marketing, legitimate businesses need comprehensive solutions to protect their brands.
The Numbers at Play
These issues may seem abstract and far-flung, but the numbers at play put them in stark perspective. Experts at the World Trademark Review estimate that 80% of the world’s counterfeits originate in China, permeating both domestic and international markets. The economic impact is profound, with estimates suggesting that counterfeit goods cost the global economy hundreds of billions of dollars annually, severely undercutting legitimate businesses and harming consumer trust.
According to the International Trademark Association (INTA), counterfeit goods constitute up to 2.5% of global trade, with China being a major source. Global counterfeiting accounts for $2 trillion in sales every year, while also sapping countless jobs, livelihoods, and business fortunes. With these numbers increasing annually and showing no sign of slowing, businesses must take their fates into their own hands, and explore effective solutions for tackling counterfeiters and protecting legitimate ecommerce.
Clearly, the idea that one state enforces against counterfeits and the other gives them free rein presents a vast oversimplification: the reality proves far more nuanced and ever-changing. Despite these complexities, all regions report substantial revenue losses due to scams, highlighting the need for international cooperation and stringent measures to protect consumers and businesses alike.
Online Scams: China vs. Europe vs. US
Ecommerce scams exhibit common tactics globally but vary in prevalence and impact across regions like China, Europe, and the US. Common tactics include fake websites, phishing emails, and counterfeit goods advertised as genuine. Regulatory frameworks and enforcement actions differ significantly: China’s sheer size compared with individual European member states presents challenges around counterfeit goods due to its vast manufacturing base and evolving regulations.
However, while the EU must work hard to harmonize its various consumer protection and anti-counterfeiting regulations, China and the US enjoy the unequivocal jurisdiction of statewide enforcement agencies. The differences in stipulations and enforcement between China’s Trademark Law, the US’s Lanham Act, and the EU’s IP Directives warrant their own conversation for another day.
Tactics and Takedowns
Counterfeiters employ various strategies to evade detection, changing platforms, hiding from enforcers on private social media, and pioneering new platforms to launch their scams. To combat these tactics, businesses must implement comprehensive brand protection solutions. Legal support also proves crucial, with brands leveraging international intellectual property laws to pursue legal action against counterfeiters.
Major successes include large-scale takedowns of counterfeit networks, but challenges persist due to the global scale of ecommerce scams and the adaptability of fraudsters. Ongoing collaboration between platforms, authorities, and technology like EBRAND’s Online Brand Protection solutions remains essential to mitigate the impact of counterfeit goods on consumer safety and brand integrity.
Conclusion
In conclusion, there’s so much to explore about Chinese ecommerce landscape, but our discussion so far covers a few key landmarks. We’ve seen how platforms like WeChat and Taobao, coupled with the influence of Key Opinion Leaders, shape consumer behavior and drive significant sales volumes during events like Double 11. However, challenges around counterfeit goods and ecommerce scams underscore the importance of robust mitigation frameworks and technological solutions to maintain consumer trust and brand integrity.
Looking ahead, the future of ecommerce in China promises continued innovation and growth, driven by advancements in AI, augmented reality shopping experiences, and the expansion of cross-border ecommerce. These developments mirror concerning expansions in counterfeiting and ecommerce scams, which brands must work hard to monitor and mitigate. As China remains a pivotal player in the global economy, its ecommerce sector will likely continue to set trends and influence the evolution of digital commerce worldwide, necessitating ongoing adaptation and collaboration across East Asia and beyond.
