Retail surgery: What are the complexities of trading in China?

Etail giant Alibaba’s profits have increased threefold over the past year, demonstrating the enormity of ecommerce opportunity in the region.

So how easy is it for European retailers to get a piece of the action?

“It’s not easy setting up shop in China,” says Tyrone Lynch, vice-president of NTT Com Asia’s ebusiness department. “The chief concerns for retailers are entirely new sets of regulations, the language barrier and unfamiliar types of payment.”

The Chinese payments market is different from that of other countries. Visa, Mastercard and Amex take a backseat to payment systems such as Alipay, China Union Pay and Tenpay. Ecommerce sites in China need to process these different payment types and transmit the money back to the retailer.

This is why many brands have opted to work with local ‘emalls’ such as TMall and ShangPin, which provide the shopping platform as well as payment and settlement processing. Peace of mind on these fronts, however, comes with a big trade-off. Businesses working with ‘emalls’ lose out on a branded, digital customer experience – something they’d take for granted at home.

But there is another way. “Payments and ecommerce providers are emerging that have the technical infrastructure and payments capabilities to operate both inside and outside of China,” says Lynch.

“These, along with market insights and links to local banks will allow foreign retailers to level the playing field with local competitors while retaining total control of their brand online.”