Publish time:10/10/2017 12:00:00 AM Source: CCM
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As China's appetite for dairy products is growing steadily, exporters to China can benefit from the
convenient sales channel of e-commerce to get their market share of
high-quality dairy products in China.
comparatively low prices of dairy products coupled with the convincing of
getting them delivered right at the doorstep have switched e-commerce
for many Chinese to their favourite option of shopping, including buying
international dairy products. The first dairy products that discovered this
channel have been infant formula.
now, China’s e-commerce industry has developed to the main entry stage for
dairy product imports into the country. In 2016, the e-commerce distributors in
China have already reached an import share of 66%, leaving only one-third of
imported dairy products not sold via e-commerce. Those products can be sent in
normal parcel-sized boxes to China and therefore bypass import tariffs, which regular
imports have to face at the borders and ports.
products sold and send by e-commerce are not only cheap and convenient for the
consumers, but they also ensure that the product is coming from trusted dairy
markets overseas, like Australia, Europe, or New Zealand. These regions are the
main exporter of dairy products to China and are still preferred by many
Chinese for the domestic market since past quality scandals of Chinese dairy
products are still present in many minds.
may be worth noticing, that newly announced higher taxes on dairy imports in
China are not likely to change the buyer’s behaviour to a greater extent since
the demand for qualitative foreign dairy products in China is relatively
inelastic from the price. Chinese consumers still prefer quality before price,
especially if it is about their health or the health of children and
Chinese government is working actively to save the domestic dairy industry by
regulating the suppliers of dairy products in China. Foreign infant formula
brands need a special Certificate to be allowed selling their brands in China.
Most of those approved companies are currently located in New Zealand,
Australia, the USA, and Europe.
cooperate with e-commerce provider
to market intelligence firm CCM, the new trend also leads to cooperation
between China’s dairy and e-commerce giants. One example is the announcement of
China’s second-largest dairy producer, Mengniu Dairy, to operate closely with
China’s e-commerce giant Alibaba. Mengniu achieves its profits mainly with the
sales of liquid milk and ice cream products. The cooperation will be focused on
using the delivery platform of Alibaba to ensure quick and reliable sells of
fresh products. Furthermore, the companies want to work together in sharing
both data for effective and precise marketing activities. As a fact, for the
last 4 years, Mengniu has been working to establish a professional data team to
conduct data mining, modelling and analysis. Up to now, it has amassed a large
amount of detailed data about the dairy market. Alibaba has comprehensive data
about a variety of sectors.
Yili struck a cooperation agreement with JD Daojia, a platform of the
E-commerce business JD Company that is designed to deliver fresh fruit,
vegetables, etc. to customers within 2 hours of them placing orders. This deal
aims to facilitate deliveries of Yili fresh yoghurt and frozen foods. JD Daojia
commits to deliver such products to customers within an 1 hour via its strong
cold chain logistics service, enabling Yili to conduct business in a way which
has not been possible up to now. Both Yili and Mengniu make most of their sales
from UHT milk, but customers are becoming increasingly inclined to consume fresh
dairy products with shorter shelf lives.
even has its own supermarkets in China, selling food and dairy products. These
supermarkets have a fulfilment centre that deals with online orders and can
deliver the required products within 30 minutes.
to a research by Goldman Sachs, Online supermarkets, omnichannel sales, and
lower-tier cities are lifting up the e-commerce growth in China to the next
level which will leave the online retail market to be about USD1.7 trillion by
the year 2020. This development would mean a double of value compared to the
China, it is very easy for consumers to order the trusted dairy product they
prefer online and get it delivered even on the same day. This process skips any
middleman or retailer and lets manufacturers sell directly to the end-consumer.
For companies, this means, that marketing and promotion online and on
e-commerce platforms is a key task they have to conduct in order to place their
products and brands in the right light.
Chinese government announced recently to delay the enforcing of tougher rules
on the cross-border retail market to the end of 2018. The planned new rules
will increase both the taxes and regulations on cross-border sold products.
With the delay, the government aims to give retailers more time to prepare for
the change ahead.
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