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Window on China – IRM50, January 2015

Cameron McLean, Managing Director, PayPal UK shares findings from a study into China’s shopper behaviour and why the world’s second largest economy is now our biggest customer when it comes to online exports.

Research conducted by Ipsos for PayPal has shown that online shoppers in China love to buy British. The UK now ranks as the third most popular international market (after the US and Hong Kong) for Chinese online shoppers who buy cross border.

Interestingly, consumers are not looking for a bargain – just 9% of Chinese international shoppers (those who spend more than 10% of their annual online spend cross border) buy online to save money. Instead 63% are shopping online because they are convenience seekers, valuing the time saving and comfort of shopping at home. 18% do their cross border shopping online because they value the extra information available online, which helps them make the right buying choice.

This is promising news. In light of the current Eurozone problems, China could hold the key to unlocking huge growth potential for many British businesses – and without the cost of setting up a physical store in market. According to CNNIC, the Chinese Internet agency, China has 564 million internet users. This dwarfs the UK, which has 22 million households connected to the internet, according to the ONS. Singles Day in China, the world’s biggest online retail sales day that took place recently, is a reminder of the monumental buying power of the nation.

The appetite for shopping internationally online is set to grow. Our findings indicate that more than a third of Chinese online adults plan to either start or increase shopping internationally online in the next 12 months.

In China, the most common reason for shopping from abroad is to buy clothes, footwear and accessories. 45% of Chinese cross-border consumers have purchased a product from these sectors from another country in the last 12 months. Cosmetics and beauty products are the second most popular products to buy with 38% of Chinese online cross-border shoppers buying this type of goods from other countries in the last year. Consumer electronics, computers, tablets, mobiles and other peripherals are the third most common purchases and have been bought by nearly a third (31%) of Chinese online cross- border shoppers in the last year.

However, to take advantage of this market there are some online pain points that need to be addressed to succeed. Our research showed that Chinese online shoppers are deterred by obstacles like added fees and the lack of guidance offered by some international websites. In all, 52% of all Chinese cross-border shoppers believed that shipping costs prevented them from buying internationally more often.

Concerns about customer duties, fees and/or taxes as well as not receiving sufficient help if they encounter problems on an international website were the second biggest barriers – each preventing 47% of all online cross-border-shoppers from buying abroad more often.

On the flip side, providing a safe way to pay and offering customer support in their language are two website functions that Chinese online shoppers said would encourage them to buy from international websites. 45% of Chinese online shoppers said that the appropriate level of language support would prompt them to do more online shopping abroad.

Ensuring a trusted and secure payment method is available at the point of purchase is another way that businesses can encourage international online shopping. Our research found that more than half (53%) of Chinese online shoppers said that having a safe payment solution in place would spur them to do more online shopping abroad.

In times of global economic uncertainty, it’s encouraging to see that online shopping is eroding the traditional notions of ‘borders’, ‘national barriers’ and ‘travel restrictions’ when it comes to cross-border-trade. British businesses can now run global businesses without a store front.

The sheer size of the Chinese online market, combined with a love of British goods means there is huge growth potential for businesses willing to look eastward to grow sales. The key takeaway is to ensure that websites are set up correctly to attract Chinese customers, addressing their concerns when it comes to purchasing online from abroad and giving them the confidence to return again.

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