Chinese Products Will Continue To Target Value-Conscious Consumers Globally 

“Targeting value-conscious consumers in emerging markets worldwide from China will be a successful in cross-border e-commerce model,”Hans Tung, Managing Partner of GGV noted in TechCrunch Shanghai 2015. Given that high-end products like iPhone proved a great success in China, his statement could sound rather unexpected.

He continues, “Chinese or China-influenced outbound e-commerce players, like Xiaomi and Wish, are targeting ‘mass markets’ first. It’s similar to the brand positioning of Walmart or Costco in the U.S., but on mobile, and targeting the rest of the world.”

“Chinese inbound e-commerce players, like RED (or Xiaohongshu in Chinese), on the other hand is very different. They leverage user-generated social networking and expert curations to feature branded, westernized products for high-end users, many of which are iPhone or Samsung users.”

“When I first started to invest in the cross-border area, many people were skeptical of its potential. Everybody thought it would be hard to build true cross border companies. But since then companies like Xiaomi, Wish and RED, have enjoyed triple digit growth,” Tung said.

“Globalization of mobile internet is the biggest paradigm shift we are witnessing. By the end of 2020, the world will have 4 billion smartphones – that’s double from where we are now, in the next five years. If companies can take advantage of this trend by building a globalized team, they can achieve tremendous growth trajectory.”

“There is a chance for new startups to emerge and thrive in the cross-border area. But because there are several established players from the PC internet era already, we think community-driven, recommendation-based, mobile app platforms or marketplaces have a higher chance of success.” 

Community Voice Stronger Than Price

One startup that is using the community to its advantage is Xiaohongshu, an online platform where people can share cross-border purchase information and shopping tips, helping users to shop smarter overseas. 

Charlwin Mao, Founder & CEO of Xiaohongshu said “we ran many focus group interviews and found out that customers don’t know how to buy overseas products, even though they have a need for it. When users want to buy overseas products, they purely rely on search, which often doesn’t give you proper search results,” he says.

“Since last December when we launched Xiaohongshu, we have earned on advertising without making any payments on our platform and made growth every month. It proved community users can develop into real customers.” 

Now that laptops’  large screens have moved to mobile’s small screen, it’s hard for companies to appeal to customers with many products on the page. “Rather than cross-border purchasing, it’s more about how much the users are interested in the community. When it comes to specific needs, finding the right product for the user matters the most.” 

His three suggestions for Mobile eCommerce players are:

• First, many times offering the VIP shopper’s shopping list is helpful to other shoppers, since VIP customers pre-filter the quality product.
• Second, know who you are and pick the right product. Combining users’ comment, review with the number of ‘like’ clicks, numbers of preview of product can help you find out which products appeal to users the most.  
• Third, price solution is also related to the community. When they use our platform, we try to give them feel like ‘We  know who you are, we’re trying to offer three most relevant products for you.’ 

According to Mao, two kinds of users in the community lead their peer groups. “First, some of the people in the community follow the account of vendors, and share good offers and events to their peers. Second, young opinion leaders in our platform are like celebrities. They travel around and go shopping, which influences their peers. We encourage everybody to take initiative and become celebrity shoppers on Weibo.”

Image Credit: TechCrunch Shanghai 2015, L-R: Hans Tung, (Managing Partner of GGV), Charlwin Mao (Founder&CEO of Xiaohongshu), Qian Niu (Senior Editor of TechNode)