E-commerce plays a major role in the modern age in the sense of globalization. Online shopping is increasingly dominating the retail market and hardly anyone can think away from shopping anywhere and anything in the world. What many do not know: Where do the strikingly cheap clothes of the originally unknown and dubious websites "She-In", "Romwe" and Co. come from? How do Chinese online shopping platforms influence the European market from an evolutionary perspective? The goods are produced in China and shipped from there, which explains the long delivery times of often up to four weeks.
Social media platforms such as Instagram, Facebook and YouTube have grown dramatically over the last decade, giving Chinese online stores simplified access to the international marketplace.1 The low-priced and low-quality goods are brought to consumers by well- known models from around the world through social media. Fake branded clothing is also creeping into online shops such as "Joom", "Wish", "DH-Gate" and "i-offer": The extent of this can be seen at the customs office, how many fakes of stamps are sent by post.
In addition, you can order weapons, knives and other illegal items from China without needing a license.
The Alibaba platform allows European retailers to purchase, print and even ship materials directly from China at low cost2. But this also stimulates start-up companies from all over Europe to launch their own product and thus their own brand: most take an already existing product, such as a 'whitening kit', which promises almost professional teeth whitening in just a few seconds. The only thing left to do is to brand the product from China, which means to label the product with its company name and market it as 'its own'.
Most of the marketing today is done on Facebook or Instagram. Also, these social media platforms have been offering to advertise around the world for little money - even 1 € for 1 day.
However, the ingredients of such a bleaching kit are not questioned or tested. Meanwhile, all sorts of relatively well-known brands from cosmetics to health have been established on social media. These brands cooperate with big personalities and pay them a large amount of money to 'post' a picture with the product.
It is a fourfold profit situation from which the producer in China, the founder of the brand, influencer and customer benefit.
If one compares an 'old-fashioned' teeth whitening at the dentist with a home kit from China, one immediately notices the drastic price difference. A kit from China can be purchased for less than 20 €, with a whitening dentist starts from 400€ - now almost everyone can beautify themselves with cheap products from China.
The waist trainer - an almost common word among the young, everyone knows it: a corset which promises a thigh-thin waist, without doing sports.
The waist trainer was one of the biggest trends in 2016, almost every girl had one, young or old. Superstars from around the world advertised it on social media. For little money, you can buy it and a thin waist. What nobody or only a few consider is that the trainer from China presses the organs and it can cause internal bleeding. Also, you can get pimples and circulatory disorders through the tightness of the corset. Despite all this, it was one of the biggest trends of the 21st century not only in Europe but around the world. Another trend that has "flooded" social media was the 'Bubble Mask'. A mask that begins to foam after a few minutes. The trend came from China and immediately there were several 'brands' of the same mask made in the same factory.
The success of Chinese online shopping platforms seems pretty easy - offering cheap and all sorts of products in almost every area without paying attention to the quality, selling them to wholesalers outside of China and selling them cheaply to consumers online.3
However, this was not always smooth, because in 2016 there were fakes of 'Kylie's Lip kits' on the Chinese market, the lipstick was sold almost 3 times cheaper. However, the problem here was that toxic substances were found in the cosmetics and several people had to be go to the hospital - most of them also thought that the fake products were discounted originals.
With one of the largest and most spectacular IPO’s, Alibaba is one of the largest companies in the world - bigger than eBay and Amazon, although Alibaba is not 100% public. China is one of the largest e-commerce markets in the world.
It has more than doubled in the last 5 years and e-commerce accounted for nearly 30% of China's GDP growth in 2015.4 With growing competition, small businesses are becoming more and more oppressed by major online brands, forcing them to lower their prices and adapt, and the city center is in danger of dying out.
Almost all online shopping platforms such as Alibaba, Aliexpress, SheIn and Co. are now also offering apps where you can shop in seconds on the go.5 With daily discount codes and promotions, the app attracts the consumer to the shop every day, which attracts, for example, with over 75% discount.
Also through YouTube, there are always ‘Hauls' of well-known influencers who want to prove that shops like Romwe and SheIn are trustworthy and no rip-off – mostly, the influencers are paid by the shops. This is free marketing for the shops and the 'brand' is becoming more and more popular. It can be observed again and again that Chinese platforms also use ‘Google Advertisement’ as a marketing tool to reach out to people who are not on social media.
Another market leader, ‚Wish’, offers a wide range of products to customers on a B to C level compared to a mom-and-pop store.
However, here is the difference to Alibaba and Aliexpress, where the customer thinks / expects that 'Wish' is the main seller.6
At Alibaba and Aliexpress, however, the customer is aware that the various products displayed come from multiple producers, and it is mostly a B to B level.
The market entry for online shopping platforms in China is definitely more difficult than anywhere else. China has a reputation for having a bad and cheap quality, which has deterred people. But now that celebrities and well-known people are promoting it, it is becoming increasingly attractive for Europeans and the rest of the world to buy everything cheaper and stay one step ahead of technology, cosmetics and related gadgets, toys like the Fidget spinners and household goods.
An additional market entry strategy for the Chinese markets are replica products, which looks and works identical, only cheaper than the original.
An iPhone costs about 900 € - you can now buy a replica version from China which will cost about 100 € - so almost 9 times cheaper. There are also many replica versions of smartwatches and designer watches that look amazingly real: A Rolex is available from 10,000 € - an identical-looking watch from China, but without a good clockwork, starting at just 200 €. This strategy makes some producers and buyers punishable and the brands suffer, but only if it has the logo of the brand.7
International marketing has enabled Chinese markets to penetrate the European market more and more, especially young people are affinitive with the online shopping from China and do not conceal this.
In conclusion, those who place great emphasis on quality and sustainability are rather wrong with the Chinese platforms. But if you ask for it, you have to pay a high(er) price.
In my opinion, China will become even more successful with e-commerce in the next few years. The world is becoming more and more digital by the day, the supermarket is already running out of cashiers and the retail industry is shifting more and more online. Even with many disadvantages, one cannot deny that globalization is being driven forward enormously by online shopping platforms.
With faster delivery times and new trends, there is a growing need to 'keep up', to be the first to own the newest product and to buy them at their cheapest point. The usually rather long delivery times of sometimes up to 30 days are ignored in the case.
More than 3 billion people are currently logged in and active on social media every day, with a rising trend. This benefits influencer, (start-up) entrepreneurs and Chinese producers. Plasticizers that are carcinogenic and found in many of the products are not mentioned by either producer or seller. What online platforms like Alibaba can do about and against it? Quite a little, except to block the producers, but only if it is already too late.
1 Boos P., Peters C. (2016) Digitales Wachstum in China am Beispiel von Alibaba. In: Heinemann G., Gehrckens H., Wolters U., dgroup GmbH (eds) Digitale Transformation oder digitale Disruption im Handel. Springer Gabler, Wiesbaden
2 Havinga M., Hoving M., Swagemakers V. (2016) Alibaba: A Case Study on Building an International Imperium on Information and E-Commerce. In: Segers R. (eds) Multinational Management. Springer, Cham
3 Tan, Barney; Pan, Shan L.; Lu, Xianghua; and Huang, Lihua, "Leveraging Digital Business Ecosystems for Enterprise Agility: e Tri- Logic Development Strategy of Alibaba.com" (2009). ICIS 2009 Proceedings. 171.
4 (2016). The evolution of China’s e-commerce marketplace - BusinessNZ
5 Yazdanifard, R. (2014). The Review of Alibaba’s Online Business Marketing Strategies which Navigate them to Present Success – Global Journal of Management and Business
6 Kreutzer, R. (2018). Übersicht chinesische E-Commerce-Plattformen - Springer Professional
7 Chaffey, D. (2009). Internet Marketing – Strategy, Implementation and Practice - Financial Times
- Quote paper
- Jennifer Shojai (Author), 2018, Market entry strategy into Europe through Chinese multinational companies of online shopping platforms, Munich, GRIN Verlag, https://www.grin.com/document/584066