SHANGHAI, CHINA – Late last week the U.S. Department of Agriculture Foreign Agricultural Service (FAS) hosted two informational sessions on the opportunities, requirements, and challenges of e-commerce in China.
The opportunities were described as tremendous. With 586 million on-line shoppers in 2019, e-commerce represents 17 percent of total retail sales in China. For example, last year on Singles Day, November 11, the Chinese shopping holiday that originated as an unofficial holiday for bachelors, on-line shoppers spent $30 billion.
There are two forms of e-commerce in China, the traditional approach similar to the Amazon model in the U.S., and cross-border e-commerce (CBEC), which is growing rapidly and used primarily for food-related purchases. CBEC purchases are free from most regulatory compliance and, notably not subject to retaliatory tariffs, but include basic import tariffs and value added taxes.
On-line purchases are paid using a “digital wallet,” similar to Paypal, linked to bank accounts only in China. They are now being accepted in other countries in the region, such as Thailand.
Weak intellectual property laws are a significant concern for product marketers both on-line and off-line in China because trademark registration is different than that in the U.S., which is based on a “First to Use” doctrine while China recognizes a “First to File” approach. Consequently, many registered trademarks in the U.S. have been “pirated” by unscrupulous actors, who then either use the trademarks themselves or ransom them back to the rightful owners.
The FAS panel recommended that trademarks be registered in China. The filing process usually takes five months to get approval and costs less than US$50, plus legal fees. Enforcement is sometimes lax but there are both civil and criminal remedies for misuse of trademarks registered in China. The U.S. has three Patent and Trade Office attachés based in Beijing, Shanghai, and Guangzhou to assist U.S. exporters with questions related to trademark registration and also has a
website to offer assistance to U.S. exporters.
Finally, to be successful in the Chinese e-commerce realm, U.S. exporters need to have a presence on social media platforms such as WeChat or Weibo to reach and promote products to prospective customers. USA Rice has had a Weibo account for more than a year to introduce U.S. rice and the U.S. rice industry to social media users in China.