MILAN — Made in Italy brands looking to break into China were presented with what appeared to be a win-win scenario on Thursday when Chinese e-commerce giant VIP.com presented itself to a group of Italian entrepreneurs. The message: Chinese consumers are hungry for your products and we can help you reach them through our platform.
During a full-day event — which included closed-door meetings in the afternoon between interested Italian businesses and executives from VIP.com — Maggie Mei Chuan Hung, the group’s senior vice president for merchandising, updated participants on current e-shopping trends in the Asian giant.
Today in China there are some 618 million Internet users (nearly half the population), 400 million of which carry out some sort of online commerce, Hung said, citing figures by iResearch. Total online business-to-consumer (B2C) sales this year are projected to reach $600 billion, a figure that represents some 12.6 percent of total retail sales (excluding services) in the country — also according to iResearch — up from 10.7 percent in 2014 and almost nothing in 2006.
VIP.com — China’s third-largest e-commerce platform, after Alibaba Group and JD.com — serves a significant slice of this market: Since its founding in 2008 as a fashion-focused e-commerce site, it has signed up some 140 million Chinese consumers, according to Franco Chiang, general manager of European business development. The platform boasts some 14 million active unique visitors each day, 76 percent of which place orders through their smartphones, tablets or other mobile devices. Customer loyalty is high: Just over 80 percent are return buyers. Women make up almost three-quarters of the site’s customers and just over 60 percent of the site’s shoppers are aged 26-40.
The company carries products from some 18,000 companies — including, in the fashion segment, Tod’s, Calvin Klein, Levi’s, Boss, Ermenegildo Zegna, Dolce & Gabbana and Armani Jeans, among others — and has online distribution partnerships with another 1,000. The company bills itself as the world leader in flash sales, and a favorite among women.
Fashion generates the lion’s share of the group’s revenues, accounting for some 60-65 percent of the group’s total 2014 revenues of some $3.7 billion. Chiang didn’t offer an estimate for the group’s current-year sales, but pointed out that in the first half turnover passed the $2.8 billion mark.
Organized in collaboration with the Fondazione Italia-Cina, a private-public Italian foundation that seeks to bolster trade and cultural ties between the two countries, the event aimed to dispel the idea that breaking into the Chinese market was too complicated for smaller players. Meanwhile, VIP.com — which listed on the NYSE in 2012 and has been profitable since the fourth quarter of the same year — needs to keep finding ways to encourage Chinese consumers to part with their hard-earned yuan.
The company, which as part of its Italian efforts also opened a representative office in Milan to help interested firms sign up to the platform, has made similar inroads into other markets, including the U.S., the U.K. (a London office was recently opened) and Australia.
Chiang said the company works closely with brands that sign up, including helping those who want a tailored presence on the company’s Web site so that they stand out more.
This is a good time for brands eager to connect with China’s tech-savvy, young generations to make the move online. According to data from China E-commerce Research Center, cross-border shopping in China will pass the $130 billion mark this year, up some 50 percent on 2014’s $99 billion figure. For many of those operating in Italian fashion and home furnishing/design — two of the main areas of interest for VIP.com (the others are beauty/cosmetics and children) — import duties are relatively favorable: 10 percent for clothes, accessories, shoes and furniture and 20 percent for textiles and finished products.
The political climate is also favorable, with the government seeing e-commerce as an important channel to get consumers to spend and so boost domestic consumption, explained Marco Bettin, operations director of the Fondazione Italia-Cina.
Some risks clearly remain. For example, asked if there were particular legal issues that firms interested in doing business in China needed to be aware of, Chiang pointed out that companies should register their brands in the country before setting up shop, otherwise they risk losing the right to use it should a Chinese firm register it first.