China’s growing middle class craves imported goods, and a growing number are going online to obtain them. Easily their favorite country to buy from online: the United States.
Two studies commissioned by PayPal and released this week conclude that 26% of online shoppers in China buy foreign goods via the web. What’s more, 17% of online adults say they will begin shopping online for imported items in the coming year and 35% say they will do it more it often, according to the “Get to Know Your Chinese Cross-Border Buyers” report from PayPal Holdings Inc., the online payments company that eBay Inc. spun off earlier this month.
Chinese online shoppers especially like buying U.S. goods. 14% say they have purchased U.S. goods online in the past year, followed by Hong Kong at 9%, and the United Kingdom and Japan, both at 6%.
“The growing Chinese middle class always has an appetite to buy more authentic and high-quality products from the U.S.,” says Melissa O’Malley, PayPal’s director of global merchant and cross-border trade initiatives.
Among those buying from U.S. e-retailers, 53% says they buy apparel, 46% consumer electronics, 41% cosmetics, 32% food and beverages, 23% health products, 23% jewelry and watches, and 20% household goods and furniture.
When they do buy, they buy a lot, often consolidating their orders to minimize the impact of shipping costs, O’Malley says. The average order for clothing is $485, for consumer electronics $1,229 and for cosmetics $512, the PayPal study says.
They buy online from U.S. retailers and brands primarily for three reasons: higher product quality, better prices and because they are more confident they are getting authentic products and not knockoffs. All three of those reasons were mentioned by 53% of the Chinese shoppers who purchase U.S. goods. Purchase incentives and better brand offerings were mentioned by 30% of those consumers. 27% say they buy from U.S. companies because the items they want are not available in China.
When looking to make a purchase from the United States, nearly 60% go to online search engines, while others rely on personal recommendations, visit familiar U.S. sites, look to social networks for recommendations and search U.S. sites they are not familiar with.
Aiming to be the preferred payment provider to these Chinese web shoppers, PayPal has taken a number of steps to make it easier for Chinese consumers to buy U.S. goods, and for U.S. brands that accept PayPal to promote their wares to online shoppers in China. PayPal projects in the new report that online sales will continue to grow by at least 20% annually through 2016.
Since 2010 PayPal has allowed Chinese consumers to fund their PayPal purchases through their bank accounts via the debit cards of China UnionPay, China’s sole debit card network that claims there are 2 billion of its cards in circulation. That allows them to use PayPal when purchasing from the 10 million merchants around the world that accept it. Of the 1,000 leading North American retailers by online sales, 466 take PayPal, 246 in the 2015 Internet Retailer Top 500 and 220 in the 2015 Second 500, according to Top500Guide.com.
PayPal in May unveiled a program called PayPal China Connect designed to make it easier for Chinese consumers to buy from merchants around the world that accept PayPal. Chinese shoppers are eligible for PayPal’s buyer protection, which can get them a refund if a product bought online does not arrive or is not as described, and for free return shipping.
In addition, PayPal has forged alliances with China UnionPay’s UnionPay International and such Chinese banks as China Construction Bank and Ping An Bank to promote PayPal merchants on cross-border shopping sites hosted by those financial companies. Chinese consumers who visit those sites can use their PayPal accounts to buy from such foreign companies as Carter’s Inc., the U.S. maker of baby and children’s apparel under such brands as Oshkosh B’gosh; U.S. food producer Heinz Group Inc.; and Olay skin cream from Procter & Gamble. Chinese shoppers can also pay with PayPal at eBay Haitao, a Chinese-language site featuring products from eBay merchants and GMarket, a South Korean subsidiary of eBay that also offers products from its marketplace sellers in Chinese and other languages.
PayPal also launched last year its own cross-border Chinese website Wu Jing Gou (which means “borderless shopping” in Chinese) that enables global merchants from outside China to showcase discounts and deals. Among the merchants featured on the site are apparel retailer Nasty Gal Inc., No. 112 in the Internet Retailer 2015 Top 500, shoe retailer JimmyJazz.com (No. 403), and fashion e-retailer The Net-a-Porter Group LLC (No. 101).
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