How Temu ruffles the online retail – Shaun Rein

 

Shaun Rein

Temu, owned by Pinduoduo, is one of the leaders in online retail that has been ruffling international competitors in the past year. Business analyst Shaun Rein looks for the BBC at the firm’s international expansion. “They’re proud that Chinese companies can slay the e-commerce dragons from the United States like Amazon,” he adds.

BBC:

Temu is owned by Chinese giant Pinduoduo – “a monster in Chinese e-commerce,” according to Shaun Rein, founder of the China Market Research Group.

“Throughout China, everyone buys products on Pinduoduo, from speakers to t-shirts or socks,” he says.

The company consistently trades places with rival Alibaba for the top spot of most valuable Chinese firm listed on a US stock exchange. Its current worth sits at just under $150bn (£117bn).

With the Chinese consumer market under its spell, Pinduoduo expanded overseas with Temu, using the same model that had ensured its previous success. According to Mr Rein, who is based in Shanghai, the firm has become a great source of pride and patriotism.

“They’re proud that Chinese companies can slay the e-commerce dragons from the United States like Amazon,” he adds.

A quick scroll through the Temu app or website will bring up anything from steel-toecap trainers to a device designed to help the elderly and pregnant women put on socks. A menagerie of manufactured goods, almost entirely produced in factories in China, Mr Rein explains.

More at the BBC.

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The global fight between food delivery giants - William Bao Bean

Already before COVID-19, American and Chinese internet giants fought for dominance in the booming market for food and grocery delivery, and the coronavirus crisis has caused another boom in the market, says William Bao Bean, managing director of global venture capital firm SOSV in Shanghai in Marketplace. Having dominance in their home market helps the Chinese players.

Marketplace:

William Bao Bean

“Ordering groceries online is much more advanced in China than the U.S., and when I say ‘advanced,’ it’s market penetration. I’d say more than double the amount of groceries are ordered in China for delivery versus the U.S.,” said William Bao Bean, with the global venture capital firm SOSV in Shanghai. According to iResearch, the customers it surveyed used grocery delivery services one to two times a week in 2019... 

These differences matter, given that U.S. grocery and food apps are now competing against Chinese giants for customers in Latin America and India. This is a global food fight. 

“When you look at India, they’re definitely going more towards the China model,” said Bao Bean, the venture capitalist in Shanghai. “Whereas the U.S., the big-box format, with large parking lots and everybody driving a car, you’re simply not going to see that in Southeast Asia and South Asia.” 

He said Amazon is not doing as well in India compared to Chinese tech firms, and Chinese money is backing Indian startups. A report by the MacroPolo think tank found that Chinese apps overtook U.S. apps in 2019. 

Though, Chinese apps are now caught in the political crossfire between China and India.

More in Marketplace.

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COVID-19 made the wealthy wealthier - Rupert Hoogewerf

Rupert Hoogewerf

While the jury is still out on the economic effects of the coronavirus crisis, the majority of the wealthy ended off better since the COVID-19 hit the world, says Hurun rich list founder Rupert Hoogewerf in the Business Standard. "The two biggest ‘winners’ from the Hurun Top 100 of Covid-19 were online retailers Jeff Bezos of Amazon and Colin Huang Zheng of Chinese low-end ‘social shopping’ giant Pinduoduo," says Hoogewerf.

The Business Standard:

Amazon Inc boss Jeff Bezos, Reliance Industries chairman Mukesh Ambani and Dr Cyrus Poonawalla of Pune-based Serum Institute of India saw their wealth increasing during the coronavirus pandemic, says research done by a Chinese group. 

Hurun Research's 'Wealth Impact 4mths after Covid-19 Outbreak' tracks the wealth changes of the world’s most successful entrepreneurs in the four months ending May 31. It is a follow-up on the 'Wealth Impact 2mths after Covid-19 Outbreak' looking into wealth changes in the two months ending 31 March 2020 and the Hurun Global Rich List 2020, which had a wealth cut-off of 31 January 2020. 

As many as 60 per cent of the entrepreneurs on Hurun Global Rich List Top 100 had their wealth rise or stay the same in the four months since the outbreak. As many as 40 per cent entrepreneurs saw their wealth reducing. “Whilst the first two months of the outbreak saw a massive wealth wipeout of the Hurun Global Top 100, the second two months saw a V-shaped recovery for two-thirds of the Hurun Global Top 100, reminding us that it is dangerous to bet against the world’s best wealth creators,” said Rupert Hoogewerf, Hurun Report chairman and chief researcher. 

"The two biggest ‘winners’ from the Hurun Top 100 of Covid-19 were online retailers Jeff Bezos of Amazon and Colin Huang Zheng of Chinese low-end ‘social shopping’ giant Pinduoduo, who added Rs 1.51 trillion (20 billion US$) and Rs 1.35 trillion (18 billion US$) to their fortunes, pretty much all the gains coming in the past two months,” said Hoogewerf. 

Another big winner was Eric Yuan Zheng, 50, of popular video conferencing app Zoom, who saw his wealth triple from Rs 34,000 crore in January to Rs 98,200 crore today, propelling him up from 555th in the world four months ago to knocking on the door of the world’s Top 100 today."

More at the Business Standard.

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Why an Indian virtual fitting room has a match in China - William Bao Bean

William Bao Bean

The Indian startup TryNdBuy has been adopted by the Chinaccelerator, and Shanghai-based managing director William Bao Bean explains why the virtual fitting room has a good chance to succeed in China, he tells at Livemint. Up to now, every virtual fitting room including Amazon and Microsoft, makes the consumer look bad, he explains.

Livemint:

Chinaccelerator MD William Bao Bean explains why he took a chance on the Indian entrepreneur.
“Every virtual fitting room I’ve ever seen makes the consumer look bad. Amazon and Microsoft make the person look like a plastic dummy. The consumer is not going to buy something if she looks bad in it," he says.
He says TryNDBuy’s computer vision solution does a better job of making a 3D virtual avatar that won’t make a consumer cringe while getting a sense of how she will look in a dress. Chinaccelerator is helping the startup with the tough act of business development outside India.
“It’s a B2B (business-to-business) sale, step by step. There’s interest from brands in China and then we just have to navigate Alibaba, which is never an easy thing," he says.

More at Livemint.

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Why Amazon's kindle might not catch on in China - Shaun Rein

Shaun Rein

Amazon is trying to return to China, but business analyst Shaun Rein doubts severely whether China's consumers are waiting for the elsewhere so successful Kindle, he tells in Abacus News. China's Xiaomi could be more successful as a competitor, but has problems of its own, he adds.

Abacus News:

Analysts say smartphones have an edge over dedicated ebook readers in China. Unlike Americans, who adopted the Kindle to read ebooks before smartphones became widely popular, Chinese people leapfrogged e-readers and went straight to using smartphones, according to Shaun Rein, managing director of China Market Research Group.

“They’re much more comfortable reading books off a mobile phone interface than something specifically for books like the Kindle,” he said... 

“Because salaries are a little bit lower in China, people are less likely to buy a TV, a mobile phone, a Kindle reader, and many multiple devices,” said Rein. “So they’re willing to spend a larger proportion of their monthly salary on, say, a mobile phone than Americans would… They’re putting all their money into mobile phones.”... 

“I think Xiaomi has potential, but I think Xiaomi in general is just one of those companies that has way too many product lines,” said Rein. “Basically they try to get into every product category there is and just spread into their internet of things, but they don’t necessarily have a cohesive strategy.”

More in Abacus News.

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Amazon failed in China because of business issues, not the government - Shaun Rein

Shaun Rein

Amazon was the latest online Western casualty in China. The US company has been clueless in organizing its business in China, and it was not the government who killed Amazon, says business analyst Shaun Rein, author of The War for China’s Wallet: Profiting from the New World Order in the Voice of America.

The Voice of America:

China is considered by many as a difficult market for foreign players even without taking into account hindrances caused by government policy. In the case of Amazon, however, analysts said the reasons for its poor performance lie in its not being able to localize to meet the requirements of the market. 

Shaun Rein, managing director of Shanghai-based China Market Research Group (CMR), said Amazon's Chinese platform could not survive because it did not have a strong and stable management team. He does not think Amazon was hampered by government policy. 

"I don't think it is a problem of government protectionism," he said, adding, "They (Amazon executives) didn't have the necessary relationship in China and were unable to build the right ecosystem for people to sell on Amazon." 

Getting a large number of local sellers is crucial for an e-commerce platform to provide goods at competitive prices and in sufficient variety to customers... 

Foreign internet-based businesses have very little presence in China, which has the biggest number of web users in the world. This is partly because a large number of U.S.-based sites including Google, YouTube and Twitter are banned, while e-commerce companies have walked away. Amazon's departure will likely only make it harder for other foreign retail companies to succeed there. 

"I think it would be very hard for large e-commerce players from foreign countries to build in China. It is still possible for niche players like there are opportunities in luxury space and cross-border trade," Rein said. 

American and European brands will have to depend heavily on local e-commerce companies like Alibaba and jd.com to see their products, analysts said. Although Amazon will continue to sell foreign-made goods, its reach is limited in China because local companies dominate the cross-border trade as well. 

"Unfortunately, Alibaba is almost a monopoly in some ways and they have way too much power because they control the eyeballs," said Rein, adding, "They (Alibaba executives) control traffic so they are able to force Western brands to discount even if Western brands do not want to,"Rein said. "Alibaba controls the relationship with the customer rather than the brand controlling the relationship with the customer."

More in the Voice of America.

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How Tencent became a winner with WeChat - Matthew Brennan

Matthew Brennan

China's internet giant Tencent has become a winner, first by copying US competitors, but now it has become their inspirator, says Tencent-watcher Matthew Brennan to Leadersleague. “WeChat does not monetize data, but it is a growth lever for other businesses in the Tencent group. It’s a bit like iOS or Android in that regard,” says Brennan.

Leadersleague:

Tencent does not sell access to user-data to third parties, such as advertisers. The data of the Chinese app is to all intents and purposes the handsets of the users. “It would have been possible to compare We Chat to Facebook, Baidu to Google or Alibaba to Amazon ten years ago, but that’s no longer possible today,” insists Matthew Brennan a consultant specializing in Chinese IT... 

The most widely used of WeChat’s secondary functions is WeChat Pay. Until recently, Chinese people’s attachment to paying with hard cash was the norm. Nowadays, e-commerce represents 14% of all retail sales, against 8% in France. With WeChat Pay, you can use your phone to settle a bar tab or pay an electricity bill. Even the famous hongbao red envelopes Chinese use to exchange monetary gifts are being replaced by the application. During the 2017 Chinese New Year period, 14 billion transactions were carried out using the app. “Tencent has taken advantage of the lack of a developed baking sector in China, where the use of credit cards is not commonplace,” adds Brennan. By cannibalizing all the different services available on smartphones, WeChat has become a killer app, which the competition find impossible to match. 

Tencent is the big winner from the success of WeChat. Not only does the company take a percentage of every transaction made using the app, but it has developed its own content for the platform. “WeChat does not monetize data, but it is a growth lever for other businesses in the Tencent group. It’s a bit like iOS or Android in that regard,” stresses Brennan. Via WeChat Tencent can commercialize other businesses, such as Tencent Video or Tencent Music. In total the average mobile phone user spends 55% of their time on a Tencent service. The case of streaming services is particularly instructive. Thanks to WeChat, Tencent has managed to increase the subscriber base of its VOD platform Tencent Video, seizing a quarter of the Chinese market. The company claims to have more subscribers than Netflix even. 

Between 2016 and 2017, Tencent made 318 investments in startups and diversified number of sectors it is involved in in order to propose more services on WeChat. Tencent has invested in Karius, a platform specializing in the diagnosis of infectious diseases, and branched out into the connected agriculture sector.

More in Leadersleague.

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Why e-readers are doing well in China - Shaun Rein

Shaun Rein and his books

The Hong Kong IPO by Tencent's China Literature, driving on a Chinese e-reader, was a big hit, while e-readers like Amazon Kindle are clearly over their highpoint. Business analyst Shaun Rein explains in CNNMoney why e-readers go like crazy in China.

CNNMoney:

Compared with other smartphone distractions like video games and streaming TV, e-books may seem a bit low-tech. 

But they appeal to many Chinese, as they are subject to less stringent government censorship rules than movies and TV. 

"There's a lot more flexibility and freedom," said Shaun Rein, managing director of China Market Research in Shanghai. The most popular genres are romance and fantasy, he added. 

Rein said that local e-reading platforms are also more popular than foreign entrants, like Amazon's Kindle. That's despite the U.S. behemoth's e-book store having been in China for almost five years. 

Apple's iBooks service in China was abruptly shut down last year, reportedly on government orders. 

China Literature's Qidian.com portal lets users buy individual chapters for the equivalent of a couple of U.S. dollars, rather than forking out for an entire title. 

"It's seen as virtually free and it builds up momentum" for the following chapters, Rein said. Unlike Amazon's Kindle Store, the titles on Qidian.com are mostly written by enthusiastic amateurs hoping to strike it rich as the next J.K. Rowling. Part of China Literature's long-term strategy is licensing out this steady flow of content into other media, like TV series, games and movies.

More in CNNMoney.

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Related articles

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Analyzing China firms: a tough job - Ben Cavender

Ben Cavender

A favorite hobby among analysts and journalists is comparing Chinese companies with American or European competitors. Alibaba has little in common with Amazon. The differences are often larger than the similarities, says business analyst Ben Cavender. And getting into the China market is certainly not easy, he adds at the BBC.

The BBC:

Investors have shown unbridled enthusiasm for Alibaba this year. The company's shares were up 5% on the results, and they are up 81% this year. While these numbers seem almost unbelievable by US or European standards, some analysts think there's still plenty of room for growth. 

"That's the challenge evaluating these companies because the market dynamics are so different than in the US and Europe," said Ben Cavender, from China Market Research Group. 

He says e-commerce still only accounts for about 15% of the total retail market in China, so there's still plenty of untapped potential... 

And while Amazon has a presence in China, it hasn't made huge inroads. 

"They don't have the funding, they don't have the brand recognition. They don't have the product that people want at the end of the day," said Mr Cavender. 

On its home turf, Alibaba might be more worried about Walmart, which has a significant bricks-and-mortar presence, and has also formed an alliance with Alibaba's local rival JD.com. South East Asia, with its rapidly expanding middle class, is shaping up as the next battleground for global e-commerce giants. "All of these players are looking at where the emerging spending growth is coming from," said Mr Cavender. Amazon Prime has dipped its toes into South East Asia by setting up shop in Singapore. Alibaba has opted for a different route by partnering with established local players.

More at the BBC. Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form. Do you need more strategic experts from the China Speakers Bureau? Do check out this list.  

The fast growth of online cross-border shopping - Ben Cavender

Ben Cavender

The already booming e-commerce in China is getting fast an international leg as internet users discover the advantages of buying goods online abroad, says retail analyst Ben Cavender in the China Daily. And the large e-commerce players quickly grab market share.

The China Daily:

After learning how cross-border shopping online can save them money－despite the relevant taxes and shipping charges－and provide guarantees of authenticity, they are giving domestic goods more of a cold shoulder. 

There are a number of reasons behind the rise of cross-border e-commerce in China and the launch of various platforms to service this trend is natural, said Ben Cavender, an analyst at China Market Research Group. 

More Chinese now shop overseas or pay for third parties to purchase products and mail them back to China, because many products either cannot be found in China or they are too expensive, he said. 

About half of all cross-border shopping online by Chinese goes through Amazon.com and these products are sent to customers via shipping agents or online agents, said Niu Yinghua, vice-president of Amazon China. 

As the agents bump up the price, Amazon decided to introduce a direct shipping service for its Chinese customers that can be as low as $1.99 per pound of freight, Niu added. The central government has adopted a quite open-minded stance in response to this exploding e-trend. Premier Li Keqiang, for example, included plans to expand the number of trial cities operating this system into his Government Work Report this year. 

Many Chinese consumers find themselves shut out of the shopping spree because of the language barrier, which has inspired e-commerce companies to step into the breach. 

According to data from the Ministry of Commerce, there are more than 200,000 enterprises in China offering cross-border e-commerce service through various platforms. 

The big e-commerce players in China are fast grabbing territory in this emerging market, said Cavender. 

In February 2014, Chinese e-commerce giant Alibaba Group announced the official launch of Tmall Global, a site designed to give Chinese online shoppers a platform to buy foreign-branded products directly.

More in the China Daily.

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Why Amazon teams up with Alibaba - Ben Cavender

+Benjamin Cavender 

In a surprise move US internet giant Amazon is opening a webshop at Tmall, part of its competitor Alibaba ´s empire. Retail analyst Ben Cavender explains why Amazon is teaming up with its competitor to enter the China market at CNBC.

CNBC:

Amazon is currently doing a test run of its Tmall store, with an official launch slated for the end of March or early April. 

The U.S. e-commerce giant currently offers consumer electronics, food and beverage, household and baby and maternity items on the site. 

Ben Cavender, an analyst at China Market Research Group says the move is perhaps an acknowledgement that they cannot tackle the China market alone. 

"I wonder if they are conceding the market and recognizing that it's better to work through Tmall because that's where the traffic is going," he said. 

China's B2C e-commerce industry is currently dominated by Tmall and JD.com, which hold 57 and 21 percent shares of the market, respectively, according to iResearch. 

Alibaba's Tmall shop could also be part of a strategy to breed familiarity around its brand which is less known among Chinese consumers, Cavender said. 

"They may be conceding revenue to Alibaba via Tmall in the near term, but in the longer-term it could pay off," he said.

More at CNBC.

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• NetEase Invests Heavily in China's E-Commerce Market
• E-commerce in China will reach one trillion dollars by 2019
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Not relevant for the Amazon links?

Today I discovered the little new tool Amazon has put in place to let you make more money through your weblog. I know I should not use beta-tools when they are just out, but I could not resist the temptation. The first reviews were pretty raving and when you see the new system working, 'cool' would be an understatement. Here is a website where it works.

What context links does is providing you links to Amazon-products that are connected with relevant text in your weblog. Installing the little script was easy enough for me and then I waited for the things to come. And I waited, waited. Actually, nothing has happened up to now. I just assume now that I have no Amazon relevant text. So when I start to write even funnier than I did, talking about Snow White or other popular Disney figures, or about Dummies among Investors, you know I'm testing the Amazon system. Will let you know if I make money on this. But the first enthusiasm is over.

Update: I might have found an explanation. According to messages on the Amazon forum IE6 and IE7 (which I use), do not display the Amazon links: typically a beta-problem. Firefox does, but I cannot get back to Firefox easy for some technical reasons.

Adding some new ad toys

I have been adding what is called Amazon context links. In stead of adding every now and then boxes that refer to relevant books, Amazon now offers to do it all by themselves. Not sure how it works, and also not sure whether this is more or less a nuisance than the old system. Please let me know if you have problems with it. It should take online marketing a step further.

Amazon keeps on refusing my business

I got little feedback on my complaint that Amazon was no longer shipping their books to China. One person actually used my weblog to order a book that I could not get.
So, to avoid any possible misunderstanding, I tried it again, on different addresses and always I got this message. Seems that I have to ship the books to people who might take it along in their luggage when they come to China.

Has Amazon stopped shipping to China?

I'm not really reading a lot of books compared to the past. Mostly I would pick them up at airports, at least that was the case before I could get online in airports and airplanes. But every now and then I would order some at Amazon, especially since a few of the organizations I work for would send me Amazon gift certificates. I still had a US$ worth of vouchers laying around and I thought this was a good opportunity to order The China Fantasy: How Our Leaders Explain Away Chinese Repression and a few others.

Not so. Putting the books in my Amazon-cart was no problem, but when I wanted to check-out, the Amazon computer said they would not ship to my address. No explanation given. By accident I discover at the bottom of the site they now have a China-agent: Joyo.com. They only offer Chinese books, including one I wanted to buy, but I would prefer to order it in the English language, German or Dutch, but rather not Chinese.

I started to write an angry email to the Amazon customer service, but my email was refused. Not because of foul language (although I'm ready to use that now), but because I have not order number. Now that was exactly my problem.

Anyway: similar problems out there, and perhaps solutions too?