Fashion
Five companies from three nations are banding together to sell imported popular household products like diapers and milk powder in China.
The partners are Itochu, Japan’s third-largest trading house; Charoen Pokphand Group, Thailand’s biggest conglomerate; and Chinese companies CITIC, China Mobile and Shanghai Information Investment Inc.
An agreement forming the venture, which will operate through a cross-border e-commerce website out of the Shanghai Free Trade Zone, was signed yesterday.
The venture, which is named Face to Face Co., aims to tap a growing market in China for premium foreign products. Until now, most consumers accessed such products mainly through gray market channels, expensive offshore orders, overseas trips or limited online retailers in China.
The new system will end long waiting times for deliveries, lower prices by up to 30 percent and ensure that products meet quality standards.
The five partners are investing US$500 million, and the company will benefit from preferential policies offered by the Free Trade Zone.
“We predict the scale of cross-border e-commerce in China will jump from nearly 76.7 billion yuan (US$12.4 billion) in 2013 to about 1 trillion yuan by 2018, Itochu said in a statement yesterday. “We see huge demand for premium products in the country.”
The new company plans to buy an e-platform to run its operations. It will take over online shopping mall Kuajingtong, which was formerly run by state-owned Shanghai Orient Electronic Payment Co. The partnership will take advantage of China Mobile’s vast user base in promoting online orders for goods.
Japan’s Nikkei Newspaper reported that the new company plans to accrue sales of US$666.7 billion by 2019 and plans to list in China in 2020. The report could not be immediately verified.
Itochu said the platform will begin operation later this year, offering nearly 100,000 Japanese-made items, including household appliances, food, diapers milk powder and possibly clothing. Charoen Pokphand said it plans to sell Thai food products on the site.
The Free Trade Zone, launched in 2013, is China’s pilot project for freer trade between the mainland and overseas. Flexible regulations will allow access for both Chinese and overseas companies to import and sell foreign goods domestically.
