E-commerce in China offers interesting opportunities for medium-sized enterprises in Uruguay

China is currently Uruguay's main trading partner, and one thing Uruguayans can be satisfied about is that, moreover, this balance is positive, although Uruguay's exports so far are mainly concentrated in what might be called "raw materials": meat, wood, wool and soybeans.

However, in recent years a trend has also developed with companies beginning to penetrate the Asian market with other products or services with higher added value. In this sense, electronic commerce, and in particular the cross-border electronic commerce modality (also called cross border), is seen as a preferential channel for those Uruguayan small and medium enterprises that want to start exporting to the Chinese giant.

We must pay attention to electronic commerce when we think about exporting to China, since it is precisely in this country where this new form of consumption has developed most, far above the other great market, which is the United States. In China currently more than 23% of all retail sales take place through e-commerce.

It is also important to distinguish that about 80% of all these transactions take place in the marketplaces controlled by two major technology groups in China, the famous Alibaba group, with Jack Ma at the head, and the not so well known but equally important and with a large market share, JD.com.

The means of payment are also unique to this region, where virtually no purchases are made by credit cards, but through local means of payment such as alipay or wechat.

Therefore, those companies that sell their products on a regular basis in China are more than likely to have their virtual stores on these e-commerce platforms.

Cross boder e-commerce, however, is focused exclusively on products of foreign origin, and is therefore a channel preferably used by foreign companies starting business in China.

This modality offers administrative advantages, such as being exempt from using Chinese labeling, which can be marketed in this channel as it is done in Uruguay, without the need to modify the labeling or packaging. It also has tax advantages, as the tariff is reduced or cancelled and it is subject to a reduced VAT.

Sometimes it has logistical limitations, for example for perishable food products, and limitation on the annual allowed expenditure per consumer, which is close to USD 3,500. But it is undoubtedly a channel that offers great possibilities and that many foreign companies are already using with great success.

According to CBN Data - the financial business data center, jointly established by First Financial and Alibaba -, in 2018 sales through cross border e-commerce increased 25% with respect to 2017 and reached an amount of RMB 511 Billion.

This is why Zonamerica, in a strategic alliance with Uruguay XXI, offers Uruguayan companies a diagnostic service, free of charge, on the potential and opportunity to access China through e-commerce.

The objective is to provide companies with relevant and updated information on the real possibilities of the companies, such as the position of the product in dominant platforms such as Alibaba or JD.com, usual formats, countries of origin, prices, among others.

With this information companies will know the real possibilities to access the Chinese market and the convenience of using this channel.

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