A decade ago, the Chinese e-commerce giant Alibaba launched what was then described as a pilot program for cross-border trade in China. At the time, the press made only very brief mentions of the initiative, and as is often the case in China, no specific details were provided—just the usual grand announcements.

Soon, a boom and excitement ensued, somewhat reminiscent of the reaction to the release of ChatGPT 3.5. The fact remains that the launch of cross-border trade turned out to be a true revolution in e-commerce. At the time, we probably didn’t fully realize its significance. Today, the cross-border trade model, known in Europe as dropshipping, has become an everyday practice and a quick way to enter the Chinese market with a product, rather than merely a pilot program.

What is cross-border trade?

Cross-border is an fascinating e-commerce sales model for consumer products. In China, it is known as CBEC (Cross-Border eCommerce).

In this model, sales to consumers are handled from warehouses located in cross-border zones. These warehouses are physically situated either in ports or adjacent to them, within designated special customs areas. While geographically they are in China, from a customs perspective, they are still considered outside the customs border. These cross-border zones are strategically located near sea, rail, and air ports.

Goods are delivered to these zones from abroad, unloaded in the usual manner, and stored on specially designated shelves. They remain there until an order is placed. Once an order is received, the corresponding products are picked and cleared through customs automatically.

The undeniable advantages of this trade model include bringing foreign products closer to the market without the need to pay customs duties or VAT on goods that have not yet been sold at the time of delivery. Theoretically, it is possible to ship individual items directly from the manufacturer’s warehouse abroad, but it’s hard to imagine the efficiency of such a process.

Export in Cross-Border: Selling Directly to Chinese Consumers

The Chinese have mastered the principles of the cross-border trade model. Initially, this system facilitated sales into China, but Alibaba was the first to expand CBEC globally under the widely recognized brand—AliExpress.

So how does this model work in detail? To explain, let’s focus on the direction of sales to China. Formally, this process takes place between a foreign producer and a Chinese consumer. The consumer searches for a product in their favorite app (e.g., Tmall or JD), places an order, makes the payment, and receives the shipment the next day. Occasionally, delivery takes a few days, and in rare cases, longer.

Products are retrieved from specialized warehouses, packed, cleared through customs automatically, and handed over to a courier company. Simple? Simple!

Cross-border – strategia wejścia ze sprzedażą do Chin

Cross-border sales represent an effective yet challenging strategy for consumer goods manufacturers looking to enter the Chinese market. Manufacturers who choose to establish and independently operate their own cross-border e-commerce store can sell at retail prices. However, all costs related to sales, marketing, and operations fall on the manufacturer. This is in addition to meeting the operational and legal requirements of such activities. In reality, this business model is very difficult to launch and manage. One significant challenge is the high cost of marketing, which must be localized (tailored to the preferences of Chinese consumers) and consistent to be effective.

For manufacturers, the best approach is to partner with a specialized distributor who is experienced in their product category and possesses the necessary expertise to efficiently manage a cross-border e-commerce store.

Exporting manufacturers should also keep in mind that when planning their business in China, quick results are unlikely unless they offer an absolutely unique product and their cross-border distributor allocates a substantial budget for promotion. Low-budget marketing can take several quarters to show results. This is one of the reasons why distributors often expect marketing support from manufacturers during the initial years of collaboration.