How To Open Cross Border Tmall and JD.com Stores

How To Open Cross Border Tmall and JD.com Stores Market EntryE-commerce Jul 12 Written By Marek Matura This guide described the process of opening ‘cross-border’ Tmall and JD.com stores. For ‘China-based’ stores please read our guide dedicated to this type of stores here.Tmall and JD.com are the two most dominant e-commerce platforms in China. Together, they account for 80% of China’s e-commerce market.It then comes as no surprise that every company serious about selling to Chinese consumers should consider opening their store on either or both of the platforms. Tmall Global (also owns Kaola) is the dominant player in the cross-border e-commerce. If a company wants to open a store on only one of the platforms, Tmall Global is the obvious choice. Store locationBoth Tmall and JD.com operate two separate sales platforms: China-based and Cross-border stores. China-based storesSimply called Tmall and JD.com (or Jindong in full)Store registered using a Chinese businessTypically done by local distributor, agent, subsidiary or agencyImport and VAT taxes have to be paid before goods enter China Certain goods have to be certified to be sold on the Chinese market (eg. CCC and FDA certifications)Require trademark in China Cross-border storesTmall Global and JD WorldwideStore registered using a foreign business licenseGoods shipped to customers from abroad or a bonded warehouse in ChinaSpecial tax regime with lower tax ratesTaxes paid only after goods are purchased by customersGoods don’t have to be certified in ChinaRequire trademark in home country of the applicant only This guide will describe the registration process for a cross border Tmall store. While we focus on Tmall, the process and requirements are nearly identical with JD.com. Tmall Global operates 6 types of storesFlagship store 品牌旗舰店Opened by trademark owner. Store sells only one brand of products.Store-type flagship store 卖场型旗舰店Trademark owner of offline supermarket chain, store or online B2C website.Industry flagship store 行业卖场型旗舰店Operated by offline chain supermarket, store or online B2C website engaged in several industry categories, such as clothing, cosmetics, personal care. If a store needs to sell goods that are not branded, it shall provide a first-level authorization or first-level purchase certificate.Exclusive store 专卖店Trademark owner provides permission to open a store to enter the store opened by Tmall Global.Specialty store 专营店One store operates two or more brands under the same Tmall Global category.Galaxy franchise store 银河专营店Refers to the franchise store of Tmall Global Direct Sales or Tmall Global Brand Flagship Store, without major business restrictions.The above is a direct translation of the names of categories from Chinese.Detailed list of store types and relevant policies available on Tmall’s website here.Foreign companies interested in selling to China are typically the brand owner. As such, flagship store is the default choice offering the highest level of exclusivity. This guide will focus on the process of opening a flagship store from now on. InvitationTmall Global (and JD Worldwide) keep a list of brands they identified as prospective and not yet available on the Chinese market (link). These brands are invited by Tmall staff to join the platform directly.Companies that weren't invited can start application on this link. independently and go through an extended approval process. However, many categories do require invitation from Tmall. With this invitation, application can be submitted on this link. Application can be obtained through the embassy, Tmall or Tmall Partner.Reach out to us to get invited. Apply for Invitation Limited entryIn accordance with the policies of the Chinese government, Tmall and JD periodically announce policies limiting opening of stores in certain categories. View fullsize For example, new stores cannot currently be opened in the category of milk powder and supplements for babies category. RequirementsNot only are the entry requirements to open a Tmall Global and JD Worldwide stores more strict compared to the China-based Tmall and JD.com, the platforms can decide whether to allow merchants to join the platform based on subjective criteria.The applicant is required to provide the following:Non-Chinese/English documents must be submitted in Chinese or EnglishCompany registration documentationStatement of the authorized representative allowing store openingID or passport of the authorized representativeOverseas bank account certificate or bank statementTrademark registration certificate (Chinese or foreign trademark certificate)Certain categories accept notice of acceptance of trademark registration (ie. filed application for trademark)Certain categories require a certificate of trademark registration (ie. registered trademark)If the main company of the store is not the trademark holder, it is necessary to provide exclusive authorization issued by the trademark holderTmall groups products into categories and requirements differ slightly by category, For example, selling drugs and cosmetics requires store owner provide lab results and FDA certification. Full up-to date list is available on Tmall’s website here.In addition to the documents listed above, the applicant is required to provide a business plan. This plan must introduce the company, its products, global sales, manufacturing capacity, history, growth, plan for sales in China, projections, budget, implementation team and other relevant information.As the final decision whether a company is granted the permission to open its store on the cross-border e-commerce platforms, it is vital to spend extra time on preparing the business plan. Online applicationSubmit required documentsSelect store type and categoryFill in brand informationFill in company informationPick store name Picking nameThe naming regulation strictly prescribes the following:Store name: Brand name from trademark registration + (Category) + “Oversea flagship store”Domain name: English or Chinese brand nameFull list of requirements on Tmall’s website here. Audit7 workdaysBrand evaluationTmall will assess the strength of the business and the brandBrand positioning: style, audience and unit priceBrand management strength: the establishment date of the brand, offline operation (stores, turnover in recent year, foreign trade and export volume and other), operation on Taobao or other platformsBrand characteristicsCorporate strength: factory, enterprise awards, operation plans and other informationContent of Qualification AuditValid qualificationThe scale meets the entry requirementsValid authorizationComplete production, business scope and product safety qualification, complying with the requirements of the state administrative lawWarehouse must meet set requirements Basic set upSet a passwordFill in mobile phone number and email addressSetup bank accountComplete the store informationPay deposit and annual service feeFee structure View fullsize DepositAmount varies by categoryStandard deposit for flagship stores: 50 000 CNYStandard deposit for other types of stores: 50 000 - 150 000 CNYAdditional deposit for brands without a registered trademark: 100 000 CNYStores in special categories: 300 000 - 800 000 CNY (eg. instant formula, dietary supplements)Paid in advanceRefundable in the case store is close downIts purpose is to provide refund to customers automaticallyAnnual fee10 000 - 60 000 CNY (amount varies by category)Paid in advanceIf store meets revenue targets set by Tmall, fee will be partially or fully refundedSales commission2-5% (amount varies by category)Deducted automatically with every purchaseAdditional 1% charged by Alipay (payment provider) with every purchaseFees charged by JD Worldwide are largely identical.Complete fee structure available on Tmall’s website here. LogisticsWhereas merchendize sold on standard China-based Tmall and JD.com stores can be stored anywhere the store operator chooses, cross-border stores are required to adhere to special rules. Goods can be shipped to customers from abroad (typically Hong Kong) or a bonded warehouse in Mainland China.Goods stored in a bonded warehouse have not yet been declared as imported to China and taxes will need to be paid only after they are purchased and shipped to customers.Tmall and JD.come operate their own warehouse and delivery businesses that can be picked to handle the shipping seamlessly. The storage and shipping fees for cross-border stores are typically twice as high compared to comparable solutions for China-based stores. TaxationTaxes are calculated based national tax policies and automatically paid after a customer purchases goods on the store. Compared to standard import to China, overall taxation is lower. Store design and set upStore homepageProduct pagesWarranty and returnsStore structureDesignate logistics providerSetup customer serviceUpload products, images, prices, available stock and other relevant information Chinese e-commerce is different. While western e-commerce platforms aim for simplicity, stores on Tmall and JD.com are expected to provide intricate designs. Every product page has to be individually designed in PhotoShop (or similar) by a professional designer in order to keep up with the competition.Texts, images and videos are all expected to be presented in a way the Chinese customers are used to.This process can be tedious for new brands to China and we recommend starting preparations well in advance to avoid launch delays. LaunchEnsure store meets minimum stock requirements (link)Follow the steps in the video below OperationEvery store automatically receives assessment score based on its performance. Some of the key performance indicators are sales, customer service response time, positive/negative customer reviews, indicated stock, participation in sales events and ad spend. Stores with poor score will be notified by the platform. If the overall rating doesn't improve in time a set period, store may be automatically closed down. ChinaMarketingTmallJD.comE-commerceSalesMarket EntryTmall GlobalJD WorldwideKaola.com Marek Matura Previous Previous How To Open Tmall And JD.com Stores In China Next Next What Is WeChat?