The influence of Chinese marketplaces on Russian e-commerce

This article explores the influence of Chinese online marketplaces on e-commerce in Russia. With the growing interest of Russian consumers in Chinese goods such as home products, electronics, clothing, and accessories, platforms like AliExpress, JD.com, and Taobao are becoming increasingly popular among Russian online shoppers. The article analyzes the key factors determining the success of Chinese marketplaces in the Russian market, including product assortment, pricing, service quality, and platform usability. It also examines the challenges and opportunities faced by Russian e-commerce retailers in the face of intensified competition from Chinese players. Based on the analysis, recommendations are provided for Russian online retailers to enhance their competitiveness and attract consumers in the dominance of Chinese marketplaces.

Keywords: Chinese marketplaces, e-commerce, Russian market, online shoppers, competition

Data from Digital Commerce360 shows that by 2024, B2B platforms will account for approximately 30 % of all global B2B online sales. Currently, only 7.5 % of the US$7.9 trillion in annual B2B sales are online, but by 2024 sales will reach US$12 trillion [7]. About 2/3 of Russian consumers who shop online regularly use marketplaces to shop online, this is also the channel preferred by Russian shoppers as it provides easy access to a wide and varied offer, as well as fast order fulfillment and delivery. On the other hand, merchants, both small and large, value marketplaces mainly because of the ability to reach a huge number of customers at a relatively low cost. However, the authors emphasize [1, 8, 10] that buyers of such platforms also have clearly defined expectations regarding the functionality of such solutions: this is confirmed by the success of players who have created platforms that are maximally adapted to the specific needs of their industries. At the same time, we can agree that there are barriers to the development of e-commerce that concern enterprises and refer to the fact that, as is noticeable, for example, in Russia, a number of companies cannot adapt their offers to the constantly changing conditions, which include [1]:

— technical limitations arising, for example, due to the lack of universal standards for the security and quality of Internet use,

— unsatisfactory communication throughput, which prevents effective communication and information transfer between Internet users,

— difficulties in integrating Internet and e-commerce tools with applications and databases existing in individual companies,

— the constant development of IT tools, which forces entrepreneurs to constantly purchase new applications and programs,

— the high cost of network servers,

— a large number of unregulated legal issues relating to doing business in the form of e-commerce,

— still weak developed rules regarding national and international document management standards,

— need to have extensive expert knowledge related to the development and implementation of various forms of e-commerce,

— inability to use the latest electronic technology, which characterizes most small and medium-sized businesses?

— organizational chaos, user rejection of all types of advertising, such as spam, the danger of data interception by third parties, lack of support and promotion of e-commerce from the state, the need for constant adaptation of e-commerce to numerous technological and organizational changes.

The annual increase in the domestic B2B e-commerce market suggests that there are effective mechanisms in place to ensure such high results. Consider this using the example of Alibaba Group — a group of Internet companies whose mission is to cover all possible forms of electronic sales, as well as the development of e-commerce services, tools for increasing security and data collection. Alibaba is the first company to provide market information and data for free to all users around the world, allowing buyers and suppliers of goods to quickly expand their reach. Alibaba is also a group of modern companies that offer services that facilitate online trading (and much more). Alibaba's e-commerce portal is a retail and wholesale platform that primarily aims to internationalize the activities of Chinese companies by creating a system of offers, communications and business transactions. Alibaba does not sell physical products, but offers many types of services for sellers and buyers, this corporation specializes in providing services to companies (currently in more than 240 countries) — in addition to Alibaba.com (international B2B and domestic B2B) and Taobao (C2C), there is a third platform called Aliexpress, which is the international version of Taobao [4, 7]. Alibaba's services include more than just e-commerce platforms, they also offer [2–3]:

— AliFinance loans (low «kickstarter» rental rates for entrepreneurs who like to do business on the platforms and have difficulty obtaining loans from Chinese banks);

— Aliyun (cloud computing, data mining of mobile operating systems and e-commerce); Currently, Ablibaba Clud, Alibaba Cloud Computing, is a portal that stores information in the cloud.

— Alimama.com — site of marketing services for sellers;

— Juhuasuan.com — group purchasing site;

— Etao — search engine for goods on the Chinese market;

— Alizila — a site about Alibaba Group products and e-commerce trends;

— Laiwang — application for mobile communications;

— ChinaVision — Media Group in China;

— Youku and Tudou — mobile television and video content services on the Internet;

— Cainiao China — Smart Logistics — logistics platform.

Alibaba Group also offers the Alipay payment service, a well-known payment service mainly used in Asia. Alipay provides business partners with a convenient and guaranteed transaction model to make and receive payments online. Currently, the group has a number of initiatives in almost all areas of trade (and related services) existing on the market. Alipay can be used not only by buyers from China, but also from other countries, including Thailand, Malaysia, and Japan. The Chinese online sales market is the second largest in the world, but the fastest growing, marketplace platforms account for approximately 85 % of sales in China, Alibaba.com and Aliexpress.com, which offer the opportunity to sell goods abroad, and the platform itself operates in English language, the latter additionally offers buyer protection tools (escrow type). [2] Manufacturers and suppliers present their products on the platform, mainly from China, but also from India, Turkey, Malaysia, Vietnam, Thailand, Japan, Korea, Taiwan, Great Britain, the USA and other countries, including Russia. The Alibaba.com platform is a place where sellers and buyers from all over the world meet, to effectively establish business relationships, Alibaba.com offers many tools, including: to quickly find a potential supplier, verify it, check product quality, secure deal and others. The portal's income comes mainly from payments from suppliers; each provider must register to use the site.

In addition to the free account (typically for retailers), there are two different types of paid memberships: the «Gold Supplier Lite Package» and the «Gold Standard Package of Supplier», which costs approximately $300 to $3,000 per year. The rest of the portal's revenue comes from advertising revenue, gaming revenue, as well as from offering additional services to clients, such as website design and translations. A seller can choose from three forms of representation on Alibaba.com:

1. Free Membership — Free Account,
2. GoldSupplier Basic — Fee: $699 per year,
3. GoldSupplier Standard — Fee: $2,999 per year.

A seller can also use the Verified Member option to increase the credibility of their company; the manufacturer or supplier listing their products through a Gold Supplier account is verified by an external company. Potential business partners are much more likely to choose trusted companies to work with due to the problem of fraud, especially in wholesale transactions.

A new feature of the platform is the ability to offer and order product samples to analyze its quality; purchasing companies can choose between paid and free product samples, depending on the nature of the product and the scale of sales of the product. The main advantages of using Alibaba.com include access to a huge number of Asian exporters and potential suppliers, sometimes only on the site offering a particular product (not available anywhere else). Due to the low markup on the marketplace, the products offered usually have lower prices than those offered by companies in a given country. In addition, the portal offers an initial check of a registered company and, for a fee, a detailed check. Alibaba.com offers a number of tools to speed up the shopping process, including the expansion of its own payment system (currently being tested in the Chinese market and neighboring countries). Information about manufacturers and transaction history provides a broad overview of the offerings, allowing you to identify trends in the selected industry and areas of development. The disadvantages of the portal are usually the lack of thorough verification of non-wholesale suppliers, which affects the risk of doing business with the counterparty, as well as the limited scope of debt collection procedures and control of the procurement process (in the case of Aliexpress.com, this problem is eliminated by the escrow system). At the same time, the process of paid verification of the seller allows you to minimize the risk of being deceived, including the most common methods of fraud, namely:

— sending an advance payment, lack of contact with the seller, lack of goods,

— receiving a product other than agreed upon,

— the worst quality of the goods,

— damage to the goods (before shipment or during delivery).

A less frequently mentioned problem in the operation of the portal is the problem of communicating with the seller in a foreign language, most often in English. English (often difficult due to lack of sufficient knowledge of the language), in this case it is possible to purchase a sample of the product before ordering a larger batch. Certain problems during transactions include currency risk arising from purchases in foreign currencies, another problem is the relatively high cost of delivery, especially in the case of air delivery, or extended time — sea freight is from 25 to 40 days, air freight from 3 to 20 days.

Taking into account the experience of China, we can identify conditions favorable for the development of electronic B2B commerce on marketplaces in Russia. Key success factors for these processes were identified: easy and fast access through easy-to-use Internet applications; low transaction costs; guarantee of payments and their execution in a short time; a developed logistics base that ensures fast delivery, especially for products whose quality is determined by freshness. Taking into account the currently visible trends in online trading, the essence of which is the digitalization of the process of purchasing an increasingly wide range of consumer goods and services, it seems that the created platform, in terms of its functionality, should not be limited to concluding only B2B transactions. It could also include a portal dedicated to B2C transactions, allowing selected products to be offered directly to consumers. Specifying the general recommendations for building a national electronic platform for organized trade in products, it can be stated that: the construction of the IT infrastructure of the trading platform should be accompanied by simultaneous efforts to provide logistics infrastructure in the form of appropriate warehouses and transport; the auction sales system must be associated with ensuring timely transfer of funds between recipients and suppliers, and the role of the auction operator as a guarantor of financial transactions is a necessary condition for the functioning and further development of this form of sales, since financial difficulties can lead to an increase in the number of transactions; transportation of products from the seller to the buyer can initially be carried out on the basis of the auction operator's warehouse areas, to which sellers will deliver the products and buyers will pick them up, although at the same time it is advisable to develop a system of direct transportation of products from the seller to the buyer. The development of the sales system should be accompanied by the development of consulting services aimed at supporting manufacturers in meeting the requirements for the quality of goods sold. The basis for the detailed recommendations presented are the results of an analysis of global trends in online trading and an analysis of the functioning of individual electronic platforms, as well as an assessment of China’s experience in the field of trade and best practices that can be successfully used in Russian conditions.

Compared with developed countries, the overall development level of e-commerce in China is relatively low and is still in its infancy. However, the Chinese government attaches great importance to the development of e-commerce. With the active support and encouragement of the government, China's e-commerce has entered the path of healthy development. The e-commerce payment system is becoming more and more advanced. E-commerce logistics and distribution companies are emerging one after another; electronic transactions in foreign trade, finance, securities, insurance and other industries are becoming increasingly popular; various industries have created their own websites, launching product news releases online, conducting online negotiations and signing contracts. E-commerce application models are becoming more diverse. Under the B+ to +C model, online bookstores and online shopping malls developed at a faster pace after adding online payment functions and improving various services; online auctions, online shopping malls, online mail order, etc. are consumption-oriented Many e-commerce companies, as well as industrial and commercial enterprises, have begun to develop business-to-business e-commerce; Electronic trading of securities has also developed and «online stock trading» has become a reality for some investors. As the prospects for China's accession to the WTO have become clearer, Internet-based e-commerce beyond national borders is not possible. Reversely embarked on the path of global economic integration. Therefore, how to use the Internet to take full advantage of e-commerce and realize innovative technologies and e-commerce business models of great significance is a major challenge facing the Chinese e-commerce industry. The development of e-commerce in Russia began late: according to Morgan Stanley statistics, at the end of 2022 there were 11 million users of online stores in Russia, which is only 16 % of the total number of Internet users. About half of users started only in 2021. Online shopping. According to statistics, there are currently about 10,000 online stores in Russia. Over the past three years, e-commerce transaction volume in Russia reached US$8 billion, US$10.5 billion and US$12 billion, respectively, increasing by 20 %, 31 % and 14 % year on year. In terms of regional distribution, e-commerce transactions in Russia are mainly concentrated in economically developed Moscow and the Moscow region (45 %), St. Petersburg and the Leningrad region (11 %). The overall situation of cross-border e-commerce in Russia, with 69 million adult Internet users and a network penetration rate of 59 %, has been growing rapidly in recent years. There are more than 230 million mobile phone users in the world, among which the number of mobile network users exceeded 92 million in 2014, tablet penetration rate reached 14 %, smartphone penetration rate reached 29 %. In 2022, China-Russia trade set a new record, reaching US$88.16 billion, up 11.2 % from the previous year.

China's exports to Russia increased by 13.4 %, while imports from Russia increased by 9.9 %. It is likely to cross the $100 billion mark in 2013 and reach $200 billion by 2020. At present, there are more than 1,000 Sino-Russian joint ventures in Russia, and the number of Sino-Russian joint ventures registered in the Russian Far East alone has reached more than 600, which is 40 % more than the total number of joint ventures in Russia. enterprises. There are already 750 Sino-Russian joint ventures in China, mostly in the northern and northeastern regions bordering Russia. In China-Russia trade and economic cooperation, cross-border trade is becoming increasingly important. The cross-border trade volume between China and Russia accounts for about 20 % of the total trade volume between China and Russia and 43 % of the total foreign border trade volume of China. The environment and cooperation conditions in the border areas of the two countries are constantly improving, thanks to faster exchanges and more convenient trade and investment. Heihe, Suifenhe, Tongjiang and other ports are developing rapidly, and the completion of the Sino-Russian trade complex under construction will stimulate further development of cross-border trade.

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