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Kuaishou to Start Its CBEC Business

On May 16, 2021, Kuaishou released its cross-border e-commerce (CBEC) regulations, implying the oncoming of its CBEC business. The first-stage business only opens access to four categories: cosmetics, food, clocks & watches, and luxury products. China’s CBEC business soared up in 2020 and is expected to maintain high in growth in 2021, thus attracting the influx of tech giants such as Douyin, Kuaishou, and Meituan.

On May 16, Kuaishou released its cross-border e-commerce regulations, including Kuaishou Import E-commerce Platform General Rules, Kuaishou Import E-commerce Merchant Management Rules, etc. According to the source, Kuaishou has successfully developed logistics between business entities and bonded warehouses. At present, some official accounts which engage in CBEC can be searched on Kuaishou, which means that their CBEC Kuaishou stores will open soon.

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Rules on Kuaishou e-commerce website

Basic Regulations1

  • Requirements for business entities

(1)     Business entities who enter must have company entities overseas, Hong Kong (China), Macau (China), or Taiwan (China), and have overseas retail or trade qualifications;

(2)     Business entities who enter must have the subject of joint liability in mainland China, that is, a domestic agent;

(3)     Business entities who enter must have an overseas corporate bank account, or a corporate bank account in Hong Kong, Macao, or Taiwan.

  • Priority business entities

(1)     Priority is given to overseas, Hong Kong, Macao, and Taiwan brands, brand agents, and well-known brands that have not entered the Chinese market;

(2)     Priority is given to e-commerce teams with experience in cross-border e-commerce operations.

  • Entry process

The business entity can entry the platform through one of the two methods: platform invitation and voluntary application. For now, the platform only supports the former one.

  • Categories

The platform currently opens access for four categories: cosmetics & personal care, food, clocks & watches, and luxury products.

It is not strange that Kuaishou only opens these four categories in the first stage.

First, food and cosmetics are fast-consuming products with the greatest demand in the consumer market. According to statistics from the General Administration of Customs, the import volume of daily consumer goods such as cosmetics, milk powder, diapers, food, etc. ranks at the forefront of all 1,321 kinds of cross-border e-commerce retail products.2

Moreover, compared with the strict laws and regulations for products that enter the mainland market through general trading, especially functional food, the regulatory threshold of CBEC for these products is much lower.

Second, in 2020, mainland China became the only region with positive growth in the luxury goods market. There are still more opportunities to explore in China's lower-tier market. The successful cooperation between e-commerce platforms (Tmall Global, JD.com, etc) and many foreign luxury brands has witnessed up to 70% growth rate in 2020, again proving the market’s great potential. 2

Background

Kuaishou has been making significant efforts to expand its e-commerce business since it set the goal of this year’s total GMV of e-commerce at 750-800 million yuan, which is about twice that of last year (381.6 billion yuan). Kuaishou also hoped that the transactions completed on Kuaishou could account for 60% and over. 3 This ambitious goal has made the promotion of CBEC business more urgent and essential because of the accelerated development of CBEC caused by the epidemic.

According to data released by the General Administration of Customs, in 2020, CBEC imports and exports were a total of 1.69 trillion yuan, a year-on-year increase of 31.1%, among which CBEC exports were 1.12 trillion yuan, with an increase of 40.1%. "The next three years will still be a benefit period for cross-border e-commerce." In April 2021, Zhang Kuo, vice president of Alibaba Group and general manager of International Business, publicly stated that CBEC business had achieved a spurt of growth, with an average growth rate of 133%. In the first quarter of 2021, compared to the first quarter of 2019 (before the epidemic), CBEC business increased by nearly 300% year-on-year. 2

The competition is becoming severe in this sector. Tmall Global, Kaola, JD.com, Little Red Book, and VIP.com are the existing experienced players in this industry. Other tech giants are also joining the game. Douyin, another short video giant in China, who is the biggest competitor of Kuaishou, has launched its CBEC business one-step ahead of Kuaishou, and achieved over 100 million yuan sales in its CBEC opening festival in April. 4 Meituan is also planning to launch CBEC business. However, the severe competition between platforms is an excellent opportunity for overseas brands and business entities because they are more likely to get support from these companies since platforms will give more benefits to business entities to win the game. Therefore, the most important thing for brands now is to grab the opportunity and act quickly.

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