E-Commerce, Supply Chain & the Dual Circulation Economy
by Ella Kidron and Rachel Liu
The first China International Consumer Products Expo will be held in Haikou, Hainan province from May 7-10. China’s largest retailer, JD.com, has an exhibition booth in partnership with top brands from around the world, as well as a range of events and initiatives to take place during the expo. The expo is particularly significant because it symbolizes the first major event held in the region since the Hainan Free Trade Port was announced. Since January this year, JD has already opened two duty-free stores offering an omni-channel duty-free experience. Its presence at the expo is a demonstration of the important role that retailers and supply chain players can play in the dual circulation economy, a priority of the Hainan Free Trade Port.
Lei Xu, CEO of JD Retail, said: “We are honored to participate in the first China International Consumer Products Expo. Consumption upgrade is an unstoppable trend. Consumers’ demands are getting more fragmented, diversified and personalized. People hope to buy whatever they want, whenever and wherever they want it. This has created many new consumption models and scenarios.”
Overview of the expo
According to the master plan on its construction, the Hainan Free Trade Port’s preferential tax policies will encourage foreign investment and foreign manufacturers to export their products to the region, while offshore duty-free shopping policies will lure many of China’s 1.4 billion consumers with sound spending power and clear demands to travel to purchase goods in the region. In other words, the Hainan Free Trade Port is highly aligned with the “dual circulation” strategy of promoting “internal circulation” (the domestic economy” and integrating it with “external circulation” (the global economy.)
Xu added: “This Expo can not only use the advantages of Hainan Free Trade Port to improve the supply in the domestic market and meet customers’ demands for more high-quality products, but also can improve the opening up and the dual circulation of domestic and international markets.”
JD’s presence
JD will host a 500 square meter booth in Exhibition Hall 1 of the Hainan International Convention and Exhibition Center, Haikou, Hainan province. Products from its nearly 70 top international brand partners will be on display. In addition, JD’s business units and affiliate businesses such as JD Logistics and JD Health, will exhibit advanced technology and services. The company will sign partnerships with nearly 20 international and domestic brands furthering its relationships with brand partners.
JD Logistics will also offer a shipping station for ambitious shoppers who want to take advantage of the expanded duty-free quota offered during the expo as well as brands and enterprises who need to ship products back home, bringing JD Logistics’ convenient delivery station experience into the convention center.
JD Worldwide – pushing the frontier of imports
As JD’s platform for imported products, JD Worldwide plays a key role in this year’s participation at Hainan Expo. Imported products that sell well on JD, covering beauty, food, personal care and health care products, will be on display.
JD Worldwide will also announce partnerships with five imported brands, namely Perrier, New Zealand diary brand Fonterra, Nestlé, Fortune Pharmacal from HK, and South Korean personal care brand Amorepacific Group, to further cooperate on cross-border business and explore the emerging duty-free business.
The platform will also hold a forum together with China Customs Media Center during the Hainan Expo, to introduce the latest policies of cross-border business and imported products consumption trends. JD Worldwide will introduce a new project that it jointly develops with China Certification and Inspection Group to build on the imports platform’s ability in products authenticity inspection and provide customers a more trustworthy shopping experience.
“By joining the Hainan Expo, we hope to achieve three goals,” said Frank Yu, general manager of marketing and operations of JD Worldwide: “We hope that by using this influential platform, we can improve JD Worldwide’s brand recognition in the imports industry, and better communicate with overseas brands on the abilities of JD Worldwide to attract more brands to join our platform. Furthermore, we hope to work closer with Hainan on the emerging duty-free business, which we believe has great potential in the next few years.”
Increased push into duty-free
Since launching new duty-free policies on Jul. 1, 2020, raising the individual annual quota for offshore duty-free shopping from RMB 30,000 yuan to RMB 100,000 yuan, and expanding the tax-free categories from 38 to 45, including electronics products and wine, consumers have been flocking to Hainan. Reports from the General Administration of Customs said that Haikou Customs supervised sales of duty-free goods worth RMB 12.01 billion yuan in the four months since launching the policy, up 214.1% YOY, and the number of customer visits reached 1.78 million, up 58.8%. Cosmetics, watches and jewelry accounted for 72.8% of the total tax-free sales in the island’s four duty-free shopping centers.
JD made its move into the duty-free industry by opening a store through partnering with Hainan Tourism and Investment Development Co. in Sanya, Hainan province on Dec. 30, 2020. It has since opened another one. Together, the stores provide a duty-free experience unlike traditional duty-free stores. Moving away from the traditional duty-free categories of fashion, luxury, cosmetics, alcohol and cigarettes, JD has gone in an entirely different direction, using its supply chain advantages to equip the stores with consumer electronics and small appliances such as hair dryers, speakers and coffee machines, attracting a much wider variety of consumers to duty-free shopping than previously.
“As Hainan is developing a Free Trade Zone, the duty-free business will be the most important part of JD Worldwide’s development in Hainan in the next few years,” said Yu. “Our plan is to continue focusing on cross-border business, joins force with general trade business and develop duty-free business.”
In the future, JD Worldwide is considering building a self-operated shopping mall in Hainan, featuring duty-free and cross-border products and plans to explore new innovative models. Following the successful cooperation with Hainan Tourism and Investment Development Co. and the opening of two stores under the cooperation, JD Worldwide will continue to explore and cooperate with more companies with duty-free business, and find more innovative models to open offline stores. “The joining of Internet giants like JD can bring more innovation to the highly traditional business, such as providing digital solutions.” Yu added. JD Worldwide will open its advantages on digitalized solutions to partners to provide them more concise customer profile, their shopping preference and the ways to reach out them through online and offline channels.
Cooperation beyond retail
Beyond duty-free and even retail, there are a wealth of areas that JD could explore within the context of the Hainan Free Trade Port. In addition to promoting the exchange and movement of high quality products and services, smart city, smart logistics and other ventures are all promising areas to potentially explore. The expo is only a taste of what could be around the corner.
“JD will maintain an attitude of openness and accelerate the creation of win-win ecosystems based on digital smart supply chain,” said Simon Han, vice president of JD.com and head of JD’s V business group (“V” stands for victory), which includes JD Worldwide, at the Hainan Expo. “We hope to join forces with more partners and share in the development opportunity offered by the Hainan Free Trade Port.”
(ella@jd.com; liuchang61@jd.com)
