Russia’s Ozon Retailer Finds Huge Online Sales Market In China
Market is booming for Russian retailers able to handle Chinese goods
Ozon, one of Russia’s largest online retailers, has opened an office in Shenzhen, in South China near to Hong Kong, as the demand for Chinese products in Russia keeps growing.
From home appliances, laptops and smartphones to clothing and daily necessities, a wide range of Chinese products sold at the Ozon online store fills gaps due to the pull-out of Western companies after the breakout of the Russia-Ukraine crisis. This development adds a new trade development between China and Russia in bulk commodities and means that bilateral trade will become more complementary and diversified.
China-Russia trade has surpassed 1 trillion yuan (US$150 billion) during the first 10 months of this year and is on track to hit US$200 billion by the year end.
Ozon Global, a division of Ozon, opened an office in Shenzhen as its Chinese headquarters to boost cross-border sales to Russian shoppers on its platform. Ozon’s China Managing Director said the company plans to attract at least 100,000 Chinese sellers to the platform by 2024, and to elevate the gross merchandise volume (GMV) of Chinese vendors by 10 times by 2026. The company already has more than 10,000 active Chinese sellers.
Chinese products now account for 90% of Ozon’s cross-border trade. According to Ozon China, the sales of Chinese products soared in the second and third quarters of 2022, rocketing about 25 times compared with the same period last year, and the number of active Chinese sellers rose 18 times, reaffirming Ozon’s decision to expand to Chinese market.
“Ozon opened access for international sellers two years ago, but Chinese sellers only started entering last year. This year, the growth is brisk” the company said, adding that there is surging demand for Chinese products in Russia, because China – as a manufacturing powerhouse – “has rich products and appealing price advantages.” according to its Weibo account.
“Electronic products such as smartphones, laptops and computer parts, as well as small home appliances and clothing, are most welcome in Russia,” Ozon said, while mentioning popular Chinese brands such as Xiaomi, Neatsvor, Huawei and Honor.
Numerous Chinese businesses have stated that they are bullish on the business prospects and expect to see their GMVs in Russia growing for at least the next three years.
Cai Jun, vice president of international business of Beijing Puppy Vacuum Cleaner Group Co, has stated that the company set up a store on Ozon in the first half of 2022, and home appliances such as vacuum cleaners manufactured by the company have been “quite popular,” witnessing 20-30% monthly growth in sales.
“Amid the withdrawal of US and European companies due to the broad Western sanctions on Russia, Chinese brands have helped to fill the market gap,” Cai said, predicting that more Chinese sellers would join the e-commerce channel to tap into the Russian market’s potential.
Ozon supports payments in Chinese Yuan, which is convenient for Chinese sellers and reduces potential risks associated with exchange rate fluctuations.
Song Kui, President of the Contemporary China-Russia Regional Economy Research Institute has stated that “The e-commerce channel is set to create new growth points in bilateral trade and drive the structure of trade relations toward more balanced, comprehensive, and high-quality development. Bilateral trade used to concentrate on bulk commodities, such as energy, mineral and agricultural products, but now this is changing”.
Ozon predicted that China-Russia bilateral trade will hit a record high this year. “China has risen to be the most important merchandise source of Russia. The convenience of the e-commerce platform, the variety and affordability of Chinese products, and optimized transnational logistics will continue to propel the fast development of cross-border trade.”
Russia Briefing is produced by Dezan Shira & Associates, a professional services form handling Russian and other global investment into China. The firm has multiple China offices including Hong Kong, Shenzhen, Shanghai and Beijing. See: www.dezshira.com For assistance in China please contact Maria Kotova at firstname.lastname@example.org