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The number of Chinese e-commerce merchants selling products on Russia’s biggest online marketplace is growing, as exporters increasingly turn to the platform to find new markets and avoid Western tariffs.
Ozone Global, the international version of Russia’s largest e-commerce platform, told the Financial Times that it sources 80% of its orders from China and has contracts with at least 100,000 sellers from China. In 2022, the number of Chinese sellers will be approximately 10,000. Wild Berry’s, the largest platform by sales, announced last year that it had officially launched a channel for Chinese sellers, and industry insiders acknowledged growing interest in selling on the platform.
Several Chinese suppliers said they have not only opened accounts on the site’s dedicated international platform, but also registered local Russian e-commerce stores. The process requires opening a Russian bank account, paying for a warehouse in the country and receiving payments in rubles.
Chinese suppliers said they were keen to fill the void left by the withdrawal of international business from Russia following Russia’s full-scale invasion of Ukraine more than two years ago. It added that the country is an alternative source of demand as Western markets, including the European Union and the United States, move to close favorable tax loopholes that boost China’s e-commerce industry.
“The US and European markets are currently being (negatively) affected, and relations between China and Russia are quite good, so I would say everyone is increasing their investment (in the Russian market).” said Yaron Wuliu, Under-Secretary-General. He is the head of the cross-border e-commerce department at the China Small and Medium Enterprise Association, which assists small and medium-sized enterprises that wish to open accounts with Ozon.
According to official statistics, China’s e-commerce trade in the first half of this year reached a record high of 1.25 trillion yuan ($175 billion), a 13% year-on-year increase, accounting for 5.9% of total imports and exports during the same period. E-commerce will grow by 15.6% in 2023, accounting for 5.7% of China’s total merchandise trade, up from 4.9% a year ago and 1% in 2015, according to official statistics.
Singapore Management University law professor Henry Gao said bilateral e-commerce was growing rapidly. “For the Chinese side, it’s the downturn in established markets such as the US and the EU, especially moves to reduce dependence on China or ban certain Chinese shopping platforms,” he said. “And for the Russian side, given all these sanctions, China is basically the only lifeline.”
Mr. Wei, an e-commerce trader in Shenzhen who asked that his full name not be used, said he opened a home appliance store with Ozone Global two years ago, just after graduating from university.
“We only have a market because of the US sanctions against Russia,” he said. “Compared to other platforms, it’s pretty good. The margins are decent. . . The competition isn’t as intense.”
However, sellers have complained that sanctions against Russia have made it difficult to pay in renminbi. To ensure that Ozone meets global legal requirements, it has also prohibited the sale of certain products through cross-border channels. But Wei and others said they could avoid both problems by opening locally registered stores.
Popular posts on Chinese social media platforms, such as Instagram-like Xiaohongshu, detail the benefits of opening an account with Ozon’s local stream. Others advertise services for opening Russian bank accounts and registering local businesses. One such account contacted by the FT said you can register a Russian company to operate a local e-commerce store for around RMB 30,000.
For a higher fee, it is also possible to find a legal representative in Russia to be nominally responsible.
Demand for Russian business registrations, mainly driven by Ozone and Wildberry e-commerce operators, had increased since the start of the war with Ukraine, the official added.
Eason Chen, who runs a Sino-Russian logistics company in Shenzhen, said demand from e-commerce sellers looking to open local stores is starting to outpace business from traditional trading companies. “All I can say is (demand) will continue to grow,” he said.
Ozon said foreign sellers account for only 5% of the company’s overall product range and that it does not support Chinese sellers who import goods for sale in Russian stores. It added that all sellers are currently receiving payments on time.
Wild Berry’s said it is evaluating the Chinese market “through a limited number of local manufacturers and distributors who can directly supply products to all countries in which the company is present.”
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Zhen Yang, an e-commerce retailer that sells furniture and household items, will open an Ozone store in 2022 after selling exclusively on Amazon for three years, hoping to fill Russia’s unmet demand for everyday items. He said it was open.
She said she currently earns about RMB 20,000 a month from sales at stores on the platform, which accounts for about 30 percent of her e-commerce sales.
She added that the company has opened two Ozone stores in the country and is still “testing it” given concerns about converting profits into renminbi, but demand across Russia is quite strong.
“China is a manufacturing powerhouse, so we can basically sell anything China needs,” she says.