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April 28, 2015

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Home » City specials » Hangzhou

O2O center strikes blow for innovation

By Wu Huixin | April 28, 2015, Tuesday | Print Edition

FORMERLY, if Hangzhou residents purchased a product from a foreign e-commerce website, they would have to accept hefty tariffs and transportation fees in addition to a lengthy wait before their goods arrived.

Things have become easier though with the opening of the cross-border e-commerce online-to-offline experience center at the Xiasha Industrial Park in Jianggan District.

Popular foreign products including diapers, milk powder, cosmetics and child safety seats are on display in the center.

Every item is labeled with a tag that contains product and pricing information as well as a QR code.

Consumers scan these codes and enter an online shopping platform where they can pay for items via AliPay or online bank transaction. The products are then shipped to the consumer’s home via express delivery. Each customer is eligible to buy 1,000 yuan (US$161) worth of products per purchase.

“All of the products would be dispatched from the Xiasha bonded warehouse. Shoppers could receive their products within two to three days,” said Wu Yinglai, who is responsible for the daily operation of the experience center.

Last month, Hangzhou became China’s first city to be approved by the State Council to establish the China (Hangzhou) Cross-Border E-commerce Pilot Zone to encourage foreign trade and industrial restructuring.

To spark innovation in the cross-border e-commerce industry, the experience center was established on April 17 under the cooperation of the Hangzhou government and nine online cross-border e-commerce websites.

“Guests have already scanned our products 15,000 times since we opened the experience center,” Wu told Shanghai Daily. “Our products attract consumers by virtue of their low-tax prices and short delivery times compared with purchasing from foreign shopping websites.”

“The O2O experience center is administrated by the government, which in return reassure consumers about the quality of products, especially considering the flood of fake products being sold by online purchasing agents,” said Wu.

At present, the O2O experience center has 570 products in seven categories. The most popular products are diapers and milk powder.

“I worry about the quality of domestic milk powder, since safety problems appear now and then. Previously, I purchased milk powder from a German website at high prices, but now I can buy from this store,” said a shopper surnamed Zhang.

Though Zhang praised the center’s convenience and prices, she still wondered why she could not take products home directly.

“Cross-border online-to-offline e-commerce means the shopping happens between domestic consumers and foreign vendors. If we let them take products from the experience center ... the nature would change. Our center would become an ordinary supermarket,” Wu explained, adding that the government only allows the center to operate as it is now being run.

“In the future, we will enrich the product varieties to meet shoppers’ demand with items like apparel, bags and suitcases,” Wu said. “If the center operates well, it is expected to open branch stores across Hanghzou.”

The State Council has given the Hangzhou cross-border e-commerce pilot zone a mandate to focus on innovation, technical standards, procedures and supervision of cross-border e-commerce and also promote successful practices across the country.

Last May, the Hangzhou government erected the Xiasha Industrial Park as an experimental cross-border e-commerce site. Right now, 18 shopping websites and 20 e-commerce service providers are based in the site. The zone recorded 290 million yuan in cross-border online transactions during its first 10 months.

Since Hangzhou boasts 470,000 e-commerce companies, including the world’s largest business-to-business platform Alibaba and China’s largest online payment platform Alipay, the city is well positioned to bolster the competitiveness of the cross-border e-commerce industry.

Indeed, the city’s leaders have expressed lofty ambitions for its future. “We expect to build the pilot zone into China’s cross-border e-commerce innovation, service and data center after three to five years of development, providing the country with a model of developing this industry,” said Hangzhou Mayor, Zhang Hongming.

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