As business leaders from across the world continue their discussions at the St. Petersburg Economic Forum, Russia’s answer to Davos, it’s clear that the commercial ties between China and Russia are growing stronger. And that’s especially true online.
As access to the internet improves through increased smartphone use, more and more Russians are shopping online and China is capturing a big share of those sales. E-commerce in Russia is booming to the tune of around $10 billion a year.
That much is obvious from the volume of parcels at Moscow’s central post sorting office. But more and more of these packages have come over the border from China - 80 percent of all cross border packages, in fact, now originate there. So what’s behind the increase?
“The Chinese are low price suppliers and that’s really the story. We’ve seen the ruble halve in value. What people have done as a response is they’ve moved downmarket. So, they’re now buying on price whereas for many years the key driver in this market was brand. That was the way the market was going and then -boom - the tremendous slash in earning power meant that people had to look round more and more for bargains,” said Michael Winn, Senior Consultant of Macro Advisory.
Winn also says that some surveys show 83 percent of Russians are now buying on price and looking for discounts - and three new Chinese sites have popped up here in the last few months trying to fulfill that need. DHGate, Trade Ease - specifically designed for Russian consumers - and JD.com.
The king of online retail here in Russia is undoubtedly AliExpress, the Alibaba subsidiary that’s number one in terms of fulfilled orders and website traffic. And the shop that’s opening here in Moscow today, Technosila, wants its products to be among the hundreds of thousands sent across Russia by AliExpress every day.
The CEO of Technosila, which sells electronics and household goods, says the company took part in Ali Baba’s famous Singles Day event last November as part of a pilot scheme. That went so well, it’s now looking at a more permanent presence:
“There’s really big, big traffic on the AliExpress website. And cooperating with AliExpress helps us to get additional clients for our customers base, and then we can create additional clients for our brands in the future,” said Ilya Timchenko CEO of Technosila.
But although Chinese goods are attractively priced, experts say there’s still room for improvements on quality and delivery times. That reflects the mixed feelings among some Russian consumers:
“I don’t use Chinese internet shops. I use online shops to buy cheap accessories for mobile phones, maybe some jewellery. I once bought a Chinese iPhone 6, but I didn’t use it as it was bad quality.”
“I’ve been using AliExpress for about six months. I normally order mobile phone accessories, like cheap headphones, phone covers - you can order those very cheaply. I’m happy with the quality.”
And after the first ever Russia-China e-commerce summit last October, and with a new Russia-China online business platform which opened in February, it’s getting easier and easier for Russian shoppers to spend their rubles on Chinese websites.