Alibaba and JD find comfort in Russia when domestic business declines

On October 9, according to foreign media reports, the sharp depreciation of the Russian currency, the ruble, did not dampen the enthusiasm of consumers in this country to pursue imported goods. On the contrary, cash strapped Russian shoppers turned to online retailers to buy imported smart phones, jewelry and clothing, which unexpectedly boosted the business growth of Chinese e-commerce companies Alibaba and JD.

According to the data of market research company TNS, Alibaba's AliExpress shows that the number of Russian visitors increased by 40% year-on-year in July this year to 22 million.
Jingdong, another e-commerce company, has launched its first international website in Russia since June, which specializes in providing cost-effective products such as Xiaomi smart phones (priced at about $214). Electronic equipment and household appliances accounted for more than half of the company's total revenue.
Maria Gracheva, CEO of Yandex Money, the largest online payment service in Russia, said: "Due to the economic recession, Russian shoppers are gradually moving to the Internet to find the cheapest goods. Chinese e-commerce can provide them with these affordable products." Yandex Money has cooperative relationships with AliExpress and JD.
As the world's largest energy exporter, Russia's economy has been seriously affected by the sharp decline in international crude oil prices. The sharp depreciation of the ruble and government spending cuts have caused millions of Russian people to fall into poverty. In August, wages across Russia actually declined by 9.8%. At present, the disposable income of Russians is significantly lower than that of the previous year.
Xu Xinquan, head of JD International business, said in an interview: "Consumers' wallets have shrunk by about half, but there are still Russians who want to buy high-quality and inexpensive goods. We expect strong growth in the fourth quarter. Before that, we have achieved better results than during the trial run." However, Xu Xinquan refused to disclose specific sales data.
Although the economy may still be in recession, Russia is opening its arms to welcome goods from China. According to East West Digital News, an international information company, Russia has about 80 million Internet users, which is the largest Internet market in Europe by users. However, the number of online consumers only accounts for about one-third of Internet users, while the proportion of the United States and Western Europe is 70% and 90% respectively.
Xu Xinquan, head of JD International business, said: "In China, we have 3 million orders every day. The size of the Russian market is about 10% of that of China. It is estimated that we may have 300000 orders every day in Russia in the future."
According to the prediction of the Russian NAMO organization, the number of packages from overseas will exceed the number of packages from Russian local e-commerce this year due to the promotion of Chinese e-commerce. In 2014, Russia handled 235 million packages, including 75 million cross-border orders. This year, NAMO is expected to generate 220 million packages and import 120 million packages.
In response to questions about the Russian market, AliExpress said that in the past few months, in addition to the steady demand for fashion, accessories and electronic products, the number of consumers buying daily household goods also increased.
Although Alibaba's business has grown in Russia, the slowdown in China's domestic business has hurt Alibaba. Last month, Alibaba handed over the title of Asia's largest Internet company and gave way to Tencent. After 10 consecutive months of stock price decline, Alibaba's market value has evaporated by 140 billion dollars.

Price sensitive
Chinese enterprises, including Alibaba, TinyDeal, a foreign trade B2C website, and Jingdong, have developed well in Russia, which undoubtedly takes the cake from other enterprises. According to TNS, the number of Russian visitors to eBay has lost 16% since July to 6.9 million. In addition, according to East West Digital News, eBay not only provides Russian consumers with goods from the United States and Europe, but also helps a large number of Chinese retailers to sell. An eBay spokesman in Russia declined to comment.
In the past year, the dollar has risen 55% against the ruble. One of the benefits of the devaluation of the ruble is that goods made in Russia are cheaper and more attractive overseas. Alibaba plans to provide Russian made chocolate and condensed milk to Chinese consumers from November, while Jingdong is considering importing Russian seafood, vodka, jewelry and furs to China.
Although many Russians living in big cities such as Moscow and St. Petersburg like online shopping, the development of e-commerce in the Far East of the country is slow. In Blagoveshchensk, Amur State, Russia, tourists from China directly exchange RMB for rubles. One yuan can exchange RMB for 10 rubles, which was still 1:5.4 at the beginning of 2014, making Chinese tourists rich.

Gold and candy
Maria Kobysh, the general manager of a jewelry store in Bragoveshchensk, said: "We used to walk, eat and shop in Heihe River (across the river from Bragoveshchensk, the nearest distance is 750 meters)."
Kobesh said: "Now we can't afford it anymore. Instead, Chinese shoppers are starting to go to Bragoveshinsk." According to Kobesh, gold, gems and candy are the most popular products for Chinese consumers.
However, even the business activities of such physical stores may soon migrate to the Internet. After Russian shoppers stopped spending across the border, TradeEase, an e-commerce platform supported by the Bank of China, launched a Russian website last month, making online shopping close to the border possible.