E-commerce finds markets overseas(2)

What is different from its Chinese operations, though, is Vancl's pricing in the market.

"Vietnam is like China a number of years ago where rich people buy luxury goods and those with little income go to wholesale markets. There are few fashion brands in between targeting the middle and high-end market," he said, explaining the reason for Vancl's brand positioning in Vietnam.

The company began its expansion in Vietnam with a limited number of products, about 300 kinds of clothes, on a trial basis as it is still learning how to work with a partner in a foreign country, Luan said.

Compared with Vancl, Jingdong Mall seems to be less aggressive in its global expansion, without stepping much into local operations. It buys made-in-China goods and then ships them overseas. 

However, Shi Tao, Jingdong Mall's vice-president, told China Daily that the company plans to build warehouses overseas to eventually shorten the delivery period. 

He said the ultimate goal for Jingdong Mall is to act like Amazon, which does business in different countries locally, and has a diverse source for products.

By June, almost all of Jingdong Mall's 60 million registered users were from the Chinese mainland. US-based Amazon, the world's biggest online retailer by user number, has more than 60 percent of its customers coming from countries outside North America, said US research firm comScore Inc.

Currently, the most popular categories on Jingdong Mall's English-language website include Chinese books, electronic accessories and clothing, which take up more than 70 percent of its overseas sales, the company said.

Luan with Vancl, however, said the company didn't set a goal for its overseas business, nor has its business overseas registered "breakthrough growth", and everything currently going on is more of an exploration of how to go global. 

E-commerce companies' efforts for expansion come when the domestic e-commerce market has been increasingly tough, especially in the last year. A large number of players are competing head-to-head with cutthroat price wars, which helps them lure users but squeezes their profit margins.

"Compared with the domestic market, e-commerce players are likely to have higher profit margins in the international market," said Li Chengdong, an e-commerce analyst and columnist of the Chinese website of The New York Times. 

Hu Yanping, general manager of the Data Center of China Internet, a Chinese market research company, agreed. However, fierce competition in the domestic market is not the reason for e-commerce players to go global, he said. 

"Going global will be part of the future, something you need to do other than your main business in China even though it's not urgent now."

For Luan, going global is by no means easy. What Vancl spent most of its time exploring overseas is how to rebuild the whole process of doing online retail business and providing localized services to the market.

"You are also exposed to other risks," he said, referring to a protest against China in Vietnam in early December, which led to a delay of Vancl's more aggressive plan to expand its sales in the country.