Can foreign companies sell on Taobao.com?

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Taobao.com is China’s largest ecommerce platform. It’s used by everyone, to buy all kinds of cheap goods, from t-shirts to cosmetics.

Taobao.com is the essential marketplace for ‘Made for China’ products. In other words, products made in China, for the domestic market.

So, why would anyone want to sell on Taobao.com, rather than Tmall Global or JD Worldwide?

Probably because Taobao is, by far, the largest platform in China, in terms of transactions and sales figures.

That said, bigger is not always better when it comes to selling in Mainland China.

What is Taobao.com?

Taobao.com is China’s largest online shopping website, launched and fully owned by Alibaba Group. Taobao.com started out as a ‘consumer to consumer’ platform, but it has matured since then.

Today, there are more than 8 million Taobao.com stores, selling everything from local handicrafts, to imported brand name products.

However, Taobao.com is mainly known for its domestically produced apparel, jewelry and accessories, sold to working and middle class Chinese.

It’s China’s go to place for low to medium end consumer goods of all kinds.

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What is the difference between Taobao.com and Tmall?

Tmall, which originally meant Taobao Mall, is generally more ‘premium’ than Taobao. On Tmall, consumers can find brand name items, and even cross border products, shipped directly from Hong Kong, Europe, Australia or the United States.

Taobao, on the other hand, is more about domestic Chinese brands, made for the domestic market.

Tmall, with its Tmall Global platform, is also far more open to overseas and Hong Kong companies, compared to Taobao.com – which is purely domestic.

Is it possible to sell cross border products on Taobao?

No, you cannot open a Taobao.com store with a non-Mainland China company. However, you can open a Taobao store, in some product categories, if you register a company in China.

China allows foreign nationals fully own both limited liability companies and partnership enterprises – or do so with a Chinese partner.

That said, you will not be able to setup a postbox company, using a virtual office. The requirements to setup a company in China follows below:

Business license application
Office rental contract
Passport copies

Most China incorporation agencies charge around RMB 20,000 to 30,000, and the application can easily take up to 6 months. Notice that you also need to actually rent an office, meaning that you must pay a deposit and a few months rent, before you can even apply for the business license.

Setting up a company in China, to sell on Taobao.com, is therefore a major commitment – long before you see your first sale.

You will also need to open a bank account in Mainland China, that you later link to your Taobao.com store. Most foreign owned companies in China go to the following banks:

ICBC
Bank of China
China Merchants Bank

Can I sell on Taobao.com using an agency?

There are a few agencies that claim to help foreign companies selling on Taobao.com. This is mostly done by guiding them through the account setup and verification process.

That said, none of these agencies can void the requirement of first setting up a company in Mainland China.

There are far more agencies helping companies to start selling on Tmall, as this is where the Chinese actually go to look for overseas brands and products.

Sure, there are plenty of European, Japanese and American goods sold on Taobao.com, but that’s not the main attraction.

It’s far easier, and cheaper, to start selling cross border via Tmall Global or JD Worldwide. Selling on Taobao.com may work for some companies, but not for most.

Can I use a Hong Kong company to sell on Taobao.com?

While Hong Kong is part of China, it has its own legal system. Setting up a company in Hong Kong is very easy, and can be done without ever visiting the country.

That said, Taobao.com requires that you setup a company in Mainland China, which is on an entirely different level in terms of complexity and cost.

Okay, so what should I do if I want to sell products in Mainland China?

There are several cross border ecommerce platforms in China, but Taobao.com is not one of them. Alibaba Group launched Tmall, and later Tmall Global, specifically for medium to high end brands – known or unknown.

You can start selling on Taobao, but it requires a local presence in China. That means that you need an office and local employees.

That’s quite a commitment, before you’ve even tested the market.