How to find a breakthrough in the segmented products and segments of the “small and beautiful” direction or regional market? Speaking of light industrial goods, Russia’s largest trading partner is actually the European Union. Russia’s e-commerce penetration rate is relatively low, so in fact, everyone’s view of Russia through e-commerce is just a glimpse of the leopard, including traffic acquisition, payment methods, consumer behavior, including brand awareness, and cultural differences.
Basically, the Russian market is closed. Less than 15% of Russians can speak English, and only a few thousandths of Chinese can speak Russian. Direct communication between the two countries is actually difficult, so Russia is a less open economy for China. In recent years, because of the good relationship between China and Russia, including the explosive growth of AliExpress in this market since 2010, everyone has seen the potential of this market. In the past, basically everyone could not see this market or looked down on this market, and most of them were paying attention to the European and American markets. Now everyone is competing more fiercely, so the territory has begun to sink.
Why do we do this market? In fact, it was also a coincidence. Our starting point was that we had a warehouse in the local area and a large logistics channel between China and Russia. The core members of our team had more than ten years of experience in Sino-Russian trade. In my opinion, the increase in the Russian market and the increase in the purchase of products from China will continue in the next five years, and will increase by more than 50% every year.
For example, in the first half of 2016, the growth of Huawei, ZTE, Xiaomi, and LeTV in Russia should be more than three times. Why? Because the Russian mobile phone market is in the period of switching from feature phones to smartphones, and the mobile terminal traffic in 2015 may have increased several times compared with 2014. The proportion of Internet users using mobile terminals, especially those under 30 years old, has reached 90%. In the process of development in the past few years, the Russian market has changed rapidly. This is just like the e-commerce market in China in the past six or seven years, including the e-commerce of the retail industry.
How can we make the Russian market more beautiful and how can we have a greater explosion? I personally believe that only when we go deep into the localization of Russia can we find opportunities for beauty. Let me give you another example. For example, most of the local e-commerce in Russia are e-commerce that has been upgraded from traditional retail. Its business model is a natural O2O business model. There is no situation like the Chinese market where online counterattacks offline and offline and online compete for market share. Because most of its products are heavily dependent on imports, merchants or companies that can import goods must have been importers or large retailers. The top ten Russian e-commerce companies all have offline stores or large logistics systems.
What kind of supply chain and what kind of product selection can satisfy such an e-commerce market? We focus on local Russian retailers and procurement needs. For example, what price range of products can have a large sales volume, what kind of packaging and what kind of after-sales service conditions can be quickly accepted by local consumers. We have been studying how to localize Chinese brands easily, how to match channels with Chinese products, and how to connect consumers with brands. I think our own transformation is very important on these issues. In fact, startups are fighting with themselves in the early stages. The faster you transform yourself, the faster you can seize opportunities.
Many times, entrepreneurial ideas or models come from opportunities that everyone sees. Everyone is doing similar things, competing to see who can find a solution faster, or reduce costs faster, or speed up faster. You can’t do something that is unique in the world. We started earlier, in 2014, and have been doing it for quite a while. Currently, more than 50% of our employees are local Russian employees. I believe that our accumulation will soon develop rapidly with the development of the market.