China’s ecommerce merchants set up shop in Russia’s online marketplaces

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A growing number of Chinese ecommerce merchants are selling their products on Russia’s largest online marketplaces as exporters increasingly look to the platforms to find new markets and avoid western tariffs.

Ozon Global, the international version of one of Russia’s largest ecommerce platforms, sources 80 per cent of its orders from China and told the Financial Times it had signed up at least 100,000 sellers from the country. In 2022, Chinese sellers numbered about 10,000. Wildberries, the largest platform by sales, said it had formally launched a channel for Chinese sellers last year, with industry sources confirming growing interest in selling on the platform.

Several Chinese suppliers said that as well as opening accounts on the sites’ dedicated international platforms, they were also registering local Russian ecommerce stores — a process that requires opening a Russian bank account, paying for in-country warehouses and receiving payment in roubles.

Chinese suppliers said they were eager to fill the gap left by a retreat of international business from Russia following Moscow’s full-scale invasion of Ukraine more than two years ago. They added that the country was a source of alternative demand as western markets including the EU and the US moved to close lucrative tax loopholes that boosted China’s ecommerce industry.

“Because it’s fair to say that the US and European markets have now been affected [negatively] and because relations between China and Russia are pretty good, everyone is investing more [in the Russian market],” said Yarong Wuliu, deputy secretary-general of the cross-border ecommerce division of the China Association for Small and Medium Commercial Enterprises, who helps SMEs hoping to open accounts on Ozon.

Chinese ecommerce trade grew 13 per cent in the first six months of this year from the previous year to a record Rmb1.25tn ($175bn), or 5.9 per cent of total imports and exports for the period, according to official figures. Ecommerce grew 15.6 per cent in 2023, accounting for 5.7 per cent of China’s total goods trade, up from 4.9 per cent the year before and 1 per cent in 2015, official figures show.

Henry Gao, a law professor at Singapore Management University, said bilateral ecommerce trade had been growing swiftly. “On the Chinese side, [it’s] the downturn in their established markets like the US and the EU, especially their push to reduce reliance on China, or even ban certain Chinese shopping platforms,” he said. “And on the Russian side, China is basically their only lifeline in view of all these sanctions.”

Wei, an ecommerce trader in Shenzhen who asked for his full name to be withheld, said he opened a store selling consumer electronics on Ozon Global two years ago as a recent university graduate.

“We only have a market because the US enforced sanctions against Russia,” he said. “It’s pretty good compared to other platforms. The profit margins are decent . . . the competition isn’t as fierce.”

However, sellers have complained of difficulties in receiving payments in renminbi following sanctions against Russia. At times, Ozon has banned the sale of certain items on its cross-border channel to ensure it meets global legal requirements. But Wei and others said they had managed to avoid both problems by opening locally registered stores.

Popular posts on Chinese social media platforms, including Instagram-like Xiaohongshu, detail the benefits of opening accounts on Ozon’s local stream. Others advertise services opening Russian bank accounts and registering local businesses. One such account contacted by the FT said they could register a Russian company to run local ecommerce stores for about Rmb30,000.

For a higher fee, the company could also try to find a Russian legal representative as a nominal head of the company, they said.

Demand for Russian business registrations was driven by ecommerce merchants, primarily on Ozon and Wildberries, and had taken off since the start of the country’s war against Ukraine, the person added.

Eason Chen, who runs a China-Russia logistics company in Shenzhen, said demand from ecommerce sellers looking to set up local stores had started to outpace business from traditional trading companies. “All I can say is that [demand] will continue to grow,” he said.

Ozon said overseas sellers accounted for just 5 per cent of its total product range and that it did not support Chinese sellers importing goods to sell on Russian storefronts. All sellers were now receiving payments on time, it added.

Wildberries said it was assessing the Chinese market “through a limited number of local manufacturers and sellers who can supply their products directly to all countries where the company is present”.

Jen Yang, an ecommerce merchant selling furniture and household goods, said she opened her Ozon stores in 2022 after three years of only selling on Amazon, hoping to fulfil unmet demand for daily goods in Russia.

She said she now made about Rmb20,000 a month from sales on her stores on the platform, which accounts for about 30 per cent of her ecommerce sales.

While she had also opened two domestic Ozon stores, she was still “testing the waters” given concerns over converting her profits back into renminbi, but she added that demand overall in Russia was fairly strong.

“China is a manufacturing powerhouse, so basically we can sell anything they need,” she said.