Argumentative Research Paper
Introduction
In the recent decades, multiple economic, political and cultural factors have contributed to China’s increasing participation in the global market, particularly in the international retail. The country’s retail market is among the most dynamic in the world today, while the fast and decisive adoption of the technological opportunities for retail operations made China the largest e-commerce market worldwide with the sales revenue of estimated $589 billion as for 2015 (Tong). Chinese retailers readily use the modern technological means to reach both local and foreign consumers, which has led to the dramatic growth of China’s Business-to-Consumer e-commerce in the past several years (Yu 28). Significantly, along with the increasing pace of the domestic e-commerce market growth, China has been demonstrating increasing affluence in foreign markets, especially in the U.S. online retail market. Online retail transactions have been executed mainly via several leading e-commerce platforms such as Amazon.inc, websites of Alibaba conglomerate, and eBay. Yet, according to the data provided by the Business Insider statistics, Chinese retailers tend to prefer Amazon.inc as the primary platform for reaching customers from overseas and especially from the United States (BI Intelligence). Although Alibaba is recognized as the largest e-commerce conglomerate worldwide incorporating multiple websites and exceeding Amazon.inc in the number of sales, Amazon.inc remains a preferable platform for cross-border e-commerce due to a set of significant advantages including American origins, cultural congruence, payment security, fair site policies and own developed logistics which enables prompt and secure delivery of purchased consumer goods.
Context
For a retail business entering the global market, traditional trade has been challenged by a number of legislative, tax and other barriers which restrain development and expansion of its capacities. As Tong notes, Chinese retailers working in traditional trading are required to have both the Chinese business license and the product selling license in order to operate legally in the domestic consumer goods market. At the same time, Chinese taxation policies impose rather high duty and sales taxes, requiring that retail businesses locate their inventories in China rather than elsewhere (Tong). On the other hand, the advantages of cross-border online commerce open greater opportunities and revenue prospects for businesses: the aforementioned licenses are not required, payments are tied to the U.S. dollar, whereas Internet-based commerce offers online marketing advantages. At the same time, e-commerce has become a vital pathway for entering and maintaining positions in the global consumer goods market for such a powerful consumer goods produces as China. Listing their goods on eBay, Alibaba and Amazon, China’s retailers establish commercial connections with foreign customers through the efficient and direct B2C model. Remarkably, as for the data collected recently, 62 percent of Chinese retailers prefer to use Amazon.
Currently, Amazon is the leading online retailer of the globe in terms of revenues and one of the most successful and affluent Web-based businesses (Breeding 19). Being established as an online book store, it has undergone the dramatic technological innovation and expansion (Orkiszewski 204) to sell many other consumer goods including electronics, computers, DVDs, apparel, home appliances, sport accessories, beauty products and many more. Although Amazon is based in America, it has its fulfillment centres, warehouses and websites in many countries including Germany, Japan and China. Over time, the platform has developed a reliable, extensive and sophisticated technology infrastructure incorporating large logistics network, multiple Web services, payment security system and many other elements supporting its operation.
Both organizations and individuals are allowed to use Amazon’s infrastructure for selling their products to American and international customers, while the company directs its efforts on partnerships and affiliations rather than just on direct sales (Breeding 19). The company has a bright history of success in the field of e-commerce and offers multiple advantages attracting Chinese retailers and motivating them to use the platform as the primary means for international sales. Since 2007 when Amazon concluded a partnership with Chinese retailers, the latter have been able to access a number of ‘new’ foreign markets for their products. As Amazon possesses the significant authority in the Western countries, collaboration with this company increases the presence of Chinese retail products in these markets and expands China businesses’ outreach.
Consumer mentality
American consumerism has been the model of the modern consumer culture, with the country’s population – having milder class distinctions than in many other countries – perceiving spending money as an inseparable aspect of American lifestyle and culture. Material goods have been purchased on the overwhelming scale, and the demand for more consumer goods at better prices have been attracting Chinese retailers and creating the Western world orientation in their e-commerce market development. The reason is rather simple: Amazon is a U.S.-based company whose initial function was serving U.S. customers and whose current stage of expansion allows foreign product distributors to engage with the local customers. Thereby, the goods offered by Chinese e-tailers are often perceived as more cost-efficient, being priced lower and having the same quality; this tendency, in particular, is aligned with the general economic trends existing in the global market and in trade relations between the bustling developing economy of China and its export outlets in the Western world.
Importantly, American consumer mentality accepts and encourages online shopping as the consumer experience, whereas Asian mentality, as stressed by Yu (34), places more value on face-to-face or brick-n-mortar transactions. Even despite the recent dramatic surge of Chinese e-commerce market, this trait remains inherent in Chinese mentality, while American consumers make purchases much easier and typically do not need to build a commitment with the seller before they make a purchase.
Another important factor contributing to Amazon’s attractiveness for Chinese online retail businesses derives from the company’s American origins and perceived reliability. The concept of patriotic consumerism received much attention during the turmoil of 9/11 and has been cultivated ever since, denoting the aspect of American consumer psychology which makes the nation’s consumers extremely fond of their native products and services as reliable and superior. Even travelling abroad, Americans prefer staying in American hotel networks, eating in American franchise restaurants and using U.S.-based services. Apple as a peculiar means of ‘American identity’ expression has been extremely popular among the population of the United States even though its products are assembled elsewhere in developing economies. The key psychological appeal to consumers is made by American brands and their association with reliability and convenience.
In this respect, Amazon as the U.S.-based and administered e-commerce platform appeals to consumers with its inherent authority of a ‘native’ and reliable service. An evidence of China’s orientation at the U.S. consumer could be found in the statistical data provided by Business Insider: 91 percent of Chinese e-tailers selling their goods via Amazon are listed on the American website of the company (BI Intelligence). Thereby, Chinese businesses targeting American customers prefer the e-commerce platform which has the highest level of popularity among them.
Logistics
The preference for Amazon expressed by Chinese e-commerce businesses is also underpinned by a rather pragmatic argument. Unlike other e-commerce platforms, Amazon.inc possesses an extensive logistical network across the globe, enabling prompt and safe delivery of the purchased goods. In Chinese context, transportation infrastructure efficiency issues pose a major barrier in operating due to the B2C pattern (Yu 35): with the large international delivery firms have been available in China only to the limited extent until the recent years, transportation of the goods which is to be arranged by the seller upon the purchase was enabled either by the China Post Service (which is slow and unreliable) or by available offices of international logistical firms at a high price.
Amazon’s great advantage in this respect lies in the developed and well-organized logistics network which incorporates air and sea transportation as well as trucking. The company has become a reliable service provider in logistics, although its step into the domain of logistics was explained by the need to assist local transportation companies in fulfilling their duties and in order to meet the expectations of online customers whose number has increased greatly over the recent years. For China, where Amazon China operates as a local subsidiary, logistical operations are simplified by a centralized system of transportation (unlike those of eBay or Alibaba). In addition, the recent advance in Amazon’s logistics is tied to the registration of Amazon China as the freight forwarder from China to the U.S. (Federal Maritime Commission); the Beijing Century Joyo Courier Service Co., ltd. has obtained a license for transportation from the Federal Maritime Commission which authorizes Amazon China to carry is own e-tailers’ freights to the U.S. and even fulfill delivery orders from the third party businesses by taking their goods to the U.S. via Amazon cargo ships. This means that Amazon has granted an exclusive transportation rights to it Chinese subsidiary, creating a well-managed system of products delivery from Chinese online retailers to the U.S. customers. While most inconveniences arising in the course of B2C transactions between Chinese retailers and foreign customers are related to the speed or quality of delivery (for instance, on Alibaba websites or eBay China), Amazon’s logistics attracts China’s online retailers due to enhanced delivery conditions.
Site policies
Overall transportation convenience offered to Chinese e-tailers by Amazon is complemented by the favorable site policies and rules. Amazon’s business model incorporates multiple parts and combines direct sales with service provision for the third-party retailers such as Chinese online merchants. The policy outlined in the site’s terms of use includes a per sale commission retained by Amazon: instead of imposing fees for listing of the partners’ products, Amazon collects fees only after a successful transaction. Unlike Alibaba, Amazon does not promote the model of paid ranking, i.e. the model where the seller pays to rank the listing higher in the website’s search engine. Instead, the company offers fair conditions of referral and closing fees for each item sold via the website, as it is stated in the Fees and Pricing policies section of the website (Fees and Pricing). In addition, the statistical data provided by Business Insider indicates Chinese merchants’ preference for Amazon as a result of fair and simple rules (BI Intelligence), which confirms the argument of per sale fees in return for all commercial services provided by Amazon Marketplace. In this manner, Amazon Marketplace enables Chinese e-tailers targeting U.S. customers to access the vast customer base accumulated by Amazon or even enjoy its logistics infrastructure for delivery (the service is referred to as Fulfilled by Amazon) in return for reasonable fees.
Payment processing security and customer support
Amazon’s advantages cover the aspect of data and payment security: the company has created a safe and convenient payment system for its customers. With the customers’ need for security in mind, Amazon enabled bank account data protection, while payments are made via internal transactions with the external money transfers, which means that the customer will always have an official bank statement once s/he pays for purchased goods. In addition to such security solutions for customers, Amazon Payments is a system which provides direct funds transfer to the retailers. That is, Amazon Payments system transfers the customer’s money directly to the seller’s bank with the subsequent e-mail notification (Balasubramanian 159). Overall, Amazon Payment services are considered the most reliable in ensuring security, privacy and integrity of payment information both for customers and merchants, and retailers from overseas such as Chinese e-tail businesses benefit both in attracting customers (who feel safe in making international payments to China) and in ensuring stable and convenient money inflow to their bank accounts.
Targeting consumers overseas and especially the U.S. consumers, Chinese online retailers who enter Amazon’s marketplace are bound to comply with the U.S. laws of customer protection and service. This means that, in addition to local customer service centers in the countries of operation, there is the main client support department located and managed in the U.S. and in accordance with American laws of customer support, security and refunds. Obviously, American – and even European – customers are likely to purchase from websites working in accordance with their native customer support standards. Moreover, one of the key values held by Amazon is building a global customer-centered e-commerce platform which would provide the best customer support possible (Piacentini 29). Being aware of Amazon’s working philosophy, customers are likely to trust the company and Chinese retailers listing their products on the site by association.
Counterarguments
Although the statistical data concerning the use of Amazon and other online retail platforms cannot be overlooked in counterargumentation, one could offer a number of objections concerning Amazon’s superiority in the international e-commerce for Chinese retailers. Particularly, Alibaba is the closest rival for Amazon, exceeding the latter in terms of sales and active accounts – around 423 million accounts annually according to 2016’s estimates (Wells). Thereby, one could argue that it is Alibaba conglomerate that holds a leading place in Chinese retailers’ preferences, if judged by the number of sales and active accounts. However, Alibaba is the e-commercial space based on a different business model and operating in a different economic environment.
The mentioned e-tail conglomerate holds the lion’s share of Chinese online retail and yet is less popular overseas, particularly, in the Western world. At the same time, Alibaba operates mainly as a mediator between the seller and the customer and facilitates connection between the two parties of the business operations, possessing neither its own inventories and warehouse system nor logistic assets. Amazon, in turn, offers comprehensive assistance and support in retail even for its third-party partners including Chinese retailers. Alibaba and eBay both operate as e-commerce mediators, while Amazon orchestrates the entire B2C process both in direct sales and in third-party deals. Alibaba as the leading e-commerce conglomerate in China’s market is extremely successful primarily due to its high level of adaptation to the Chinese e-tail market itself. Yet, Amazon was originally created with consideration of the Western type of consumerism. The company’s key advantage for Chinese retailers targeting customers overseas lies in the company’s better knowledge of this overseas market and development of policies and services appealing particularly to the Western, and U.S. customers.
Similarly, one could object to the argument about Amazon’s payment system convenience as an important reason for preferring the company as a main e-tail outlet. For instance, eBay uses PayPal system as the means of payment transactions, whereas Alibaba runs Alipay, which is recognized as the most popular third-party payment method in China. However, it is needless to say that the payment system run by Amazon possesses greater authority in the international consumer e-market – particularly among American and other Western consumers.
Conclusion
Recent dramatic expansion of global e-commerce produced the profound impact of strategies and preferences of Chinese retailers who tend to choose the most favorable mean to strengthen their presence in the international online retail rather than just in the local Chinese market. Thereby, their preference for authoritative and popular e-commerce platforms derives from the need to increase their sales and customer outreach. As it has been illustrated, Amazon.inc turns out to be the most efficient platform for selling Chinese retail goods overseas, and such popularity among Chinese online retailers is underpinned by a number of reasons related to both parties of the B2C process. As it can be observed from the arguments above, Amazon has a significant advantage in terms of cross-border online retail die to its origins and inherent orientation. While other rival platforms such as Alibaba are originally designed with consideration of the Chinese consumer market as a primary field of operation, Amazon adjusts its business standards and working philosophy to the demands and needs of the Western consumers and aligns its payment and customer support systems with American legislative standards. Moreover, the organizational aspect should not be underestimated as it ensures maximum convenience for both parties of the cross-border e-tail deals. Foreign customers receive payment security assurance, prompt customer support aligned with the U.S. policies, and better quality of transportation. Chinese online sellers, in turn, gain an opportunity to discover new markets, can use Amazon’s logistic infrastructure for their business operations, and receive safe and direct payment transfers directly to their bank accounts. Finally, the Westernized consumer mentality served by Amazon turns out to underlie the platform’s superiority over its rival Alibaba, which is China-oriented, largely remaining unknown by the Western customers in the present conditions. The described set of arguments proves invalidity of the possible objections and shows that the preference proved by the statistical data is far from accidental: whether fully aware of all decision-making factors or nor, Chinese online retailers tend to choose the best possible option both for their commercial success and for the potential customers’ commitment and convenience.
Works Cited
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