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Exclusive: CBD Oil Sold on China’s E-Commerce Platforms Raises Regulation Concerns

Products containing cannabidiol oil, an essential part of marijuana, can be found on China’s three major e-commerce marketplaces, even though consumption of marijuana is illegal in the country.

Search results for cannabidiol oil, commonly known as CBD oil, on Alibaba Group’s Taobao , JD.com and Pinduoduo show multiple sellers offering “U.S.-imported” or “authentic imported” cannabidiol oil, claiming their products can help with sleeping, depression, inflammation and even bone growth and cancer-fighting.

To lure buyers, some sellers use marketing pitches such as “try the CBD oil Europeans and Americans are all using.”

Unlike the U.S., where the recreational use of cannabis is legal in many states, China strictly bans the use and sale of cannabis, even calling the legalization of marijuana in Canada and parts of the U.S. a “new threat to China,” sparking a spike in the amount of drugs smuggled into the country.

In the U.S., legalized cannabis oil sold on the market can contain no more than 0.3% THC, the psychoactive ingredient that gets people high. But some of the products listed on the Taobao, JD.com and Pinduoduo platforms do not provide information on THC level, making it difficult to identify whether they belong to the prohibited drug category.

CBD oil containing less than 0.3% THC it is not a controlled drug as it is not included in the list of narcotic drugs in China, but the importation of such products requires permits for psychotropic substances.

CBD oil products sold on JD.com. Photo: Caixin

Some sellers on the e-commerce platforms know they are operating in a gray area and try to avoid problems by posting disclaimers. One seller on JD.com says in the product description that the cannabis oil is brought into China through overseas channels. Once buyers confirm their orders, no claims can be made regarding labels, origin or inspection reports, or on the ground that foreign products do not comply with China’s laws and regulations, the seller says.

If a seller knowingly smuggles in narcotic drugs or psychotropic substances controlled by the state, he or she shall be suspected of the crime of smuggling drugs, said Liu Zhixin, a lawyer specializes in food.

After initial investigation, JD.com said it found that some sellers of CBD oil wrongly list their products under the category of food. The company said it will remove the unlicensed goods from its platform, deduct points from the sellers and continue to check other violators.

Pinduoduo said it will remove CBD oil from its platform after obtaining more information.

In response to a Caixin inquiry, Alibaba said Taobao has been strictly following laws and regulations on CBD oil containing more than 0.3% THC. It won’t tolerate any violation and will report any cases to law enforcement agencies, the company said.

Now CBD oil is still sold on Taobao and JD.com, but searching related products on Pinduoduo shows no result.

There is still a gap in the regulation of CBD in China, said Li Jianhua, a professor at Yunnan Institute for Drug Abuse. He suggested that relevant departments should strengthen supervision as soon as possible.

Exclusive: CBD Oil Sold on China’s E-Commerce Platforms Raises Regulation Concerns – Online availability of ‘U.S.-imported’ derivative of prohibited cannabis raises regulatory concerns for Alibaba, JD.com, Pinduoduo

How to (legally) sell CBD in China?

Controversial in Western countries, cannabis is a hit in the countries where it has been legalized.

In China, the CBD market, or cannabidiol, is exploding with the recent loosening of Chinese laws regarding the cultivation of hemp and a local production already equivalent to that of France.

China is …

  • 1.4 billion inhabitants, and therefore potential customers
  • A rising middle class
  • Accompanying a 5% increase in the minimum wage
  • And a Chinese purchasing power increase of more than 6% in 2018

Why sell CBD in China?

  • A growing interest in CBD with over 164,000 questions about CBD on just 1 social network
  • A market that is expected to reach $ 23.7 billion by 2023
  • Asia is the largest region after North America in CBD market share
  • More than 46,000 comments for a hemp oil reflecting a growing interest in CBD

CBD market in the world

  • An industry with more than + 30% per year growth
  • Consumers with disposable income (77% of those interested between 30 and 49 years old)
  • A variety of products: drink, oil, tea, cosmetics,…
  • A sensitive subject that attracts the attention of Internet users

This product is currently very popular in the US and Europe but is only taking off in China. The opportunity to become the first CBD brand in China is real since there are currently no major players on the Chinese market.

In addition, Chinese regulations and laws are uncompromising on the sale of CBD: for example, CBD oil should not exceed 0.3% THC. In addition, it is imperative to hold an import and export permit to sell CBD in China since it is a psychotropic substance.

Forgetting or not knowing about the existence of such regulations can be fatal to your business and even cause you to face many problems with local authorities.

(Legally) sell your CBD in China

China is a unique market where selling your products may require the use of a completely different strategy from the ones in Western countries.

Differences in culture, language, lifestyle and many other things require you to adapt to this market to sell your products, and therefore also to adapt your strategy.

No, China is not asking you to change the DNA of your brand and products.

However, you need to be visible AND credible to your potential Chinese customers.

Your branding is vital for selling in China, but not only. Visibility and credibility make your products “pass or break” China.

But don’t panic, we’re here to help you.

Rule number one : Be visible

Unlike the West, Chinese shop online on their phones. With more than half of sales made through e-commerce, the Chinese market makes online presence essential and even mandatory for the sale of any product.

But where to be visible?

WeChat

The equivalent of Facebook / Messenger in China. This social network allows you to chat, share text, images, music and much more.

The question of the repute of WeChat does not arise since there are a billion users who visit the platform daily.

WeChat can increase your visibility through Moments, groups of friends or official accounts which are perfect tools for spreading information.

Sharing visible content to everyone from your official account, a WeChat brochure to explain the benefits of CBD or a mini-program (that can be a little game or an event invitation for the launch of your products in China) are all powerful tools to get to your Chinese target.

Wechat is therefore an essential platform for the spread of marketing content in China. It can also be used to educate consumers when it comes to relatively new products such as CBD which in addition can come in a variety of forms.

Weibo

Chinese Twitter, perfect for effectively disseminating your content. A popular platform offering a large audience: 500 million monthly active users!

Chinese love fashion, which is trendy and in demand. It influences their mode of consumption: they love the latest novelty that everyone tears off, but they will certainly not be part of the early adopters (or first followers) of a new product, even more so if it’s CBD. This is why using KOLs to promote your products can be doubly beneficial: gaining visibility with a targeted audience, but also gaining their trust and credibility.

Key Opinion Leaders are Chinese influencers. They can introduce and promote your new products to their audience. Weibo users put a big trust in the KOLs they follow. That is why using the suitable KOLs can make your products have a good reputation in the world-of-mouth. And because Chinese people love to share their experience, having a positive reputation will lead you to also have a positive e-reputation on Chinese forums

Rule number 2 : Be credible : Reputation matter in China

Trust is the basis of any business relationship in China. No trust, no exchange. To gain the trust of your potential consumers, you must therefore develop a reputation to be credible in their eyes.

Douyin

The short video app that has boomed last year. Just like on YouTube, opening your channel will allow wide and regular distribution of your content. Douyin is particularly appreciated by young people and remains an adequate platform for the dissemination of short videos that can quickly go viral. You can also use KOLs on Douyin for your marketing campaign.

Videos are very popular in China and are becoming a great marketing tool. For example, KOLs can add a link in their videos so the users can easily and quickly buy any of your products.

Douyin is also known to offer cheap ads to marketers which is good news for you! Reaching the Chinese youth thanks to cheap and visible ads. How could it be better?

PR (Public Relations)

Refine your public relations will increase your credibility. Indeed, if there is no article on your company or products, it is the quality or even the veracity of your products which can be questioned.

It is important to remember that if your PR does not exist, then you are not worth it.

Note that it goes the same for any business, artist or, more generally, professional that comes into the Chinese market.

Little Red Book

Similar in some ways to Pinterest, Little Red Book is both a shopping platform and a forum. Indeed, this platform offers reviews and advice about products from its users but also the possibility of saving certain posts for the creation of tables as on Pinterest.

This social network is therefore based essentially on word-of-mouth and mutual trust of this online community, which can play a lot in the trust relationship with consumers.

It mainly targets young modern women and is rising in the Chinese market game. Thanks to its forum/store hybrid features, this platform is very efficient to convert a user into a buyer (especially for makeup/beauty products and skincare products).

And just as in WeChat, Weibo or Douyin, Little Red Book’s livestream use is growing a lot and increases brands’ sales significantly. Brands or KOLs can program a livestream, invite users to attend it, remind them the livestream is coming, produce the event and sell even more!

Rule number 3: choose right partner

To sum up, as in some western countries, CBD remains a sensitive subject also in China. Indeed, if your choice is not made on the right terms to promote it (and you even use prohibited words!), your account can be blocked, or even deleted.

GMA is a team of specialists with a wealth of experience in marketing in sensitive industries. Don’t let non-professional people destroy your image in China, GMA will never let you make that kind of mistakes.

As you can see, launching your CBD business in China is not easy and can involve many obstacles if your knowledge of the Chinese market is limited. This is why we will be delighted to accompany you on this adventure.

How to (legally) sell CBD in China? Controversial in Western countries, cannabis is a hit in the countries where it has been legalized. In China, the CBD market, or cannabidiol, is exploding