It’s no secret that the Chinese market is one of the most lucrative in the world. There is no better place to invest for companies looking to grow and expand. But how to sell in China? Here are nine tips included in the following part.
China’s e-commerce market is booming, and demand for foreign imported products will continue to rise as China’s middle class grows. It can be challenging to break into this market, particularly when trying to sell your goods or services.
Let’s take a look at some of the best practices.
Chinese Business Culture
An important factor isolating the Chinese market is the changing consumer persona which continues to elude western marketing. The population of China underwent societal changes as a result of the country’s rapid economic growth, and the country’s financial prosperity accelerated the shift from production to consumption among particular demographics.
For example, Jeffrey Towson, author of the best-selling ‘The One Hour China Book’, puts forward the example of Chinese mothers, whom he dubs “super consumers”, as market influencers who control spending within the family unit. Their unique concerns and perceptions of paramount importance to consider, even when selling products aimed at different audiences.
While acknowledging Chinese business culture can be advantageous, many western businesses that entered China have failed because of a lack of adaptability and a superficial understanding of Chinese consumers. eBay.
Inevitably, the geographic advantages that Western brands enjoy in play are due to these. In China, where there are frequent scandals involving product safety, some goods made in the west, such as food, health, and beauty products, have a better reputation. As self-expression is frequently achieved in China through the display of wealth and distinctive taste, international fashion brands also experience success there.
These foreign companies had to modify their business models to take into account cultural differences in order for them to be successful in China.
Related Reading: Chinese Business Etiquette
How to Sell in China: 9 E-commerce Tips
Here are some tips you can can use when selling in China.
1. Understand Chinese Consumer Behavior
Chinese online shoppers don’t behave like their counterparts in the United States and Europe.
For starters, Western search engines don’t have a sizable presence in the PRC, in large part due to censorship laws.
The Chinese, on the other hand, have a number of in-house search engines, each with a specific market niche.
Additionally, the vast majority of consumers access these on their mobile devices, with 99.7% of Chinese internet users doing so through a smartphone.
However, those are by no means the only variations in consumer behavior.
Chinese customers also favor single-entry-point retail over shopping at a single company’s platform because it allows them to compare brands.
As an illustration, they’re more likely to purchase Nikes from Tmall (an Amazon-like retailer) than from the Nike website.
Chinese consumers are also heavily swayed by influencers and social media.
Celebrities using their apps as a platform for product launches are actively encouraged by Chinese companies. Shoppers can easily locate and purchase the exact shoes their favorite celebrity was wearing thanks to direct links from social media posts to online retailers.
Additionally, the enormous economic growth the nation has experienced has resulted in a higher priority being placed on quality, convenience, and customer service when making decisions.
2. Select the Right Products
Modern Chinese consumers have shifted into a more individual mindset, in contrast to earlier generations of Chinese consumers who may have valued collectivization and sought benefits for society.
In a whitepaper entitled “Chinese Consumer Insights 2022,” Accenture, a professional services firm based in Ireland, discovered that between 2013 and 2021, consumers’ willingness to purchase items that highlight their identity increased by 11%.
Given that there are currently more than 700 million middle-class people living in the country, this should not be shocking.
Selling the kinds of products they want is essential if you want your ecommerce marketing in the PRC to be successful.
The Chinese digital market continues to see strong sales of products for leisure activities, technology, beauty products, and clothing.
Although there is a large market for foreign goods, they must be viewed as high-end alternatives to domestic goods.
According to the South China Morning Post, an English-language newspaper owned by Alibaba, China claimed 32% of the global luxury goods market in 2020.
This is a fantastic chance for foreign businesses seeking to enter the Chinese market.
Read More: How to Source Products from Overseas?
3. Set Up Local Hosting for Your Website
Chinese search engines tend to prioritize websites hosted on servers within the country. You can’t just launch a Mandarin version of your current online store.
You must host your website in China if you want to appear in Chinese users’ searches. You can’t just enter your credit card information by pressing a few buttons, though.
Before any website can be hosted in the PRC, you must apply for an Internet Content Provider (ICP) registration with the Chinese Ministry of Industry and Information Technology (MIIT).
Depending on the sector you operate in (e.g., education, healthcare, financial services), you may have to receive permission from a relevant government agency before applying.
If you intend to process data and transactions, you must obtain an Electronic Data Interchange (EDI) license and an ICP commercial license.
However, if you plan on having a physical presence in China, you may not need an ICP.
Just be aware if you do need one, the entire process may take several months.
4. Provide Exceptional Customer Service
Chinese business is built upon a concept known as guanxi. Roughly translated, this means personal relationships with an implied level of trust and mutual obligation.
Chinese consumers have ingrained expectations of hierarchy, negotiation, and customer service because this has historically been such a crucial aspect of how business is conducted.
While the first two are not so important to ecommerce companies, the third is crucial.
Chinese consumers are accustomed to receiving top-notch customer service because of the intense competition in the digital marketplace.
They expect quick delivery and returns, crystal-clear Mandarin communications, and simple mobile payment options, and you should deliver on these demands.
Additionally, they don’t hesitate to voice their opinions on social media platforms, which means negative customer experiences can have a big impact.
5. Use Trusted Payment Processors
Payment in China operates differently than it does in your country.
The model differs according to the type of transaction, for starters. Although it is advised that you work with an online payment platform like Alipay or Tenpay, you could attempt to navigate these complicated requirements on your own.
Alibaba’s Alipay is the primary payment method for major Chinese ecommerce platforms, TMall and Taobao. It offers escrow capabilities to reduce risk when receiving payments.
To use it, you’ll need a Chinese phone number, a Chinese bank account, and a Chinese business license.
Tenpay from Tencent is easier to set up and offers escrow as well.
You must provide a foreign e-commerce website and demonstrate to Tencent that you want to conduct business in China in order to be granted your license.
This calls for a WeChat account with China visibility, a cross-border payment account, and a WeChat e-commerce platform.
You can apply for your WeChat account and foreign business license directly through Tencent, though this is not a common procedure.
Reduce your payment risk by obtaining product inspection certificates attesting that your goods meet specified quality standards.
6. Reach More Shoppers by Using the Top Marketplaces
Chinese online users favor marketplaces over brand websites, as was mentioned in the first piece of advice.
While you can sell through your website, you’ll reach a much wider audience if you’re a part of one of China’s major online marketplaces, such as Taobao, Tmall, or JD.
In 2019, Taobao surpassed $490 billion in gross merchandise volume. Tmall was second at $463.5 billion, and Jingding claimed third at $301 billion.
As you can see, these websites account for an incredible amount of sales. Alibaba owns both Taobao and Tmall. Jingding, or JD, is supported by Tencent.
There are some exceptions in certain product categories, but generally speaking, selling on these platforms requires that your business be registered in mainland China.
These platforms cannot be switched between. Customers trust Tmall to find genuine branded items from abroad because it is generally seen as the more upscale version of Taobao.
Frozen foods and electronic books are just a few of the products that JD sells.
7. Choose the Right Logistics Solution
Chinese customers will become dissatisfied with late deliveries, damaged goods, and challenging return policies. This means that your logistics need to be rock solid.
Unfortunately, finding high-quality providers can be difficult in mainland China.
You now have three options: build your own, collaborate with or buy an existing company, or locate a reputable third-party supplier.
There is only one option left since the first two are too time-consuming and expensive for most e-commerce businesses.
Logistics providers in the PRC generally fall into two categories:
- Companies compete based on their large network.
- Companies that compete based on superior service.
Choosing which is right for you will depend on what you’re selling.
For instance, size matters more than service if you are selling pet rocks all over China.
Your main concern should be getting your product into the hands of the customer, wherever they may be. It is unlikely to be damaged.
On the other hand, if you’re selling crystal birdhouses in the Shanghai metropolitan area, a smaller logistics company that can provide a higher level of care and service is probably preferable.
8. Take Advantage of Shopping Festivals
China’s major shopping holidays are comparable to those observed by online retailers in the West, which include Cyber Monday, the weeks leading up to Christmas, Green Monday, and Amazon Prime Day.
To maximize your sales, you should be aware of these and use them to your advantage. These include:
- Pre-New Year’s (The months leading up to the Nian Huo Festival or Chinese New Year are busy shopping seasons for e-commerce retailers, just like the days leading up to Christmas in the West see record-breaking sales. (January-February)
- International Women’s Day (March 8) – Called the “Queen Festival” by Alibaba and the “Butterfly Festival” by JD, men tend to do a lot of online shopping on this day and the day before (Girls’ Day, March 7).
- Mother’s Day (Second Sunday in May) — Given the importance of filial piety in Chinese culture, it is not surprising that Mother’s Day is celebrated with great fanfare and that gift-giving rises as a result.
- Love Day (May 20) – An unofficial Valentine’s Day, Love Day falls on this day because “five two zero” is a homonym for “I love you” in Valentine’s Day is also observed on its customary date in Mandarin.
- Midyear Shopping Festival (mid-June) – JD started this summer’s event, which other online retailers have since adopted as China’s equivalent of Prime Day.
- Golden Week (starting October 1) – This week-long holiday, which starts with China’s National Day, sees a huge increase in spending due to customs surrounding travel, family reunions, and gift-giving.
- Singles Day (November 11) – First observed in 1993, 11/11 is now a significant online shopping day on which people rejoice in being single. On December 12 (12/12), the day after Singles Sequel, many online retailers hold inventory clearance sales.
9. Promote on Chinese Social Networks
Similar to the rest of the world, Chinese people are avid users of social media.
While none of these directly relate to better-known platforms like Facebook or Instagram, many of them have comparable features, such as paid advertising.
Influencers can have a significant impact on consumer decisions because they can click on an item in a Chinese social media post and be taken directly to that item in an online store, which is a good reason to enter this market.
Furthermore, the Chinese spend a significant portion of their daily lives on these websites, just like Westerners, so strategically placed products will get a lot of exposure.
Here are some of the most popular social media sites in the PRC:
- WeChat – Sometimes referred to as the Chinese Facebook, WeChat is more accurately a combination of Facebook, WhatsApp, Google News, and a dating app combined. Globally, there are 1.2 billion users who log on each month. Tencent’s all-encompassing messaging app also offers games, shopping, and financial services.
- Sina Weibo – 252 million people use this micro-blogging app every month. Given that it has character restrictions and permits the posting of videos, images, and gifs, Twitter is the comparison that most closely resembles it.
- Tencent Video – Tencent Video, the fourth-largest streaming service globally, has 1.2 billion active monthly users. Despite fierce competition, Tencent Video dominates the Chinese online video market, outperforming its rivals IQiYi and Youku.
- Xiao Hung Shu – The users of this platform, which combines social media and e-commerce, can post content, participate in discussions, and review products. The majority of content focuses on images of products and shopping adventures. Every month, there are 100 million users who are active.
- Douban – With 200 million monthly active users, Douban is a social networking platform dedicated to lifestyle content. The platform has built-in features that let users download ebooks, play music, and purchase movie and concert tickets.
Opportunities & Challenges for Foreign Companies When Selling in China
- Huge demand for online shopping & democratization of online payment platforms has made it easier than ever for international companies to enter the China market online, but the competition to reach Chinese customers is also tougher
- The majority of products on Tmall Global are typically more expensive as a result of selling imported goods, but Tmall customers are accustomed to and willing to pay these higher prices.
- Logistics is crucial because Chinese consumers value prompt delivery. For logistics distribution, Tmall Global requires the merchant to complete the delivery within 120 hours and for the product to arrive within 14 working days. The ability to track logistics information is required throughout the entire process.
Final Words on How to Sell China through E-commerce
You can see that there is a good deal of preparation needed to enter the Chinese digital market. However, the effort is worthwhile given how important online shopping is to the Chinese economy.
Be aware that you’ll probably have to overcome cultural, legal, and technological barriers. It will also take a lot longer to set everything up than you’re used to.
Having said that, if you have the time, patience, and language skills to work your way through the convoluted bureaucracy and come up with a strategy that may seem foreign at first, you’ll be gaining access to one of the largest online markets in the world.
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