In less than a decade, China has surfaced as the world's leader in e-commerce. It is undeniably a lucrative market for businesses to expand to however it can be notoriously difficult to break into for market entrants. In this blog article, we will share four valuable tips which will help your brand enter the Chinese e-commerce market.
Consider hiring a consultant
The challenge of China market entry has become an increasingly important one for Western companies. It is true that China represents an extensive market of great potential, understanding exactly where the opportunities lie and how to access them can be extremely challenging. Therefore, it is essential that foreign brands who are looking to enter the Chinese e-commerce market get a consultant to initially study the market and to help brands understand the whole picture. The consultant will be able to give a first overview of the potential market, an allocation of your investment and market research on your competitors. It is crucial for brands to study the market first before looking to enter. In order to be a part of the Chinese e-commerce market, Western brands have to understand in detail how Chinese consumers buy products and how they can fit into this whole process. A sufficient amount of local understanding is required when first selling to China through e-commerce platforms.
Choose the right channel
The next step is to draw the correct strategy and pick the right channel as your base for your brand to sell products. E-commerce in China is so prevalent and is closely linked to social media sites such as WeChat and Weibo unlike in the West where Amazon and Facebook are mostly disconnected. When selling to China through e-commerce, third-party channels are needed as platforms through which to sell your products or brand. There are various e-commerce channels that exist in China, some of the biggest include Tmall and JD with growing ones such as Xiaohongshu but they might not all suit your brand. What you need to think about is your brand story and the image you want to portray to the Chinese consumers, there needs to be something that differentiates you from others regardless of which channel you choose. As the e-commerce industry is steadily growing day by day, we can see that the cost of marketing is gradually rising. We feel it is better if brands establish themselves on a growing channel as there is less competition in comparison to using an established platform such as Wechat. This is because more effort and money is required to manage shops on these platforms because there might be more restrictions regarding the rules and regulations. Additionally, there is less competition on growing channels such as Xiaohongshu which can allow for new brands to build up a significant online presence and create a position for themselves in the market.
Consider using agencies and KOL
In addition to choosing the right channel, it is important to think about whether or not you will need the service of an agency. To be able to increase the visibility of your brand to Chinese consumers, you need to ensure you have the right expertise, experience and local knowledge. Most of the channels in China are functional only in Chinese and therefore setting up a shop can prove to be troublesome. Moreover, understanding of how the Chinese consumers use these channels is crucial. For example, on Xiaohongshu which heavily promotes word of mouth, the aspect of “daily life sharing” needs to be included into the brand image and strategy which can only be done by someone who understands how the locals work in China. One of the most important aspects of e-commerce channels in China are the Key Opinion Leaders (KOL). It was found that 29% of Chinese consumers compared to 13% globally use social media to see what products KOLs are endorsing. Some KOLs on certain channels have an exceedingly large number of followers and level of engagement which proves to be vital in creating the presence of a new brand.
Adjust Along The Way
Lastly, instead of trying to create and execute “the perfect plan”, go with the plan you think is right and trust your instincts. Formulating a perfect plan is a tedious process, start with whatever plan you initially have first and adjust it accordingly along the way because China’s e-commerce industry especially is changing rapidly and new trends and technologies and emerging every day. It is important to choose a flexible strategy to adapt to everyday life and understand the behaviour of the Chinese consumers to best meet their expectations. Before entering the China e-commerce market, it is essential to check out all the different channels and to see which one will suit your brand. Competition in this market is growing, acting fast and entering the market is key. Making an impression, monopolizing your presence on the Chinese e-commerce market is essential.
ABOUT THE AUTHOR
Ms Elaine Wong - Founder, Double V Consulting - Elaine was born in Hong Kong and graduated from The University of Hong Kong. Her company, Double V. China eCommerce Consulting, aims to help international brands enter the Chinese market. Double V. specialises particularly in the e-commerce platform Xiaohongshu (小红书) or also known as Little Red Book or RED.