How to sell online into China?
The growth in the use of the Internet has been formidable in China over the last ten years. As in the rest of the world, this continued at a pace during the COVID-19 pandemic (in China, January 2020 to April 2023). It is estimated that 1.1 billion people in China will be buying over the internet by the end of 2023. Most Chinese people access the internet using mobiles or tablets.
Many people look at the Chinese online consumer market, see the higher prices, and believe there are more significant margins to be made in China. However, the prices include all charges: taxes, shipping, stocking, e-commerce fees, etc. When you add these costs to a product's final price, you can see why overseas products have a higher price.
This does mean that creating a market in China for your products or services is not worth considering. The approach is critical to managing your costs and creating success.
Firstly, determine what interest/market already exists for your products or services in China.
This research can be done from your desk. There are two things you must put in place from the offset.
- Trademark registration – once you start looking into the potential Chinese market, you will make people aware of your products and services. If your trademark is not protected, you can lose control of your trademark before you get started. Trademark registration first.
- Your website must be seen in China; most websites cannot. There is no point talking to the largest online market in the world if your website is not visible. Chinese people are no different from the rest of the world; your website is the first place a potential customer will evaluate your company and get a better understanding of your products and services.
Do Your Research
Start your research by looking at your current sales;
- What is your potential domestic market in China?
- If Chinese people in your country already purchase similar products/services, it is a good indicator of a potential market in mainland China.
- If you see larger sales volumes going to a few Chinese customers, they may be shipping products into the Chinese market already. Chinese people living overseas often better understand the shipping processes and can ship at lower costs.
- If your products/services become known in China, you will often find Chinese visitors and students purchasing your product before returning to China.
- What is your international Chinese market, excluding mainland China?
- The Chinese market is far more significant than just China. The Chinese market is worldwide
- If your products/services are selling well in another country, check the profile of your overseas customers.
- If a product/service is selling well on the internet, check where the source of the business is. Chinese sales often show as a USA business because Chinese people use a VPN to see overseas websites.
- What is your current interest in China?
- This should be clear from your website statistics. You will lose valuable data if your website cannot be seen in China and consumers' cookies are blocked. This is why the starting point to enter the Chinese market is Website Visibility in China along with Trademark Registration.
Use the marketing data from governments and commercial trading organisations to determine the market size for your sector.
By looking at the search engines within China and the e-commerce sites for similar products, you will know that there is a market for your products and services.
Networking
Networking at local trade organisations specialising in the Chinese market (such as CBBC in London) is an excellent way to learn how the Chinese online market differs from the Western market.
Through these trading organisations, you often get a chance to meet Chinese trade delegations and learn directly about the Chinese market.
Before you begin networking, ensure you start your trademark registration process and that your website is visible in China. This means you can be confident to speak about your brand without risking losing your trademark.
Visit China
If you decide to enter the Chinese market, visiting a trade show in China is an excellent place to start. You will see the local markets, how China conducts business and ascertain the interest in your products and services.
If it is your first time visiting China, we recommend travelling with a trade delegation. They will ensure you attend the right trade fairs for your products and services. Some trade delegations offer the opportunity to exhibit at a trade show. Make sure the trade show recommended has a good attendance record. There are many trade shows in China in many cities, and not all are well attended.
The aim is to find local people with a proven record in your market sector and with a large social media following. These people will give you the best chance to penetrate the consumer market.
There are some notable success stories of brands entering China. No Tangle Hair Brush became an overnight success after a social media endorsement from a leading Chinese Model had purchased the product in London. The sales on their UK website went to several thousand a day from China overnight. From there, they were approached by a Chinese agent, resulting in tens of thousands of weekly sales.
Many agents claim to be able to sell your product in China. However, the costs for marketing are considerably higher in China than in most other countries. Regardless of what your prospective agent says, you realistically need a starting marketing budget of £50K. A better approach for an SME is to build relationships with Chinese distributors and wholesalers who may be a good fit.
China Online is dedicated to helping you begin your journey by protecting your trademark and ensuring your business can be seen in China.
Here are a few pointers for your consideration;
- B2B pricing for the Chinese market – when quoting prices for customers in China, always quote FOB (freight on board). Your importer will deal with import taxes, customs clearance, etc. The price you quote only gets the goods to the airport in China.
- B2C pricing for the Chinese market -This is not so simple. You must determine the costs of getting a product to the end consumer. These costs will include;
- Shipping to China
- Import duties/customs clearance
- Local shipping (often including main shipping costs) from the airport to the customer.
- Sampling etiquette – sampling is a great way to show your potential customers your products. However, samples should be sold at wholesale or reduced cost – they should not be free.
- Return goods – A method of returns will need to be established.
- Large Chinese e-commerce sites (TMall) – The large Chinese e-commerce sites only want to establish international brands on their platform. The costs range from $50k to $150k to launch a brand on TMall. For these reasons, SME products are not often found on TMall
- QR Codes – Ensure you use QR on your website, business card, brochures, and marketing materials. Typing a domain in a foreign language often leads to misunderstandings and mistakes; a QR code is the perfect way to avoid this.
- Western social media - remember this is blocked in China. Like in Western countries, video is an important marketing tool and essential to support brand awareness and sales. China Online can ensure your videos can be viewed within China, maximising your marketing effort.
- Keep your website content up to date - spending time ensuring your website is up to date and refreshing with new content is essential for any business. This is just the same in the Chinese online world. If you are using our Website Visibility in China service, you update your content; our software will automatically update your site on our platform in China; you don’t have to do a thing.
- Your domain name will not be seen in China – often, you will not find your domain in China unless you try a few times. This is not an issue with your website but how the internet in China looks up overseas domain names. This problem is overcome by our “Website Visibility in China” service. We register a new domain name specifically for your business. The purchase of this Chinese domain is included in our fee and belongs to you.
- Chinese identity – make sure you know any second meanings of your company or product names in Mandarin or Cantonese. One of the best examples is Google, which means “rice farmer” in Chinese. To correct this, Google made a minimal change to their spelling in Chinese. Our team in China can help you get this right.
- Chinese domain names – The Chinese rules for use .CN changed in 2022. Non-Chinese businesses are no longer allowed to use the .CN in their domain name. Speak to us about our ‘Website Visibility in China’ service. We advise on a suitable domain acceptable to the Chinese authorities.
- Doman name protection – the Chinese internet authorities protect Chinese domain trademarks. When a website is published online, the t authorities check the Chinese trademark database to see if a domain name is safeguarded (class 35). If it is and you are not the owner, the website has to be taken down. Another good reason to have your trademark protected in China.
- WeChat - WeChat is the most popular mobile business platform in China. If you are visiting China, we recommend downloading the WeChat app and setting up an account. Note: It cannot be changed once you have chosen your WeChat name. Make sure you get it right the first time.
- Using your mobile in China – Make sure your mobile has an international plan, as roaming prices are exceptionally high in China.
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