China is evolving fast, especially during these last few years. Despite the slow-down of the economy, the Chinese level of consumption is constantly evolving. This trend impacts some of the major industries in China. E-commerce is one of these dynamic, still growing industries. Benefiting from the explosion of the internet in China, the E-commerce industry is driving the Chinese economy nowadays and it will be definitely the case in the future.. Chinese consumers purchased $589.61 billion worth of goods online in 2015, a 33.3% increase in comparison with the last year. This is partly due to a more developed delivery infrastructure and increasing congestion in urban areas.
Choose the most effective platform in China
When you are launching your e-commerce business in the Mainland, many things are different and strategies are not easy to adopt. That is why you need to get some more information about the Chinese market. You want to develop you own local presence or work through partners to manage your sales? Creating an e-commerce platform in China is not a small thing.
In China, your presence in the Social Media platforms will enable you to boost your brands awareness. It is necessary for you to pass through the most of famous Chinese e-commerce platforms like Tmall or Taobao. This would enable you to avoid some of administrative processes thanks to their simple trade rules. Besides, it would help you to import your products at low tax rates.
TMall and Taobao are the main players in E-commerce
The Chinese market is very specific and so is e-commerce in China in comparison with other countries. Indeed, there are the key players in China which often block the growth of smaller platforms. Even if new e-commerce platforms are expanding, their sales percentage is not enough to remain over the years with exceptions of JD.com and the online grocery Yihaodian.
The Alibaba Group, holds the largest Chinese e-commerce stake with Taobao and Tmall which both essentially own the e-commerce market in China. They hold 80% of the total e-commerce market in China and receive more over 100,000,000 transactions a day.
Taobao or TMall? What’s the difference?
Taobao is a huge online marketplace on which anyone can sell their products including customers and businesses. However, this platform is more cost-driven. Indeed, if you choose Taobao, you would have to compete with thousands of small local businessmen who propose different prices than yours. It will remain hard to differentiate yourself from the competition.
In contrast to Taobao, Tmall is exclusively devoted to professionals. Moreover, you have to hold a license-holders permit which allows you to sell your products. Besides, you need to have your own local company or work with a third-company partner with a local presence. You have to show your legitimity to sell your products and the rights you have to sell in China.
Tmall is brand-driven. It represents a huge opportunity for foreign e-commerce companies to launch their business in China.
Therefore, TMall is quite an expensive platform to use. If you want to sell on Tmall, you will need to invest a lot of money. Actually, it is crucial to plan a specify strategy and money you will need. That is why you have to know your target first, what is your long term goals and how you are going to promote and advertise the brand to your customers in order to sell your products. Ultimately, you need to be ready to choose the appropriate platform according to your strategy.
Jindong is the challenger in China, they are the second largest platform with a 25% market share and is more associated with Electronic products and Home Appliances.
Working with a partner
Founding your own E-commerce business and making it competitive enough is quite a process and takes some time. It can be very long, especially with the procedures to follow for a Wholly Foreign Owned Enterprise (WFOE). Furthermore, if you want to sell your products on TMall for instance, you would have to collaborate with an intermediary to develop your presence on this E-commerce platform. This partner will assist you in your online sales, and help you to stay focused on your core strategy. Ultimately, this approach gives you more time to develop your strategy and obtain the necessary funds. Nevertheless, by delegating this part of your activity, you risk having less control over your business and your E-commerce sales. So, you have to define your priorities and the main business lines of your strategy.
In order to avoid this intermediary company you have to draw up a contract relating to Chinese rules by arranging a local law officer to assist you. Ensure you receive an English contract which has to be exactly the same as the Chinese contract before sign up it.
Furthermore, you need to know how to put your brand forward and how it is presented on the E-commerce platform (either you choose TMall, Taobao or another online platform), how the logistic problems are managed and how the return-policy is followed for your product sales.
Selling in China
You should not underestimate the Chinese customers when you have to sell your products online. They have different purchasing preferences and skills compared to Western consumers. They pay careful attention to the products and go through all the product descriptions, and in this way they examine the products. They are not used to acting impulsively and even if it seems quite easy to purchase online, they are not buying without a careful online examination on forums, networks and social media. So you really have to adapt to their needs and understand their expectations. Then, you will face a new generation of consumers who are more sensitive to the methods you use to connect with them. So you better not marginalize your ways to engage with them.
TMall, the most effective online platform for foreign companies
TMall attracts more discerning, wealthy Chinese consumers which foreign companies are often targeting. However, because of their cultural habits, they can be difficult to reach. They are very patient, and you have to adapt to this. They are especially patient and careful when it comes to buying imported products. That is why you can see longer delivery dates on TMall delivery shipping orders.
However, while TMall represents a huge opportunity to promote your brand and increase your e-reputation in the Chinese market, this is also an important investment. You can’t afford to launch your brand on TMall if you don’t have a significant budget for it.
As a consequence, you should save your money and build a significant budget for this move. Then you will be able to plan your strategy and succeed in the lucrative E-commerce market in China!