China’s retail market will soon become the largest in the world, exceeding sales in the United States in 2019 and topping $6 trillion in 2020 according to the current analysis.
We’ll explain to you here why you should consider the Chinese retail market to grow your business and how to do it.
1. China, the biggest retail market in the world
China online retail sales in a few words:
- Represents $1.33 trillion in 2018 (+23.9% compared to 2017)
- Physical goods account for 18.4% of total retail sales
- Final consumption expenditures contributed to 76.2% of 2018 GDP growth (+18.6 points compared to 2017)
But what about the US retail market?
Well, even though the US retail market as a whole has been larger than China since 2013 China’s e-commerce sales have exceeded the US one.
- Chinese retail sales are expected to reach $6.76 trillion by 2022, compared to $6.03 trillion for the USA.
- By the end of 2019, China will represent 55.8% of global online retail.
Some key players in China’s online retail market:
- Alibaba group holding Ltd. (including Alibaba.com, Taobao, and Tmall) dominates e-commerce in China with a 53.3% market share.
- com (16% market share)
- Pinduoduo (7% market share).
Nielsen Co. published an analysis stating that 39% of Chinese consumers are willing to buy products of better quality with relatively higher prices.
- 24% of Chinese consumers will look for good deals on the products they want.
- 31% will buy retail memberships that offer discounts.
- 65% will use group shopping services and other platforms offering lower prices.
2. Key elements to develop exponential sales in China
Yes, China is the biggest consumption market in the world. Yes, you’ll find in China the opportunity you need to develop amazing sales. But before expecting any good results, you’ll need to consider some simple steps that may not be as easy as you think.
Main E-commerce channels in China :
- Tmall / Taobao
Platforms that provide your business amazing exposure and a lot of useful information for buyers with detailed product pages. Having a presence on these platforms is necessary for large brands but far too expensive for small and medium brands. However, Tmall has just released a new service targeting SMEs called TOF (Tmall overseas fulfillment).
Nevertheless, consumers in China mainly care about the comments and reviews section. And before entering these platforms, here’s what you’ll care about…
Build trust with Chinese consumers
Weibo, one of the most popular social media in China is also the number one platform for KOL. Referring to Chinese Twitter you’ll target there a large audience and it’s a good opportunity for businesses to engage with potential customers. In terms of marketing, its recommended to be one of the top marketing activities in China.
How to use Weibo:
- Create an official account
- Communicate to your community but consider commercial communication as well for discounts, coupon, etc. (Chinese customers LOVE discounts)
- Use sponsored Ads (efficient and pretty cheap)
- A good way to target the right users
- Engage your customers with mini-games and contest
Baidu is the Chinese Google. Be aware that Chinese people look for third-party information.
How to resume Baidu:
- A good way for Chinese people to find products to solve their problems (especially Q&A or conversation on forums)
- This a good way to get feedback about any brands they might be interested in. they’ll compare different brands and will be highly influenced by comments or users’ reviews for each brand.
Some tips for Baidu:
Having a good website is necessary but the Chinese don’t trust corporate communication. In the same way, they don’t purchase products on the brand’s website. They prefer an E-commerce platform. So, we advise you here to focus on Baidu to start developing your visibility/ reputation:
- Baidu Zhidao & Zhihu (Q&A) means: good information, positive feedback from your community
- Forums: be the brand we talk about in online conversation
- Media: having your brand information published in Chinese media is a good way to gain trust from Chinese potential customers. Optimize publications on Baidu to reach the first page with strategic keywords.
In China, you’d rather focus your SEO on 3rd party website than your own one. Word of mouth is an excellent way to get new clients.
WeChat could be described as Chinese Facebook. You’ll find on this APP a ‘moment’ system allowing personal feedback about brands. But people mostly use “WeChat groups” to communicate about brands and solutions to solve their problems (which can lead to product recommendations).
What to do on WeChat:
- Community management
Don’t use it to advertise, it’s expensive and hard to target with efficiency. But it’s an excellent tool to engage in conversation with your community, create your own groups per interest…
In China, Branding is everything.
Whatever is your product, you’ll have to focus on your branding before expecting to reach consumers. Even though you manage to get a store on Tmall, if nobody knows your brand, nobody will buy your product.
Branding means reputation. Reputation means business.
Time to sell your products
You’ll get the choice here between cross-border E-commerce which doesn’t require a Chinese Business license and Chinese E-commerce platforms which do require a Chinese business license.
Here are some examples of how you should proceed to enter Crossborder E-commerce or Chinese E-commerce:
What you need to do:
- Register your company on Tmall Global
- Open a store and create nice design pages
- Advertise: you can use PPC (paid per click) on Taobao & Tmall search engine
- Market your account through social media to drive traffic (Weibo)
- Use KOL (influencers) to promote your products
- Taoke: live streaming and affiliate marketing, CPS (cost per sale)
- Retargeting via emailing, SMS
Important notice: it can be very costly… your company will need to be entitled outside China with overseas retail qualifications. Companies with a turnover of $20 million are prioritized.
JD.com is the largest competitor of Tmall Global and is mainly focused on high-quality products.
How to open a store:
- Get in contact with a business development manager from JD and prepare the required documents according to your product category
- After the initial check, you should get a registration link
- Approval process
- Pay security deposit ($15,000) and platform service fees ($1000 per year and per store)
- Only after all this, your shop should be open
CHINESE E-COMMERCE PLATFORM :
Online marketplace operating to C2C mechanism, meaning that individuals and small business owners can sell their products online through their own stores on Taobao. It’s a good way to start doing business in China with low-startup costs.
But, you’ll need to have a Chinese company (such as W.O.F.E.).
How to do:
- Business license application
- Office rental contract (meaning, you must pay a deposit plus monthly rent)
- Passport copies
- Bank account in Mainland China (ICBC, Bank of China, China Merchants Bank, etc.)
Once you passed the first requirements, here’s how to proceed to open your store on Taobao:
- Set up an account as Seller
- Connect an Alipay account
- Create and design your store
- Upload products
- Promote and market store your products
- Engage with KOL
To do so, you’ll need to be fluent in Chinese or hire someone who understands Chinese. Cause the Taobao store is only available in Chinese…
Doing E-commerce in China can be very profitable and is the easiest way of selling products in China. With appropriate branding and a good platform choice, you can expect a bright future for your Brand.
We are GMA “The Gentlemen Agency”
- Expert on the Chinese market
- Digital Marketing Specialist
For any inquiries about Chinese market trends or E-commerce in China, feel free to contact us.
Website + case study marketingtochina.com