It can be tough to start in the Chinese retail landscape without a local partner. However, with the change in shoppers’ behavior, almost more willing to spend online than in physical stores, China’s cross-border e-commerce (or Haitao) ecosystem can offer plenty of opportunities. Now, China’s quickly growing online shopping market is made up of approximately half a billion consumers and accounts for over half of global online sales. It projects China’s e-commerce cross-border trade to more than double to RMB 620 billion ($98 billion) in gross merchandise volume by 2019, from RMB 305.5 billion in 2016.
If you have read some of our articles, you may already know about TMALL and JD. In fact, they are the major platforms for e-commerce business in China, having each other a huge user database and good word of mouth among local people. They are also often presented as the best way to sell in China. Nowadays, foreign brands can maneuver in the Chinese retail market without having to set up physical retail space.
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Online retailers are not satisfied with their sales result
According to a new report released by Azoya and Frost Sullivan (business consulting firm) “The Cross-Border E-Commerce Opportunity in China”, only 1/3 of retailers with just an online approach in China are satisfied with their sales results whereas about 3/4 of those who also have a physical presence in China are satisfied. A lot of physical stores in China don’t really make money, some are even losing. It is quite hard to open a store in Chinese big cities because of the high price of rent. However, having a physical store allows to support the brand’s image and it reflects a kind of “brand’s authenticity” and quality.
Only about one-fifth of retailers and brand owners surveyed felt that their online capabilities are enough to “thrive” in the China online market. In fact, the market is evolving quickly in China and there is a need to support the sales strategy with an effective marketing strategy.
Moreover, while marketplaces like TMALL and JD.com seem like obvious launch pads for e-commerce, sometimes it can be much more complicated than that. Of some of the retailers and brand owners interviewed, 30 percent listed regulations as being a major hindrance to online sales, 21 percent listed “investment is too high” as a factor and 18 percent simply don’t generate enough sales.
Most popular cross-border categories among Chinese consumers
Cross-border e-commerce shows no signs of losing ground. The Haitao for luxury goods in China is growing at more than 20 percent per year. Generally speaking, Chinese consumers prefer international goods because they are convinced that it has higher and more consistent quality; and they choose the cross-border e-commerce channels because it’s much less likely to be fakes than products bought from domestic suppliers.
China is currently the world’s second-largest consumer market, following the U.S., according to Boston Consulting Group. The research consultancy notes that China will see nearly $2 trillion in new consumption by 2021, which means the country will continue to be a top destination for consumer companies for the foreseeable future.
Fashion, baby products, cosmetics, and skincare are the most popular categories among online shoppers. Chinese’s appetite for these goods is growing so rapidly that Tmall Global has recently invested in this way. Tmall Global plans to open six new procurement centers across the world to help overseas vendors capture Chinese consumers’ booming appetite for newer and better-imported goods, said Tmall President Jet Jing. The centers will be established in Japan, South Korea, and Hong Kong, as well as in the regions of North America, Europe, and Oceania, Jing said while speaking at the annual Tmall Global 2018 Global Partners Summit held in Hangzhou Wednesday, without disclosing a time frame.
WeChat: a new gateway for e-commerce
The advantage is that WeChat requires few entry investments (as standalone websites or marketplaces) and technical development (as for creating an app) and allows customers to complete the entire shopping journey only within its ecosystem.
As Dong Zhao, CEO and co-founder of Azoya said: “To build a brand that Chinese consumers trust, which commands long-term healthy growth, it’s crucial for foreign businesses to step by step develop the infrastructure as well as leverage a series of localized marketing methods to acquire the customers”. WeChat is one of the newer players on this front as it has created many e-commerce options for retailers, including its latest development, Mini-Programs.
WeChat was at the beginning a simple app for communication but nowadays it is also leveraged a lot by brands in their marketing strategy. It owns a huge consumers database and has over 1 billion MAU (Monthly active users).
O2O strategy in China
Chinese consumers are more willing to purchase online because it’s convenient and they have a greater range of items. However, the competition in this field is also huge and the visibility of your brand is a crucial thing to success.
Brands need to communicate more often with their online customers. In big cities, Chinese people are almost all online. To reach your target consumer and your potential consumer, offline marketing activities must integrate online marketing strategies. It is also an added value if your online marketing can be supported by an offline presence. By the way, Brands need to publish informative content, to manage their visibility and increase their e-reputation. If you don’t do that, other brands will, taking over time the advance.
Gentlemen Marketing Agency: We Help You Develop Your Brand in China
The digitalization of China has brought a lot of new tools, creating new opportunities. Want to explore the Chinese market? GMA can help you with it. Our agency is specialized in digital marketing and we have knowledge about Chinese consumer’s habits. We follow the latest trends and make our services up-to-date to effectively promote your business. Do not hesitate to contact us for more information.