China opens their Border in 2023, and the Business is back.
China is the world’s second-largest economy and at the same time the world’s fastest-growing consumer market. There are so many opportunities but in order to seize them, it is important to know the market and to understand how the Chinese business world works.
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How to do business in China?
To do business in China it is important to know two concepts:
- Guānxi, or “relationship”, is a concept that is not easily translated. It is networking, it is creating relationships of trust that you can rely on, share favors, and build a business. You can’t be successful in China if you don’t strive to identify and nurture a network of relationships. The value of your business depends on the value of the relationship you create and how you keep it alive. The strength of your Guānxi will be directly proportional to the strength of your business.
- Mianzi 面子 – Another fundamental concept is that of the “face”. It is the reputation that a person has built, it is the respect that he has earned, it is connected to the role, to the story, to the Guānxi. This is why in China the value of the ceremony is recognized as fundamental, a moment in which hierarchies are made explicit rather than it is essential to keep our reputation and our partner’s high. Behaviors that discredit the “face” of our partner in front of his team can put an end to a business relationship, for example.
Expert Tips By Vadim Addesso
Expanding your business in China can be a lucrative opportunity, but it can also be a challenging task.
Here are 5 common mistakes that foreign businesses make while expanding in China:
1️⃣ Lack of understanding of the local market ????
In the early 2000s, Walmart entered the Chinese market with a standardized approach, failing to account for the different needs and preferences of Chinese consumers. This led to weak sales and a negative reputation in China.
2️⃣ Ignoring the importance of relationships ???? (Guanxi)
Starbucks built its success in China through partnerships and collaborations with local businesses, helping to establish a strong brand presence and gain local trust.
3️⃣ Underestimating the local environment ????
According to the European Union Chamber of Commerce in China, 62% of European companies feel that regulatory barriers are a major challenge in the Chinese market. Cultural aspect in China is different.
4️⃣ Failing to localize products and services ????️
KFC localized its menu in China by introducing popular local dishes like congee and fried dough sticks, contributing to the company’s success in the Chinese market.
5️⃣ Lack of patience ⏰
A survey by the American Chamber of Commerce in China found that only 54% of US companies in China were profitable in 2019, emphasizing the need for patience and a long-term perspective.
By avoiding these common mistakes, foreign businesses can increase their chances of success when expanding into the Chinese market.
It is essential to have a thorough understanding of the local market, build strong relationships, navigate the regulatory environment, localize products and services, and have patience.
Business in China: the B2B market
The gigantic Chinese market offers many opportunities for B2B businesses. In 2019 the B2B e-commerce transaction volume in China amounted to around 25 trillion yuan.
B2B e-commerce in China is dominated by several online platforms. In 2019, the leading players represented nearly 70% of the whole market share, of which Alibaba has the largest market share (28.40%).
Cultural differences, together with language barriers, and unique digital marketing platforms, make it challenging for foreign companies to be profitable in the B2B market in China. That’s why, if you want to sell to Chinese businesses, you should read this guide.
To do Business in China, Build your e-reputation
With B2B in China, Baidu is Key
Baidu is the most popular search engine in China. It has 70% of queries. That’s why it is a very powerful channel for B2b marketing. If you want to sell to Chinese businesses you must be visible on Baidu. Distributors look for information on the Internet and if they don’t find your company and your products, they will look for someone else.
Consumers are suspicious when it comes to new products, so are Chinese distributors. If you are looking to develop your distribution network in China, your very first step is going to be building your e-reputation through different Chinese channels and social media. Having a good e-reputation gives you more chances to sign with a distributor.
To rank on Baidu, your website must be translated into Chinese. This may seem obvious but it’s really important because Baidu only works in Chinese and only recognizes Chinese keywords. Another important thing is to host it in China or near China because site speed is one of the biggest indexing factors for Baidu. A large percentage of sites are so slow that they are virtually unused by the Chinese people. A site that loads slowly will be penalized for indexing. It is therefore important to use a Chinese or Hong Kong server. Content must be localized and must be adapted to local expectations.
Combine Baidu SEO & SEM to get the attention of Chinese Businesses
To achieve success in Baidu marketing campaigns, it is very effective to create a strategy that combines SEO and SEM, as both have a very significant weight in the visibility results attributed to the algorithm of the platform. Through SEM it is possible to sponsor sites with targeted campaigns. In this way, your brand’s site will get a better online reputation, an increase in visitors, and of course a higher market return.
Baidu works as an ecosystem. Baidu Zhidao, Baidu Baike, and Baidu Tieba are part of the Baidu ecosystem and they are excellent at driving traffic to your website. You must invest in the forums and Q&A to create a community around your company and work on PR.
Backlinks & PR for website authority and company credibility
Backlinks & PR are still some of the most cost-efficient solutions when it comes to building your e-reputation in China and at the same time boosting your website ranking on Baidu. Build Credibility and get more visibility, it is a win-win. PR effort last in time. PR agencies will help to increase the companies’ exposure and to build companies’ reputations. It is one of the most cost-effective methods. Companies can have an expert or a leader talk about the products positively or cooperate with Chinese online news.
WeChat is a great tool to communicate with Chinese businesses
it is a super-app, similar to Whatsapp. It has 1,08 billion active users every month, more than 1,5 million active brands, more than 17 million official accounts, and it is used for 86% by people 18-40 years old. You can use Wechat to pay, book a holiday, buy things, create “moments”, send messages (private or chat groups, texting or vocal messages), use the mini-programs (e-commerce, games, augmented reality).
WeChat official accounts are the platforms for B2B clients to get information and updates on the company.
WeChat H5 brochure to do business in China
The benefits of Wechat H5 when doing business in China:
- Easy to share and lightweight
- Interactive & nice to look at
- Bring your QR code to every salon instead of printing a flyer
- Alternative to your unsuccessful mass mailing with heavy PDF
- Show potential Business Partner in China that you Understand the market
Wechat CRM: A golden tool for B2B company in China
Want a bot to answer your customers/visitors’ questions? But also manages your contact list, allows transactions directly within the app? WeChat CRM is a great tool for you.
Use Zhihu & Forums to educate Chinese businesses about your B2B company
Zhihu is the biggest Chinese platform of questions and answers, similar to Quora. It boasts more than 100 million answers. 80% of users are well educated (has a degree or more), 30% are well paid (they earn 10.000 RMB per month) and 40% of users live in first or second-level cities. Users are mainly men. 78.2% of users have more than 25 years, this makes her the perfect platform to address more aged and rich consumers and the best solution for B2B marketing.
Not only being present on Baidu Zhihu will allow you to answer questions about your field but also to educate your target audience about your brands/products in an undercover way. It is an excellent tool to increase your conversion rate and to generate awareness about your brand.
Use these tools to engage with your audience and exchange information with them but also to build your authority. Here are some of these tools:
- Zhihu column;
- Zhihu bookstore;
- Zhihu Roundtable;
- Zhihu live;
- Zhihu tip service.
Ecommerce is another option to get Chinese Distributors attention
Once you have built your e-reputation online, you can start selling on e-commerce platforms.
Tmall specifically designed for B2B
Tmall B2D is a platform where you can connect with 85,000 Chinese distributors. Tmall B2D gives brands great visibility on the current market. It helps to:
- Connect brands and distributors
- Manage service and logistics
- Distributors Network Management
- Secure payments
Any entrepreneur can choose his distributor on the Tmall app. However, it is not easy to choose the right distributor for you when one has no expertise of distributors in China and is not in China. And it is even harder to get distributors to want to work with you if you have never worked on your e-reputation in China.
In addition, the platform is in Chinese, therefore it is better to be accompanied by professionals in this first step.
Jd.com: a good e-commerce platform for B2B
JD. com had a market share of 24.2% at the end of 2019 and 362 million active users. The most active age groups on the platform are those of the Millennials and Generation X, therefore young people under 40.
It is the site with the most accurate logistics system, with guaranteed deliveries in 1-2 days throughout the country. 85% of orders are delivered on the same day. It is a guarantee of quality and it is linked to WeChat.
It operates on:
- Pre-purchase of products from the supplier (B2B2C model). JD assumes responsibility for aspects such as international logistics, customs aspects, warehousing, product page design, marketing, and post-sale services. This way is recommended for brands that are already quite well known in China. It also guarantees an excellent user experience for customers.
Gentlemen Marketing Agency is a digital marketing agency that is an expert in helping foreign companies to establish or strengthen their position in China. We can help your brand increase sales in China, thanks to our services like:
- Baidu SEO&SEM
- Social Media
- KOL & Influencers
- E-commerce and cross-border e-commerce