All that international businesses should know to sell in China, eCommerce platforms, distribution, supermarkets, Regulation, China business culture.
China is a huge country with over 1.4 billion people who are eager to buy new products and services, but there are many barriers that stand in the way of brands trying to sell their goods and services in this market. Many companies have tried to enter this vast marketplace with little success because they didn’t realize how different things operate in China compared with other countries.
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This post will cover some of the best ways for companies looking for insights into how they can successfully go about selling their product or service in China! We are talking about Tmall, Taobao, Pinduoduo, Jd.Com, Kaola, Vip, Little Red Book (Red), Douyin, Kuaishou, etc…
It can be difficult for foreign companies to sell products to China. There are many legal requirements to follow and steep learning curves to determine which avenues are best. China has strict restrictions on foreign sales to Chinese consumers in order to protect its domestic market. The legal process and the best way to sell products in China are often only available in Chinese and may change frequently.
For U.S. companies trade wars don’t make things simple, but everything is possible in China if you use the right channels. All kinds of businesses have a chance to reach Chinese customers and get the right buyers. Your brand needs the right positions in the Chinese consumer market and for Hong Kong
Understanding China’s Online Buying Culture
It is common in the West to shop from an app or company’s website. Customers looking for Nike Sportswear will usually visit Nike.com. Even though Nike gear is available on Amazon and other marketplaces, customers would prefer to purchase directly from the company’s website. Chinese consumers are not affected by this. online payment platforms are very developed in China.
Foreign enterprises find it difficult to access the largest market in the world, China, because of the Chinese government’s preference for domestic brands and the huge differences between technology and business cultures. Chinese don’t use email addresses, but Phone or WeChat ID.
There are many things to consider before making the decision to include China in your target markets.
You need a WFOE in order to sell online in China
First, you should know that in order to advertise and sell on the above platforms, you must own a Wholly Foreign Owned Enterprise in China. It can be difficult to set up a WFOE in China. This blog post will provide more information about setting up a WFOE China.
You may be unable to open a WFOE or are not in a financial position to do so but still wish to sell products in China through TMall Global. This platform, which was launched in 2014, allows foreign companies to sell directly in China, without the need for a Chinese bank account, local business, or registration. Here are the fees required to launch your online store on Tmall Global.
Deposit fee – US$25,000 + Annual service fees: Most categories charge between US$5,000 and US$10,000 per annum.
Commissions – Depending on the product category, ranging from 1 to 5%
Is an ICP Licence required?
In almost all cases after the WFOE was established, you will need an Internet Content Provider license (ICP) to use the platforms we have discussed in this blog. There are two types of ICP licenses.
The Commercial ICP License allows you to host a Chinese commercial website (mostly an e-commerce site). You will need the commercial ICP if you want to create an e-commerce site (JD.com/TMall, Taobao).
Non-Commercial ICP License – Sites that are only used for informational purposes. This license does NOT include direct sales.
There is a way around it if your company wants to sell products on platforms like JD.com and TMall. You don’t need to create a website. An ICP is not necessary if your company is happy selling products on any platform that does not require a website. While it may seem less hassle and work, an ICP registration is easy and offers many benefits. Online platforms in China don’t ask western brands to have ICP for cross-border. A Business license is required to have an ICP.
China is the world’s largest market for online shopping, and as of 2020, there were already 782.41 million shoppers! The revenue generated by eCommerce in China is expected to reach1,556.2 billion dollars by 2024.
There are many options when it comes to eCommerce in China, and companies should be able to find the online marketplace that fits their needs and budget the most when entering the Chinese market.
Taobao: a Giant that never ceased to evolve
Taobao’s greatness comes from the fact that it’s open to everybody and every budget and one of the best entry options to sell in China. It’s one of the best entry points for anyone, and it features everything you can imagine: from clothes and shoes to furniture or appliances!. Alibaba is listed in the stock market and has offices everywhere in the world.
On top of that, Taobao has been working hard on improving its image in the last few years to compete against the growing competition and also to attract young designers and unique creators It started with developing live streaming and a Kol network to increase conversion but also traffic on the platform.
In 2019, Taobao launched an affiliate program with Weibo extending its live stream service. In 2020, Taobao launched its affiliate program for users, encouraging everyone to promote the app and encourage sales. This last comes into an effort to not only engage more with its users but also to fight its biggest competitor: Pinduoduo.
Taobao over the years has become more and more social, with the development of group tools by location, and interest, shops can also manage group chat where they are able to promote their new products.
Taobao has a large network of the address of Chinese People (mailing addresses) and a large database of personal email addresses, so China Securities Regulatory Commission put surveillance on these giant e-Commerce platforms. Double 11 of Taobao is famous… big online shopping day.
Tmall: an eCommerce platform for big brands to sell in China
Tmall, which also belongs to the group Alibaba is the biggest eCommerce platform in the Chinese market, it does not have a competitor that comes close in terms of revenue generated. Choosing Tmall to sell in China, is a smart move, as the marketplace is widely trusted by the general public.
How did Tmall achieve this? High and strict requirements to enter the platform. Only brands that are invited can enter the platform. By controlling who is in, Tmall was able to control the quality of the products being sold as well as the customer’s services while taking no risks.
All online merchants should have a Minimum deposit (refundable deposit). Alibaba provides Alipay, payments for merchants. Alibaba owns Taobao and Tmall and has a position of trust in China. With his strong position, in terms of costs to sell in China, don’t shy away from E-commerce within the 2022 share buy-back program. All marketing costs on tmall explode due to the growing e-Commerce demand in China.
If today, Tmall is opening a little bit more to smaller brands with initiatives such as Tmall Oversea Fulfillment, it is still rather complex to get in and even more to get sales when competing with a brand such as loreal, Philips, Zara, etc.
When starting to sell in China and entering Tmall as a brand, a huge effort will have to be done on e-reputation. Conversion rate is key to success, especially when competing with foreign brands that are in China for years now. ( informational purposes)
Tmall also has a platform dedicated to high-end brands: Luxury Pavilion. The idea behind the Tmall Luxury Pavilion is to become more attractive to big names of the luxury world such as Cartier or Kenzo. It’s worth noting that China is currently one of the most prolific markets when it comes to Luxury & eCommerce. We invite you to read our article introducing the Top eCommerce 5 platforms to sell luxury in China. Tmall engages to protect the intellectual property of these brands.
To get potential customers, Chinese firms and international Brands have to invest in advertising and social media channels. All merchants on these shopping sites compete to get Chinese buyers, it is important to get connections to buyers. foreign firms need to put a deposit for the store, like a real store. The United States is the main investor and ad spender. Chinese buys everything on Taobao tmall, from a luxury item for social status, to camping trip and consumer electronics. During a financial crisis, (covid) People have spent more money on e-Commerce.
Pinduoduo: can suppliers and producers sell in China with e-commerce?
Pinduoduo was founded in 2015 and has grown to be the largest e-commerce platform for Chinese consumers (surpassing Tmall users number in 2021), generating over RMB1.45 trillion gross merchandise value as of 2020 with 643 active monthly users 2020. The reason behind Pinduoduo’s success is its low price.
Pinduoduo is the main competitor of Taobao. This online marketplace started its journey in smaller Chinese cities where consumers typically have fewer resources and are looking for good deals, which Pinduoduo offers.
Pinduoduo is growing fast for the simple reason that it is centered around the customers. It included its users in the promotion and buying process. It is called social eCommerce and this practice has found a lot of followers all over China.
The idea behind Pinduoduo is simple: Low prices by encouraging group purchases directly from factories and suppliers.
The platform not only offers interesting prices but is also pushing users’ affiliation in a partnership with WeChat. Users can get sweet deals by inviting a friend to download the app for instance. It is a great option to sell in China if your company does not have too many resources. PDD is on U.S. stock exchanges.
Pinduoduo has successfully been pushing impulsive buying behavior which is not always working so well in China. Anyone that knows China’s buying habits, knows that Chinese consumers do a lot of research, so it’s quite the exploit Pinduoduo managed to achieve.
Pinduoduo is only in Chinese ( language barriers for oversea firms). You need a Logistics Specialist and law enforcement (for this platform is full of copycat), and operational readiness. During pandemic restrictions, it is complicated to deal with a staff of pinduoduo even for state-owned enterprises. This app has technological advancements for the B2C e-commerce market with a unique AI.
Chinese eCommerce market
Pinduoduo not only appeals to Chinese consumers but it has many benefits for Brands. No commissions fees, custom tools, low requirements, low deposits, etc
Little Red Book Aka RED the king of High-end Cosmetics & Fashion Reviews
Little Red Book aka Red aka Xiaohongshu, was the revelation of 2018 and kept growing through 2019 to become a strong place for foreign cosmetics brands to be and brands to promote their products via Kols and reviews. If you are a beauty/lifestyle brand looking to sell in China, this app is for you.
RED concept is focused around UGC (users generated content), more precisely product reviews – shopping notes. The platform is a dream come true for Kols who have naturally conquered the platform.
80+% of RED users are women from first tiers cities. The app has its own marketplace and strong logistic services. It also displays short videos and influencers can add hyperlinks to platforms such as Tmall, Weibo, or Taobao.
Learn more about Selling on the Little red book
We won’t get into details for every Chinese e-commerce platform that exists ( JD.com, Suning, Kaola.com), however, we strongly suggest you have a look at our eCommerce-related blog posts if you are not familiar with them yet. This company is listed in China and has Chinese stocks.
JD is a great e-Commerce site in China.
This shopping platform is connected to Chinese social media platforms, and offers communication with brands, for Foreign companies (especially European companies). JD has a strong user base and active users of his platform. In China, all online users know JD, jingdong. Like all big firms, China has a digital surveillance technology on JD.
Use Branding to Increase your Sales in China
Chinese consumers are often suspicious of new things, which can make it challenging to market your product or idea. They also have a tendency not to trust easily so you may need to work extra hard on building up that relationship before getting them interested in what you’re selling! That is where working on your brand awareness and reputation with digital marketing comes in handy!
To sell in China, your brand needs A well-translated brand name
To sell in China, it’s important to adapt oneself to the Chinese consumer’s needs. A Chinese name is required. For choosing a brand’s name, you need to combine the characteristics of the product and the brand values. Chinese consumers always feel more comfortable when they have in front of them a product with Chinese references.
Your Chinese company name is the first step in creating a localized branding strategy for your brand in China. When you have one, it allows people to identify your brand a lot faster but also shows you care about the market.
Just to give you an example carrefour: 家乐福 which can be translated to the house of happiness
A Chinese company name is like a stamp to your brand’s personality and story. It can be used as an advertisement for what you want customers in China to think about how they feel when interacting with the product. It can take a long time to come up with an adapted Chinese name for your company, and make the effort to collaborate with people that master the language and the culture before settling for one.
Chinese websites, Chinese design
In order to be successful in China, your website needs a Chinese-specific design. While Westerners prefer sites with clean and clear design, Chinese netizens like sites with Chinese references, easy communication, and convenience: Live Chat, QR code, and Shop Adress easy to find
Not only the website needs to be optimized to appeal to Chinese consumers but also to Baidu. The internet is a global marketplace, but not all countries have access to the same resources. In China for example Google’s pluggings don’t work.
NB: A website is not the best way to sell in China, but it will help you support your flagship store. This phenomenon is explained by the lack of trust of Chinese consumers that favor the online marketplace over the single-owned website for the simple reason that the online marketplace in China will have consumers’ back in case of issue, while a single-owned website can do as it pleased.
The real interest in having a Chinese website is brand credibility and visibility. A company can significantly increase its visibility through SEO on Baidu, thus reducing its cost of (customer) acquisition. Not only that, but a strong presence on Chinese search engines will improve the trust netizens accord to your brand and consequently your conversion rate.
To sell in China, use Mobile Payment
Everyone uses mobile payment. Alipay and WeChat are the most popular way of mobile payment; as a matter of fact, China’s online payment users penetration reached 86% in 2020. This online wallet is linked to user’s bank accounts and allows them to pay easily for anything they need online and offline.
When setting up a payment method for China, you better make sure that your buyers can use Alipay or WeChat pay. As the trend goes: Consumers use Alipay to pay for a bigger amount of money whereas WeChat pay is mainly used for small expenses
It can be rather complicated or inconvenient to use a card when purchasing online, most people use their online wallet. Therefore if you are serious about wanting to sell in China, you need to hop on the online payment bandwagon.
Chinese Social Media and Social eCommerce
This is nothing new to you but Social media in China differs from the rest of the world and is extremely important for a company wishing to succeed in China. For the last decades, we have seen the rise of social e-commerce notably in the form of live-streaming sales that have been adopted by every major Chinese social media but also with the integration of social networks in eCommerce platforms (ex: Weitao) and eCommerce platforms on social media (ex: Douyin Flagship Store). Most of these platforms have also adopted an online waller or developed their own.
Wechat: China’s #1 social media
Wechat is the king of Chinese Social Media. Regardless of the size of the company, WeChat has become an essential medium to integrate into your marketing strategy in China. Hell, WeChat is even a good option to sell in China.
Wechat over the year has launched new tools and started new collaborations (cf above with Pinduoduo). But has also launched its mini-program (integrated app) in 2017 that has become a must in 2021. This mini-program can take different forms: Game, mini-app, store, etc
Another hot trend of WeChat is H5 Brochures. These brochures are similar to the PDF listing (One would even dare say they’re better) goods producers are mass mailing in the hope of finally finding a Chinese distributor. However, not only in the west, blindly mass mailing is a bad idea, in China, it is even more pointless as mailing is not part of the culture.
Instead of mailing in the dark, we suggest manufacturers and producers actively prospect while setting up a lead generation strategy. Once in touch with Chinese resellers, it will be easy to share a good design WeChat H5 brochure to introduce your company, your products, etc. Wechat brochures are also wildly used to promote new products, events, etc A multi-purpose tool that we can’t recommend enough.
We recommend you read our Wechat Marketing Guide for Small Businesses
Collaboration with Chinese KOL can help you sell in China
Kols or Key Opinion leaders are “key” to building a brand e-reputation in China. Influencers are more than just a face of the brand, they become an extension of it and can really help to build consumer loyalty. They make consumers feel like they belong in their community with people who share similar values as them. Consumers tend to trust KOL more than an official brand communication because in theory they only promote brands they believe in and are legit.
Keep in mind, that Kols are picky when working with brands, indeed, they are putting their reputation on the table every time they choose a new partnership. Don’t be bump out if when getting started you struggle to find reputable Kols to work with, instead keep working on your online presence with SEO, PR, Social media marketing, and so on. Chinese business culture in 2022 requires influencers, it is a Type of Advertising. KOL is the trendy internet advertising and is a new indirect sales channel.
Not only not all Kols will be willing to work with you but also Finding the right Kol and the right platform to campaign on is not easy. When going through the process of selecting Kols to work with, it is important to have a long-term vision. You need to find a Chinese influencer, who will respect the values and image of your company. Long-term collaboration is also better than short-term.
The most popular platforms of 2021 are without a doubt short video apps like Douyin and Kuaishou. Taobao and its Kols platform are popular as well. Little Red Book has a service to help brands work with verified Kols inside their platform.
The choices are multiple and in 2021, micro-influencers are still a hit with consumers and brands. They are less expensive, closer to their community, and more reliable than the biggest stars.
To conclude on the Best ways to sell in China
Selling in China? If you are looking to sell products or services in the world’s second-largest economy, we can help. Our team of experts has extensive experience and expertise working with Chinese businesses and markets, enabling us to offer a wide range of digital marketing services tailored for your specific needs. We’ll make sure that your online presence is not only visible but credible as well – all while reducing costs associated with acquiring new customers by making it easier for them to find you!
Need a cost-efficient e-Commerce Agency to start selling in China?
Gentlemen Marketing Agency is a specialized Digital Marketing firm based in Shanghai. The agency has expertise and experience in establishing online stores for foreign companies on TMALL.com and TMALL Global and is a certified TP (Tmall Partner)
For any questions or help needed in establishing an online store in China’s e-marketplace, please contact us, we’ll be happy to guide you.