China’s leading position in the world economy is related to the promotion of small business in the country.
How Small Businesses in China should operate ?
China: New Eldorado for international Companies
China presents the biggest opportunity for small or big business. Chinese consumers are ready to create new relationships with international brands. First of all, if you really want to succeed in the Chinese market, you have to make an investment.
With 13.3% of global GDP, China is the world leader in export and the top economic giant. According to the IMF, China is in front of the US in terms of GDP and purchasing power since 2014. Over the years, China has known wave after wave of reforms that allow foreign investment and export, resulting in annual growth rates of almost 10%.
The Chinese middle class attracts more and more foreign businesses. To encourage this trend, the Chinese government has made internal consumption a new priority.
Research the Chinese market Via Digital
- China is a big country with nearly 56 different ethnicities, 94% of the population is concentrated in a few regions and the country is constantly balancing between modernity and tradition.
- Costumers habits are totally different between regions and cities in China. For example,a mini-wage is set on a local level and can be up to twice as high in some areas than others. For example the Wine Business is PRomicing in 2018
- China market is a complex market, it is crucial to do a significant amount of research ahead of time in order to successfully adapt your offering to local preferences.
- Digital Marketing is the Key to enter to the most Digitalized Market in the World
Understand the complex legal environment
Business law is constantly changing in China. To know which type of investment is sanctioned by the government, you need to consult the catalog of foreign investment, which is classified into 3 categories:
- Sectors where investment is encouraged: subway construction and management, retirement home creation and maintenance, industrial design, architectural design, textiles, etc.
- Sectors where investment is restricted: the creation of educational institutions, car manufacturing, and airline maintenance, etc.
- Sectors where investment is prohibited: production and maintenance of nuclear fuels, the sale of tobacco, production of audio recordings and online publications, etc.
Businesses wishing to establish themselves in China have several legal options to choose from Wholly Foreign-Owned Enterprise. This is the most versatile option for foreign businesses, as it allows them to bypass partnering with a Chinese investor. The main advantages of this option are greater autonomy, control, and flexibility.
Businesses also need to take a close look at the Chinese tax system, administrative requirements, and intellectual property laws before taking any steps into the country.
Finding the right local partner
It won’t be easy to enter the Chinese market on your own. Finding the right local partner is not simple either, but it can help your business and adapt to the market faster.
Foreign businesses are often required to partner with a Chinese company in certain industries that are considered sensitive or strategic. These include alternative energy, biotechnology, and advanced industrial machinery.
It is important to pay attention to the conditions of the partnership. Protection of intellectual property is a sensitive subject in China and requires taking a few precautionary measures to prevent possible technology leaks.
For example, the coffee giant Starbucks relied heavily on local partnerships with Beijing Mei Da in the north of the country, the Uni-President in the east and Maxim’s Caterers in the south in order to adapt their offering to Chinese consumers.
Marketing is most of the Time to The Key to develop small business in China.
Understanding and attracting Chinese consumers
Understanding the Chinese expectations is a key for success in China. Chinese customers are not really easy to lure, but with the right strategy everything is possible. Chinese shoppers prefer more and more international brands, which carry a certain identity as a status symbol. So, they need to adapt their offering and take into account the Chinese culture and values. For example, Montblanc, a German luxury brand, launched an innovative gamification campaign on the Chinese Wechat for its 90-year anniversary.
Adapting your management style and learning to negotiate
- The Chinese management process is totally different from other regions of the globe and businesses need to adopt a new approach in order to have a cohesive, committed workforce.
- Negotiation in China is a balancing act between showing restraint and patience, respecting the hierarchy, never allowing the other party to lose face, making group harmony and consensus a priority.
- Succeeding in the Chinese market requires patience, research, and investment. Not only are there major differences between China and western countries, but there are also differences within the market itself. It is often best to find an experienced local partner that can guide you.
- With so many cultural differences, administrative hurdles and government regulations, China may seem like an unrealistic goal for many companies; however, it is important to look at the success stories of Ikea, Starbucks, and Apple to see that it is a market with enormous potential.
Marketing solutions to enter the Chinese market
From a B2B perspective, digital marketing is often overlooked. It’s a mistake especially in China. Chinese customers turn to the Internet to find information and experts opinions.
Optimize your website for China
To be visible on the Chinese Internet, there are two other important and essential things: the website has to be translated in the Chinese language and be hosted in China. A website in Chinese is necessary to enter a market and realize branding. This is an efficient solution to increase the popularity of your products, influence consumers with content and design, and develop the image of your company in the country. Moreover, having a website written in mandarin is essential. Chinese consumers spend more than 40% of their daily life on Internet and these internet users trust more Chinese websites than English websites.
SEO & SEM
A website has to put in action different means to be visible on the search engines by using SEO, natural SEO, but also SEM, Pay Per Click, advertising on forums and backlinks. It is also important to know that the Chinese Internet is very different from the Occidental one. Indeed, Baidu is the leader on Chinese search engines with almost 70% of the market shares. It doesn’t work like Google. For Baidu, the quantity is almost as important as the quality: you need lots of backlinks (links on external websites toward your website) in order to make your website more visible.
Moreover, Baidu has its own websites like Baidu Zhidao, Baidu Baike, Baidu Tieba and it sends back 27% of its traffic toward its websites. You also need to be visible on these websites to appear in the first pages on the Baidu’s research. It is thus necessary to do SEO or SEM to have visibility in order to improve the traffic and have more purchase opportunities by increasing the potential customers visits. This article explains how to do SEO on Baidu.
The reputation has a key role in your success to market your product to a market which doesn’t know you. As we said earlier, Chinese consumers go on the Internet to gather information about a business or product, therefore it’s essential to have a good e-reputation with comments and users’ reviews. This is a crucial step in generating leads. You need to ensure the information that Chinese buyers will find your product is great
Cross-border e-commerce is define as import and export activities of cross-border trade conducted through e-commerce methods by transaction subjects from different customs borders. It is mainly classified into B2B and B2C. Today, e-commerce in china become a big tool of purchasing. Because chinese people middle class is increasing, they can buy more expensive products. The more important access to information open their mind to others countries. They want better quality products. They want to show their purchasing power to the others. This is the reason why cross-border e-commerce increases as fast.
Taobao is a Chinese online store with millions of Chinese sellers and shops, operating on a B2C system. This system allows the sale of goods and services directly, Taobao acts as an intermediary in sales. Taobao offers the opportunity for individuals to open an online shop on a website, as long as potential sellers meet certain requirements.Taobao plays an important role in China because many marketers have the chance to sell their products around Asia and buyers have access to a huge amount of products.
E-commerce In China is no longer just for young, tech Savy millennials as the older generation are catered for with rising of the “silver economy.” The number of people over 60 years old is expected to exceed a whopping 255 million by 2020.
A Wecht store is a web page hosted on WeChat. It utilizes a lot of the WeChat features & interfaces with applications for payment, templated messages and chat functions. It is also a web interface for selling products that is most often linked to a company’s ‘official account’. Payments are made via WeChat’s e-payment wallet service at the swipe of a screen, this lends itself well to impulse purchasing. It is not an ecommerce site as such, it is part of WeChat’s social app with no way for users to specifically search across stores for products through WeChat.
Just creating a WeChat store is not enough you need to drive traffic through marketing strategy to link users from your official account to your Wechat store. There is no ‘organic traffic’ searching for products as there would be on an E-commerce site. Building an engaged following that can re-sell products to their friends is a powerful way of building a WeChat store through online word of mouth. The take home is you need to drive traffic by running campaigns to make your store visible and reputable.
Sell via their own website
Chinese people are more and more used to buy online, and are more and more trusteful with this shopping plateform, and so, digital marketing strategies are more efficient and give better returns, as clients expectations are higher. The chat with the seller is culturally as important as finding the best prices for Chinese people to have a maximum of informations on the selled product. So, you should have avaible people, ready to answer to all the questions. It will show your serious and you proffesionalism, two key elements to do business in China.
GMA is the top and most visible digital marketing agency in China. We have helped a lot of brand to develop their business in China, by leveraging the latest and most efficient digital tools. Do not hesitate to contact us for more
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