11th of April, 2016

12 Essential Steps To Cracking China’s ECommerce Industry

Michelle Bourke
By , CEO - Artlivemedia

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China will be contributing a full third of the entire world’s economic growth over the next 4 years, with a fiscal growth commitment of 6.5% in real GDP growth to 2020 or USD $4 trillion.

More new Chinese consumers are coming online each year than the entire Australian population combined. China’s largest ecommerce marketplace giant Alibaba reached sales of $14 billion over just 24 hours last November – just shy of what Australians spend online in an entire year.

China will have more online sales than the US and Europe combined by 2018, so what do you need to do to get a piece of China’s online retail industry pie?

Here’s 12 essential steps Australian business can take to win in the Chinese Market

1. Start with the low hanging fruit: by selling to your Chinese customers here locally. 

There are two types of Chinese customers you can sell to locally to essentially “beta test” the Chinese market:

  • a) Chinese people living in Australia – there’s over a million of them!
  • b) Chinese tourists to Australia.

120m Chinese visitors go abroad each year and they’ve already spent over $100b US outside of China.  That’s more international tourists from China than any other country and 1 million of them come to Australia!

For instance, you could start by helping Chinese customers to pay in RMB / Yuan on your online store.  In China, Visa and MasterCard aren’t prevalent, but 80% of online buyers have Alipay!  So integrate Alipay with your ecomm site to make purchasing easier.

2. Respect and understand the culture 

Lack of cultural knowledge and understanding is one of the key reasons for failure. China’s largest ecommerce marketplace founder Jack Marr says “Doing business takes time.  No market welcomes gamblers” and that’s the same in China as anywhere else.

3. Do your homework and find a good distribution partner

This is really important if you’re exporting physical goods.  You could ask an existing Chinese exporter for help.  Australia Post’s StarTrak is also innovating their distribution across China regardless of whether your AU business is based in metro or regional areas.  T’s really important to learn about the complex regulations, duties and taxes that are in play.  One of the ways to deal with this is to partner up with other ecommerce marketplace store owners on Tmall (Alibaba’s consumer marketplace) who have built up trust too.

4. If you’re selling a product be prepared to have your digital strategy be heavily focused on ecommerce market places. 

China’s largest eCommerce platforms are owned by Alibaba.  They are Tmall and Taobao for consumers and 1688 for B2B trade.  In fact,Táobǎo Wǎng means, literally “Searching for treasure website”.

5. Prepare to market your product differently

McKinsey reported that 2/3 of Chinese consumers say they rely on recommendations from family and friends when deciding what to buy compared to 1/3 of Americans.

  • So word of mouth, social media are especially important in China and having real product or service testimonials is really critical. Celebrity influencers are a big deal although they are expensive so an alternative strategy for businesses can be to access people on social media with 20k followers, send them a sample and get them writing about your product.
  • And you don’t have to start in China.  One of the most popular Chinese social platforms Weibo or Wechat has 2.5 million users just in Australia and that’s growing by over 2000 a day.  Over 80% of those are in Victoria and New South Wales alone.
  • Chinese markets also require a lot more information on product: lots of testimonials, descriptions, showing sizing of product compared to something else to showing scale and showing the product in use, so take the time to craft your content and its credibility carefully.
  • Last month 95% of Au’s who searched for products online, did it on Google.  In China, an entirely different search engine is in control and that’s Baidu.  But even more interestingly it’s the Chinese marketplaces that have a real monopoly so your marketing channel budget mix should reflect that.

6. Use Hong Kong as strategic positioning and landing pad for China. 

This tip comes from Catherine Cervasio who is the Founder at Owner at Aroma Baby which we’ll be interviewing later in the year.  Catherine found this to be a very useful way to enter the Chinese market.  In fact the Australian Federal government has invested $11m via Austrade in what they’ve termed “landing pads” across the globe which are set up to help assist Australian companies to set up shop in export markets,  and one of those announced will be based in Shanghai. In one city, Shanghai contains more people that the entire population of Australia.

7. Target women

Women really control the purse strings in China, so you need to get in touch with your feminine side and think from their perspective.

8. Don’t replicate your Australian website

You can’t have the same website.  It has to be manually translated.  And you need to remember that many Chinese internet users are on mobile and often on 3G networks to your website is going to load a lot slower.  In fact if it’s hosted outside of China its going to be REALLY slow.  A chinese host like Alipay allows for a direct connection in and out through the government firewall in China which makes international content load a lot faster.  45% of visitors will leave a page that takes more than 3 seconds to load.  The average Australian website can take up to 20 seconds to load in China.

9. Make everything super mobile friendly

In China, most people have at least one smartphone even if they don’t have a desktop and in rural areas there aren’t any big brand stores so it’s actually easier to shop online.  That’s why in 2014, mobile phone purchases were used in 43% of transactions.

10. Take advantage of festivals

Build digital campaigns around key dates.  In fact Tmall provides a lot of campaign support for its customers, a lot of which is free.  Just as an example on Singles day (Nov 11th) 2014, Alibaba’s sales reached US $9.3b and in 2015 reached $14b US – close to the total number of online purchases made by Australians in an entire year.

11. Be Authentic

Chinese buyers are also really savvy and they know which products are manufactured for export verses those that are really selling in Australian stores so make sure whatever you’re selling is authentic and that you’ve done the hard yards here as well because your Australian brand recognition by other Chinese folk living in Australia is actually a key competitive advantage.

12. Look after your supply chain security

This is particularly important for food or health products.  It’s not a problem we can really relate to here in Australia because of the many protections that have been built into the supply chain, but exporting into China is a different story and food security is an ongoing and real concern for customers there.  One way of handling this and protecting your brand is to use a service like Authenticateit which provides location based, individualised barcodes for product so that customers can confirm it is the genuine product upon arrival.

If you want to know more about why now is a great time to explore getting into the Chinese market – read our article on that here.

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