How To Sell Your Brand in China: Steps To Become a Winner

The world’s second-largest economy and most competitive consumer market, China has been at the forefront of marketing trends shaping the global economy. According to China’s Ministry of Commerce, sales of consumer goods reached $6 trillion in 2020. Home to major online e-commerce platforms such as Alibaba and JD.com, China has also remained the world’s largest online retail economy for the past 8 years.

China’s consumer market is the largest in the world. This is another way of saying that China offers greater growth potential than you’ll find in any market anywhere else in the world. China’s market is expected to become the world’s largest goods consumption market by 2025. It goes without saying that with so much opportunity comes many challenges in fully capitalising from such opportunity. With so many consumers (over 1 billion), there are many specificities and peculiarities that brands need to be aware of and incorporate into their marketing strategies and campaigns in China. Furthermore, China is not just one big market. It is in fact many small markets combined across the country to create one enormous collective market. As a result, it is imperative for any brand wishing to enter, develop in and succeed in China to research all levels of the market thoroughly, identify which sections of the market are relevant to its brand DNA, and conduct further detailed research on those sections in order to create meaningful brand campaigns that resonate with these target audiences. Specifically, consumers in the China market have different paths through the consumer journey. One major difference is that Chinese consumers on average have eight touchpoints with a brand before making a purchase decision. That’s double the four touchpoints of the average consumer in the West. Let’s find out how you can set your brand up for success in the world’s largest consumer market.

Entering the Chinese Market for Sales: Features and ways to trade

Naturally, e-commerce is the default means of shopping for the majority of consumers in China. Anyone entering the China market should be inherently familiar with Taobao, Tmall, JD.com, Pinduoduo and Suning. These are by far the largest and most well-known e-commerce platforms used by China’s consumers.

China’s consumers and marketplace by the digits:

1.44 billion-strong population
70.8% internet penetration
842 million online shoppers
Over 25% are cross-border e-commerce shoppers

By its sheer size and speed of development, China’s market is where your brand should be, if you’re not here already. So how can you start a successful In order to make the most out of these opportunities offered by the market, it is imperative that you understand the unique aspects of China’s diverse marketplace, including:

the general market situation;
business culture;
the psychology of the buyer of goods and services, the criteria for selecting a seller
direct options for entering the market;
peculiarities of marketing and sales channels

China’s E-commerce Market

China’s digital economy continues to grow. The number of online shoppers in the country rose to 782.41 million in 2020. The revenue generated by e-commerce across China is expected to reach 1.5 trillion dollars by 2024. With such a developed digital commerce infrastructure, brands need to identify the platform that suits their needs best, in order to figure out how to sell in China the right way.

Features of the Business Culture

China’s rapid economic expansion has brought about many social changes for its massive population. Furthermore, the financial growth that the country spearheaded led to an accelerated shift towards consumption among specific demographics. For instance, Jeffrey Towson, author of ‘The One Hour China Book’, gave an example of Chinese mothers, whom he labelled ‘super consumers’. According to Towson, these consumers functioned as market influencers, controlling spending within the family. As a result, it is imperative for brands to consider the unique concerns and perceptions of this consumer segment, even when selling products aimed at different audiences.

Furthermore, China is a relationships-driven society, with a system known as guanxi. Most business is conducted through relationships and referrals from friends and family members. This extends beyond the B2B circles and into B2C circles. Word-of-mouth marketing is a strong driver of sales in China, and authenticity is an enormous factor in building strong brand-consumer relationships. Recognition of Chinese business culture can help brands greatly in the long run. On the other hand, not thoroughly understanding Chinese consumers and being unwilling to adapt to the China market have been the main reasons so many western companies fail when entering China. eBay, for example, failed to adapt their operations to the guanxi culture, and its absence paved the way for e-commerce on Alibaba and WeChat, both of which integrate instant messaging services in their core.

The psychology of the Chinese Consumer: What you need to know to optimise sales

Chinese consumers are huge when it comes to quality. Instead of focusing on getting the cheapest deals, consumers in China care about the quality of the item they are spending their money on. This means the products you sell must be of high quality, your brand must be reputable, and you must establish authenticity with your target consumers.

KFD is very deeply acquainted with the Chinese consumer market. Our brand accelerator specialises in helping brands from all industries enter China, make a dashing reputation with consumers, and succeed on e-commerce. We are experts, and we are ready to advise you on any and every matter along the journey of bringing your brand to China’s massive marketplace.

So, let’s take a look at what you can and should sell in China.

What to Sell in China: Top 10 Best Selling Products in China

Deciding what to sell in China can sometimes be tricky. These are the top 10 best selling products in China that have been selling like hotcakes recently:

Clothing and Shoes
Jewellery
Makeup
Fresh Products
Nutrient Supplements
Packaged Health Foods
Wine
Baby Food
Sporting Goods
Electronics

Options for Bringing Your Brand and Selling in China

There are a few options for foreign companies and brands to start selling in China. Two of the most popular are:

Registering and establishing a legal entity in China
Selling via online marketplaces

Going Whole with WFOEs

Most brands go with option one and establish Wholly Foreign-Owned Enterprises (WFOEs) in China. This is by far the most flexible option for foreign brands in the long run, as this essentially enables the brand to own a legal operating entity in China. As you can imagine, this will make the journey to register and sell on China’s many e-commerce platforms much, much smoother.

ICP Licencing

Next, it is imperative that your brand apply for an ICP licence (ICP stands for Internet Content Provider). This is absolutely essential for any entity wishing to establish an online presence in China.

There are two classes of ICP licences, commercial and non-commercial.

Commercial ICP licences are used for any website offering goods or services to customers
Non-commercial ICP filings are for websites that are purely informational in their nature and are not directly involved in sales

On average, it takes 20 business days to obtain an ICP licence after submitting relevant documents to a hosting provider. If the documents are deemed valid upon review by the provider, they are passed along to the Ministry of Industry and Information Technology for governmental review. If at either stage the documents are rejected, you will be required to submit additional documents.

Most brands circumvent this hassle by selling through the marketplace, as it is more accessible. Tmall Global does not require ICP licences to register a shop.

Cross-border E-commerce: The leading online marketplaces in China

Let’s take a look at which platforms lead the market in China.

Tmall

Taobao
JD.com
Pinduoduo
Suning
Xiaohongshu
Douyin

Main Chinese E-commerce Platforms

Tmall: Peculiarities of Doing Business on the Online Platform as a Foreign Brand

First off, we have Tmall. Tmall is actually split into two: regular Tmall and Tmall Global. The differences are quite straightforward; regular Tmall requires a Chinese business licence (ie. a registered legal entity), a local bank account, and product stocked within China. On the other hand, Tmall Global enables brands to sell from their own region directly to Chinese consumers, with payments directly transferred to their own local bank accounts. We most often recommend brands to go the “legit” route — register a Chinese legal entity, move inventory to China and set up shop on regular Tmall. This is because the cost per unit of shipping products one by one to China upon demand is much higher than shipping them in bulk. Furthermore, shipping orders internationally is much slower than shipping them from a domestic location. What’s worse, shipments can sometimes get held up in Customs, thereby negatively impacting the customer experience even more.

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Benefits of Working with Tmall

Increased brand visibility on China e-commerce
Trusted platform by consumers nationwide
Establish brand authority and trust with official registered presence
Support for robust marketing with live-streaming and in-app social feed

Disadvantages of Tmall

Less control over e-commerce environment compared with operating independent e-commerce website
Lots of paperwork required
Costly to set up independently, approximately $8000-25,000
High annual service fees, from $8000-10,000
Highly competitive market
Additional commission fees

Advantages of JD.com

Authentic, high-quality products
Drone shipping to difficult-to-reach locations
International and local shipping

Disadvantages of JD.com

Strict requirements for setting up online shop
Highly competitive market
High initial deposit and annual service fees
Additional commission fees

Advantages of Pinduoduo

High user loyalty rate (78.4% vs Tmall at 75%)
Developed live-streaming e-commerce infrastructure
High degree of integration with WeChat, China’s largest social network
Third largest e-commerce platform in China

General Look at China’s E-commerce Platforms

Taobao
Tmall
Tmall Global
JD.com
Xiaohongshu
Douyin
WeChat
WFOE needed?
✔
✔
⤫
✔
✔
✔
✔
ICP?
Commercial ICP
Commercial ICP
N/A
Commercial ICP
Commercial ICP
Commercial ICP
Non-commercial
MAU

Increasing Market Penetration in China with the Right Marketing and Sales Channels

When building your marketing and communications strategy in China, it is important to pay attention to the unique mentalities of your target consumers and focus sales efforts to the medium of your strategy. No matter what that strategy is, it is crucial that you focus on:

Brand building, website design
Creating an impeccable reputation
KOLC marketing — your brand is about what people say about you and who’s talking about you
Leveraging social media and social commerce platforms
Building out a comprehensive mobile payments infrastructure

Branding, website design, e-commerce presentation and reputation building

At every touchpoint in the consumer journey, from conducting product research to making purchase decisions, consumers care what their friends and family say about a brand. As such, reviews are essential to imprinting a positive brand experience image into the minds of these consumers as they progress through the consumer touchpoints. Your website, your e-commerce store and your product reviews are all the faces of your brand. Consumers will largely decide how they look at your brand through these facets.

KOLC Marketing

It is essential to reach your target consumers through the voices that they trust. In particular, in order for your brand to establish the necessary degree of trust and authenticity, it is imperative that you collaborate with key opinion leaders (KOLs) and key opinion consumers (KOCs) to create high-quality, detailed content about your brand and products.

Some brands think that they should stick with an influencer pool that only consists of KOLs, while others think that they should only activate KOCs. This couldn’t be farther from the truth! The reality is that especially in a consumer-conscious environment like China, brands need both KOLs and KOCs to build brand trust from both sides.

With their massive followings, KOLs help establish the authority and visibility of a brand. However, KOL content often comes across to viewers as highly commercial. This is where KOCs come in to help bolster brand authenticity. As consumers themselves, KOCs interact frequently with their followers and maintain closer relationships. As a result, KOC content is more likely to be trusted by their followers, which will help to boost consumer confidence in your brand when they view positive, detailed content from their favourite KOC.

Be a Winner in the Market with KFD

At KFD, we help carry brands through the entire China e-commerce journey. People always ask us if we’re a data research company, a market intelligence firm, a Tmall Partner, or an e-commerce advisor. Our answer is All of the above. We are China’s premiere brand accelerator trusted to run brands from around the world. We run international brands in China with results that exceed expectations.

Want your brand to win in China but don’t want the guesswork or the hassle? KFD is the key to the brand of your dreams.

Drop us a line and let’s get the conversation started.