On May 14th, guest speakers Effy Huai (Client Services Manager for IT Consultis) and Jan Bejkovsky (Director of CzechTrade Beijing) shared their insights and experience in our latest webinar about e-commerce and its specifics in China, such as private traffic marketing or selling via online and e-commerce channels as a foreign producer.
By 2023 it is projected that 64% of all goods purchased by the customers will be through e-commerce, and according to emarketer.com China ranked the first in terms of e-commerce sales in 2018/2019. In china, e-commerce is dominated by mobile transactions, more than any other country in the world.
As Mr. Bejkovsky mentioned, there is visible propensity for buying foreign goods in China, it seems that Chinese consumers regard imported products as a guarantee of quality. Moreover, the impact of COVID-19 pandemic is clearly favourable to e-commerce, trend that has already started and which will be difficult to change. China e-commerce platforms are dominated by Alibaba Group Tmall and Taobao, with its largest competitors Jingdong and Pingduoduo.
Selling goods in China as foreign company
Mr. Bejkovsky admits e-commerce, with 600 million market consumers, might as well be the most efficient way to enter the Chinese market, but not risk free. Careful evaluation prior to market entry is necessary.
If you are thinking to enter the Chinese e-commerce market, here are four ways it can be done:
- Opening a flagship store on Chinese e-commerce platform ( 旗舰店). It has many advantages, but it may be quite costly and time-consuming to set up. Moreover you need to set up a Chinese company and get relevant approvals.
- Finding a distributor with online sales channels (B2B cooperation).
- Setting up cross-border e-commerce store CBEC (跨境电商). The benefit of this one is no need for setting up a Chinese company, goods can be stored in and shipped from one of the 37 CBEC pilot zones. CzechTrade offers Czech companies to take part in the Czech CBEC pavillion.
- Daigou (代购 ) – shoppers buying goods abroad and shipping them to their customers in China.
Mrs. Huai then explained the difference between public traffic (such as Taobao, Tmall, JD) and private traffic (such as WeChat Mini-Programs). Traditional e-commerce landscape in China is more and more crowded, it is costly and increasingly hard to build customer loyalty, moreover brands do not own the data in terms of public traffic.
So what about the alternatives?
Mrs. Huai shared three real life examples of Chinese companies that succeeded using private platform. Those companies use their own platform to engage with customers and to do business. Why private traffic matters? The simple answer is that a company fully owns its traffic. WeChat’s Mini-Program is a leader in private traffic with 300 million daily active users and 2.4 mil WeChat Mini-Programs in 2019.
This way, brands drive customers closer to the brand, there is a benefit to the audience (learning knowledge, discounts and collecting rewards for referrals, to name few). Moreover, converting customers to ambassadors and KOLs, online to offline (O2O) is another way to fully engage customers.
But how to build some traffic and acquire followers? Mrs. Huai says that good PR and sound marketing strategy is the key, as well as having KOLs to help to build your audience. She reckons 10-20 thousand RMB per month is enough to professionally manage brand’s WeChat account, but advertisement and KOLs can be pricey.
Are websites relevant for searching for information in China? Yes, mainly using the search engine Baidu, but there are trust issues (such as fake news and advertisement), therefore, these days younger generation search for information on WeChat, Weibo or Xiaohongshu (小红书) , where you can search for keywords or browse customer’s reviews on certain products. Customers don’t really browse brand’s websites in China, Mrs. Huai added.