05 Feb 7 Strategies for Australian businesses wanting to enter China
China’s economy has continued to rapidly grow over the last several years. With the country poised to overtake the US as the second largest global economy by 2020 and destined to remain an engine of global growth for the next few decades, understanding how to enter this large and complex market is critical for Australian companies.
eCommerce in China has an estimated 700 million B2C eCommerce users, a growing middle class population and an advanced eCommerce ecosystem that puts it far ahead of even the United States of America. However, before jumping into building out an eCommerce channel, brands need to acknowledge that without significant investment (time, money, research etc) that having a B2C channel does not equate to making sales.
Non-Chinese entering the China market will find it confusing and full of contradictions; not just from language and cultural but also around how business is conducted there.
Here are seven practical tips you can take before you take on China.
1. Find the right partner
Going into China is complex. China has at least seven distinct, mutually intelligible dialect groups, of which Mandarin is the dominate one, it also has massive cultural diversity. This means that a “one-size-fits-all” approach to any China market entry is doomed to fail. Consider a different partner in each region. China has 31 provinces – each with a very different set of regulations. It’s impossible to find one single partner who can cover the whole of China.
Before landing in China, Australian businesses can start to sell into China a D2C (daigou-to-consumer) channel. This is basically where brands market and sell via daigou (Chinese buying agents living in Australia) to expansive networks of contacts living in China. Working with DaigouSales we will help you establish a brand connection with this buying community and help you understand more about working with the Chinese consumer.
You will need to be realistic with marketing budgets and timelines. Once you have gained insights and learnings from selling via the D2C channel, DaigouSales can introduce you to different partners to help with simple issues around regulations, labelling or logistics. More established companies will face complex issues like subsidiaries, China offices and domestic competition.
2. Strengthen your brand presence
Brand conversations are about the consumer journey from online to offline and back again. The combination of both is critical. If you are a new brand looking at China then you need to start to develop your brand within the Australian Chinese community. Think about how your brand messages translate into Chinese and consider the brand USP’s being different for this consumer group.
3. Building brands takes time
Australian businesses already know the efforts to build their Australian brand so when it comes to developing their brand in the Chinese community it should be no secret that this will also be hard work, takes more time than expected and will need a flexible approach. Your efforts within the daigou networks will help you build your brand in China but this is not a reach and frequency ‘brand building’ but more of advocacy and word of mouth. Recognise the power of Chinese social media; specifically, WeChat. Look at how Chinese consumers view overseas products – it’s very different from how non-Chinese consumers view Chinese products.
4. Do your research
If you want to do business in China, you have to actually visit China. When I’m there, I spend a lot of time talking to companies in the industry and different partners across media, logistics, marketing and even recruitment. Understanding how they view the China market will give you additional insight into doing business there.
I also read the Chinese papers because their view of the world is very different from what’s in the Australian papers. You won’t have full visibility of what China is truly about if you’re only reading Australian papers.
5. Don’t just replicate
Many brands fail in China because they try and simply relicate what they have in their home market. This will not work. Use your daigou programs to learn about what can be leveraged and what needs to be changed; pricing, packaging, communications, positioning, consumer target …
6. Key Opinion Leaders & Influencers are powerful
Key opinion leaders (KOLs) are established online figures that have gathered large followings around themselves. They are highly influential and can be recruited to represent a business or brand. Different KOLs allow you to tap into specific communities and demographics, providing quality targeted exposure.
In many cases, the larger daigou have become KOLs’s in their own right and their brand recommendations can result in significant sales. At DaigouSales we engage KOLs (including some important daigou) to simultaneously post on different platforms about our marketplace brands, this has an ‘echo chamber’ effect and supports the legitimacy of the brand if numerous figures are posting.
At DaigouSales our team ensure posts and comments by KOLs are closely monitored, merely posting is not enough, so we also fuel conversation and respond to queries. KOLs do not act as a customer service representative, you a simply using their service to reach their community and influence them with via their reputation.
7. Move fast
In China, bigger and faster is always better. This is something Australian businesses need to think about. China has a very short timeline and it accelerates at full speed, which is sometimes tough for non-Chinese companies to understand and keep up.
The good news is that Australian products are highly sought after because of their reputation for being clean, green, authentic and valuable. Ride on that reputation and you’re halfway there.
So you still want to sell in China! You don’t want to risk a lot of time and money. You need to know how to put a toe in the water without getting side-tracked from selling in Australia.
DaigouSales operates the only D2C marketplace and is a great partner to help you get started. We provide you with a fully managed and operated Flagship eStore within the DaigouSales marketplace, take care of all the cross-border shipping and payment from Chinese buyer; all for a modest monthly subscription fee of $A249.
As a first step towards China, you can’t go past this platform. Start with pricing and portfolio strategies. Make smart marketing choices and build your brand within the daigou group so they can start to test then advocate your products within their buying networks located in China.
Once you have seen some traction within this D2C channel and have learnt more about the Chinese consumer, you are in a much better place to move towards commencing a B2C channel strategy knowing much more about which Chinese consumers will respond to your products, pricing and branding messages.
You understand the risks and are still interested in targeting Chinese consumers…what are the next steps? Contact us and we’ll set up a meeting to discuss your business’s particular circumstances, including risks, challenges, and opportunities.