This post relates misconceptions about selling in the Chinese e-commerce market. In today’s #AshleyTalks you’ll learn about five huge misconceptions and what preparation I advise for brands before investing in an e-commerce presence in China.
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#1 Merely making one’s brand available to Chinese customers will automatically translate into sales.
This perception is often based on the outdated idea that ‘the Chinese consumer’ is eagerly waiting to buy products solely because they’re ‘Western’. In fact, the emergence of online shopping and the huge number of foreign merchants and brands available has created hyper-competitiveness and over-saturation in the Chinese e-market. It’s naive to think that by just making one’s brand available to the Chinese e-market, the demand will inevitably be there.
#2 A product will be as popular as it is in the West when it’s sold in China.
Although globally well-known brands do attract Chinese e-shoppers’ attention, building brand awareness and demand for niche products sold by foreign SMEs in China requires an effort that should not be underestimated. Brands may even need to adjust their products to cater to Chinese consumers. Again, a brand’s success in the Chinese market is not solely dependent on the availability of its products.
#3 China is a single market with one kind of need and demand.
The idea of homogeneity among China’s 181 million cross-border e-consumers is flawed. As anywhere else, but particularly in a country the size of China, Chinese consumer demands can vary completely from age group to age group, income level to income level and from region to region. Needless to say ‘the’ Chinese consumer does not exist.
#4 CBEC is cost-free.
Although CBEC is a comparatively low-cost entry method because of minimum trial-and-error costs and shorter value chains, merchants should keep in mind that cross-border selling still requires high investment. Being present on the biggest platforms comes at a cost. Experts estimate a minimum of 1 million RMB (± € 130 000) in expenses (including branding, logistics etc.) per annum. Moreover, based on the experience of those in the field, continuous human and capital investment, as well as sustained effort and commitment on an operational and management level, are required to succeed.
#5 Selling via CBEC in China is enough.
It should be clear that selling via CBEC is an entry-level strategy in order to acquire market share, brand equity and a relevant consumer base in China. As the volume of products sold increases, for tax and business registration purposes, it becomes more beneficial for companies to engage in traditional trade. Thus, ultimately, foreign merchants tend to use CBEC as a stepping stone to achieve an omni-channel sales strategy where they sell their products via traditional channels as well as online.
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Much of the content for this video was sourced from the recent China CBEC Guidebook by the Consulate-General of the Kingdom of the Netherlands in Shanghai. The full report can be found here http://bit.ly/2xxhGer.