China is an ecommerce goldmine—there are 800 million internet users in the country with over half of the population active on its most popular channels. That being said, China is also an intimidating unknown for brands considering international expansion outside the US.
In a recent webinar hosted by Pattern, experts from our international team dove into the fundamentals of the Chinese market and what brands should know as they think about taking their product there.
The level of growth occurring across China’s ecommerce channels—even in the midst of the COVID-19 pandemic—is exciting. The area’s Gross Market Value in 2019 was $1,935 billion, and its biggest platforms are pulling numbers to rival Amazon.
“I really think the top two players of China will eclipse all of Amazon Global in the next several years,” said John LeBaron, Pattern’s Chief Revenue Officer.
The ecommerce platform Alibaba, which encompasses Tmall, Tmall Global, and Taobao, is dominating the Chinese marketplace, accounting for 50.4% of online sales. According to Joanna Perry, Pattern’s Head of Global Marketing, Tmall grew by 10% in the worst of the pandemic and Alibaba at large has a GMV of $945 billion.
Consumers love these platforms, and the brands that are effectively using them are finding lots of success.
“If you’re not already selling into China and you want to start,” Perry said, “I think we would all agree that Tmall global selling crossborder is the best place to start.”
Things to know about China
China’s approach to customer service and distribution differ from the US, and those distinctions are important to keep in mind as you consider if expansion is right for your business.
“You’ve got to understand that the culture is different and they might have a different paradigm when they’re dealing with you,” said Chris Vincent, Chief International Officer at Pattern.
The Chinese concept of face
According to Vincent, one of the most important things to keep in mind as your brand considers China is the idea of face.
“It’s almost like dignity and prestige wrapped up into one thing,” Vincent said. “Face really can stop people from giving you an honest answer about things if they think that it will diminish their face or make them lose face.”
Maintaining face is particularly important to keep in mind when building business relationships and partnerships within China. It can also impact your growth in the market.
Desiree Wong, Senior Consultant for Pattern, said Chinese consumers equate the brands they’re using to their social status. In previous years, affordable luxury brands have been huge business for just that reason, so focusing your marketing on face can help.
Customer service and delivery
Most customer service in China is carried out via live chat, and according to Vincent, 80 to 95% of all transactions for your brand will touch customer service in one form or another. This is because Chinese shoppers are very careful about what they purchase. They need to know that they can trust the businesses they’re buying from and that the products they see are the products they’ll get. That’s why brands need to offer stellar customer service.
“A well-trained customer service function is worth its weight in gold in China,” Vincent said.
Chinese consumers need as much information as they can get before making a purchase. Wong says brands should use 360 images, videos, and live-streams on platforms like Tmall to provide that information.
“For each single product, you’ll need even more than the A+ content on the Amazon US to illustrate what the benefits of the products are and also how it would look if they received the products so they won’t have any surprises,” Wong said.
Chinese consumers also expect to get their products very quickly, said Vincent. With 1 day shipping being standard in the Chinese market, considering the logistics of your shipping as you enter that market is another thing to think about.
Sales holidays in China
Similar to Amazon Prime and Black Friday, sales holidays in China drive billions in revenue and can lead to lots of growth for brands who do them right. JD’s 618 festival, a sale occurring on June 18th, and Singles Day, China’s version of Prime Day, are great examples of major market holidays there.
In fact, Singles Day crushed Amazon’s US Black Friday sales numbers in the first 20 minutes of its launch. It goes to show the value in that market.
Standing out in China
There are many ways your brand can stand out in China. According to Wong, using capabilities like live-streaming and interacting with customers through microblogging are a few examples. Tmall has the ability to reward customers based on their engagement with brands, and that engagement can help you stand out. Providing marketing through local influencers who can spread the word about your product and increase its face value is one way you can increase engagement.
Thorne, a supplements brand based in the US, made their entry into China with the help of Pattern by holding a sports event and inviting influencers and media to spread the word. This in addition to other marketing tactics brought Thorne $2 million in sales their first year. Read more about Thorne’s success in China here.
4 things to consider in a China ecommerce trade partner
Having a partner that's just as invested as you in your Chinese ecommerce store and growth is important, but it's even more important that you choose wisely when going with a China ecommerce trade partner.
We suggest you consider these four areas when evaluating a trade partner to do business with in China: 1. Make sure you have access to data. 2. Get someone with category and localized market expertise. 3. Make sure they have on-platform and off-platform channel capabilities. 4. Find experts in evaluating your product category ecosystem.
Pattern is launching a store in China for US supplement brands that are looking to sell their products in the Chinese market. As Chris Vincent stated, launching a store on your own can cost upwards of $100,000 and 25% of expected sales volume goes straight back to marketing. This can be difficult for companies that currently have no brand awareness in China.
Whether you’re a supplement brand wanting to launch in the Pattern store, a brand looking to expand into the international marketplace, or you already trade in China and are looking for a partner to help you succeed—we can help. To learn more, schedule a demo with one of our China ecommerce experts below.