KPMG Global China practice released a report stating, “In China’s e-commerce 12th Five-Year Plan (2011-2015)… unveiled policies to make China a global e-commerce leader, in line with China’s transition from an investment-heavy growth model, towards a more consumption-driven model.” They have stayed in line with this plan, as Chinese digital consumerism has skyrocketed over the last decade.
Though the volume of disposable income in tier three and four cities is lesser, the percentage of that disposable income spent online is much higher. A study done by the McKinsey Global Institute showed that 27% of Tier Four city spending is based online, as compared to the 18% in Tier 1.
The most popular form of e-commerce in China is the online marketplace. Chinese consumers prefer to shop from a variety of manufacturers on one site; highly ranked marketplace sites include Tmall and Taobao. The founder of Alibaba, owning company of both Taobao and Tmall, suggests, “in other countries, e-commerce is a way to shop, in China it is a lifestyle.” The best way to harness this cultural shift in China is to go online, go mobile, and go quickly.
Before you begin, look into the licensing and censorship requirements for Chinese websites. China’s internet censorship is considered the most extensive internet control system in the world; therefore your website must be regulated and approved prior market entry. You must register for Yoan ICP license first. Then, find a hosting service such as The Great Firewall of China that will regulate content for you. The Chinese take censorship very seriously, so you must be careful to respect their regulations.
Intellectual property rights are different in China as well. For example, your trademark does not comply with Chinese law if it is not registered in the country separately, and for the industry specialization. A foreign trademark or a trademark in a related industry will not protect your name and marketing collateral.
Chinese customers are highly sensitive to online reviews and mobile-accessibility. In 2014, 20% of Chinese online consumers made purchases on a smartphone, and this number continues to rise. Ensure your website draws mobile traffic by investing in mobile optimization services. You will also want to make your site’s third party reviews accessible. Online reputation management, whether it involves responding to negative reviews, social media engagement, SEO, or maintaining excellent customer service in your foreign markets, is an essential principle to e-commerce success.
Domestic companies are looking to find the best marketing strategy to catch the upward trend towards e-commerce in China, and have the most success when working with a strong global outsourcing and expansion partner. Baysource Global, like other domestic partners, helps guide companies through the legal aspects of Chinese e-commerce, digital marketing, and operations management overseas. Connect with us to learn the steps and starting selling online in China today.