China’s online retail market is larger than the next 10 markets combined, including the US, UK, Japan, France, Germany, Canada. No doubt it is a market no one can ignore.
With the escalating political tension and diplomatic feud, the bilateral trade and import/export will be more challenging and unpredictable. The traditional trade importing to China will incur (1) Tariff & custom duty (2) Sales tax and (3) VAT (Value-added tax). The tariff itself can be as high as 50-80% for categories like cosmetics.
Foreign brands can hardly succeed in China without a local operation, either through hiring an agency or opening a local office. Most agencies would not work with brands that cannot guarantee a minimum of $1 MM revenue.
Chinese consumers are complicated. A foreigner who has never studied or lived in China can hardly understand their preference for brands, products, and their purchasing behavior. For example, Chinese, as well as Koreans and Japanese, see whiter and lighter skin color as beauty. So the whitening skincare products are in high demand vs tanning products non-exist.
All digital marketing tools you know in the U.S. do not exist in China. China has Baidu (vs Google), RED (vs Instagram), and Youku (vs Youtube). The most common marketing tools now, however, are Wechat (Whatsapp + content sharing, mobile commerce, and mobile payment), Tiktok & Kuaishou, two of the top live-streaming and short-video apps. KOLs (Key-opinion-leaders) are critical in driving brand awareness and sales.
Jiaqi Li, known as “Lipstick Brother,” is an internet celebrity and the number 1 seller of lipstick online.
The Peer-to-peer influence is strong with regards to China market. A 25-year college graduate with $1000/month income may spend $50 for lipstick and $2000 for a Louis Vuitton handbag because that's what her friend has. The high cost of living in first-tier cities with rent, food, essentials cannot stop young generation from purchasing luxury products like Dior lipstick. Some say that’s the only thing to make them feel good.
Without understanding Chinese consumers’ needs, even retailers and marketplaces like Amazon and eBay cannot survive. Walmart’s stores cannot compete as well. That’s why they invest in Chinese JD.com.
What could be an ideal marketplace for small/medium merchants to reach Chinese consumers like?
(1) Set up a seller account and create listings as easy as Amazon;
(2) International logistics, order fulfillment, customer service solution available like FBA;
(3) Avoid high import tariffs + sales tax + VAT;
(4) Commission only; no need to break the bank to open a store;
(5) Automated translation plus localized digital marketing, social media and KOL management;
(6) Secured domestic payment;
What’s even better?
(7) Dedicated mobile shopping app already with over 8 millions of downloads, loyal customers, traffic, and sales;
(8) A platform with a reputation of authenticity, no counterfeit, no private label;
(9) A channel proved by Macy’s, DKNY, Saks Fifth Avenue, Lord + Taylor, Zappos, SSENSE, Sam’s club, and more?
Would you sign up?
Stay tuned for the next article.
