Despite high profile failures in China, including Asos, the potential reward for international brands launching successfully into China is still enormous, with 668m internet users, a booming middle class (now the size of the entire US population) and 63% cross-border eCommerce growth in 2015 on top of total eCommerce growth at +48%.
And the good news is that you don’t need to invest anything like the estimated £10m that Asos did in order to test, learn and scale up your business in China – in fact it’s easier to trade cross-border and sell to consumers in China that ever before.
Here are my 8 steps to launching in China, without betting the house:
1) See if there’s demand for your brand
It sounds obvious, but many brands overlook this stage and if there’s very little demand coming from China today the chances are that you’re going to struggle.
A great way to see if there’s demand (other than your own sales to China, presuming you’re already at least shipping there) is to look on Taobao, the Chinese version of eBay, and see if your brand is being re-sold on there. If it isn’t you’re going to have to work very hard to create brand awareness and demand for your brand in China from scratch.
If there are already lots of products from your brand on Taobao (even if some of it appears fake) you’re off to a great start because the word of mouth is out there and Chinese entrepreneurs are snapping up your product and selling it on, often at inflated prices – that shows demand for your brand in China better than most market research can do.
2) Test the water with localisation
Presuming you are attracting Chinese customers today (to your UK website) the first low-risk step is localisation of your offers and navigation.
You could easily test a localised promotion targeted at Chinese customers by geo targeting visitors to your website and emailing your Chinese customers (presuming you have at least a few already) a ‘Singles Day’ promotional offer on 11.11 to capitalise on the massive Chinese online shopping event when most of the 668m online users are online looking for deals.
To improve conversion you can also inexpensively create locally translated landing pages, translate just your main navigation into simplified Chinese or even test something as simple as making your ‘Add to bag’ button red. We tested changing our green ‘add to bag’ button to red and saw a +4% increase in add to bag metrics from Chinese customers – really simple to do with a good A/B testing tool.
3) Start to remove the main barriers: delivery /payments/currency
If your delivery to China is slow and expensive (like it is for many British retailers) and you don’t offer local payment options like AliPay and UnionPay you are already putting up a huge barrier for Chinese customers to shop with you.
I would start with testing free delivery to China for a limited period (and test the uplift in demand it gives you and if the uplift offsets some of the extra cost). Investing in improving your delivery to China is, in my experience, guaranteed to improve the demand for your brand by removing that barrier – you can offset some of this cost by setting a minimum spend for free shipping or even building in a small currency margin into your prices to cover it.
Working with a partner like Global-e you can (without the hassle of directly integrating yourself) add multiple local payment options to your UK website (AliPay, UnionPay etc) payment in local currency (RMB) and even give customers the ability to checkout in simplified Chinese.
Their solution is a great low risk way (you only pay commission on sales to China) to test whether removing these barriers leads to an uplift in conversion and sales in China.
4) Test localised marketing activity
Whilst in 2012 (when we were looking into launch into China) it was extremely difficult to find good local agencies (I had to spend time in China meeting numerous agencies on the ground) in 2016 there are now plenty of agencies with both the local experience on the ground, the language skills and understanding to work with international brands coming into the Chinese market, many of them now with small offices in the UK as well as in China.
Unusually my first step marketing-wise would be to establish your social media presence in China, rather than the more typical western approach to set up a Google Adwords campaign first.
Why social media?
In short its influence on the buying purchase is far higher in China than it is in the west. That becomes apparent when you hear that 53% of Chinese customers say their purchases are influenced by what they see & read on social media platform Weibo and that their first thought when discovering a new brand is to search on Weibo/social media for affirmation of the brands’ credentials and authenticity. If these researchers find your page on Weibo (which is where I would start) and see thousands of engaged fans and ideally endorsements by key opinion leaders (KOLs) they are much more likely to trust your brand and buy from you after visiting your UK site.
Also I think it’s worth looking at the social network/messaging app WeChat (a staggering 700m active users) as 31% of their users in 2016 made an eCommerce purchase through WeChat, up from 15% in 2015 and Chinese consumers generally prefer communication from their favourite brands through WeChat rather than email, which isn’t actually that popular in China!
I would also investigate the viability of setting up a basic brand search campaign on Baidu, which dominates search in China, (Google is blocked) although depending on the search volumes for your brand this might not be worthwhile at the moment for your brand.
5) Launch on Tmall (Global)
This Alibaba-owned marketplace has both the scale (400m users) and the international platform (Tmall Global) that make it easier than ever for international retailers to get up and running quickly selling to Chinese consumers.
Because Tmall Global requires no Chinese entity (unlike the main Tmall site) and no stock in country (you can ship cross-border from the UK) this is a perfect means to again test the potentially demand in China without huge risk and stock commitment.
Note: you will need to work with a ‘tech integrator’ to access the Tmall marketplace and ensuring you work with a strong, local (Tmall) partner will be key to the success selling on Tmall. Again these partners are much more international and easy to find than they were in 2012 when we were first looking into settling up on Tmall.
6) Further invest in your Chinese proposition
Investing in easier local returns and local language customer care are the next logical step to remove further barriers for Chinese customers and again should more than pay themselves back with improvements in conversion (especially new customers) and customer satisfaction/frequency.
More and more international logistics operators are starting to invest in local returns hubs from China and for a small fee will offer a local returns address, handle the returns and send back to the UK once a week – customers are used to paying the local leg on returns, you just need to build in the line haul cost of getting these orders back to the UK.
In terms of localised customer care you can relatively easily start with outsourcing this until there is sufficient demand to possibly hire a Mandarin speaker into your global customer care team.
7) Hire local language Mandarin resource
To really then start to understand the Chinese market, optimise your channels and step up your activity you absolutely need a native speaker on board.
My preference initially would be to have that person sit in my team in London, travelling to China regularly and working with local partners on the ground. However a lower risk option is to use an agency to fill this role and build out your own team of native speakers based on success.
Having that resource is absolutely critical to growing your brand and sales in China and especially so if you plan to make the 8th and final step in my process.
8) Launch a standalone .cn Chinese site
This is the ultimate step and requires the biggest commitment and investment, which is why you should only look at this step once you’ve worked through steps 1-7, grown demand significantly and proved the business case.
Whilst this step will establish your brand presence and credibility as well as giving you the platform to truly scale up your operations in China it comes with a lot of caveats. With a localised .cn site you’ll have localised UX and web design but customer expectations will move up several notches as they expect you to meet the high service levels offered by local retailers – think next day delivery, instant chat customer care and of course a fully translated website with local content and functionality.
Whilst you might be able to launch a .cn site initially delivering cross-border from the UK ultimately you’ll need to invest in having stock in country and all of the risk and challenges that represents. Bonded warehouses and Trade Free Zones in China have again made having stock in country much easier than it was just 3-4 years ago but it is still a huge challenge to pick and manage the best stock for the Chinese market (especially if you’ve only managed stock from one location to date) and is a decision that will require serious consideration and buy-in across the business to execute successfully.
It goes without saying that your local site needs to be fully mobile optimised and you might even want to consider a mobile/app first strategy with over 50% of transactions in China now on mobiles and growing even faster than most markets.
I could write a whole book on this phase and whilst the rewards of fully committing to China through a standalone local website are potentially huge, the risks are also substantial and you’ve got to be committed for the long-term.
It’s also worth noting that there’s a growing school of thought that a Chinese website isn’t actually necessary, given that marketplaces in China have roughly a 90% share of all online retail and are the starting point for most online transactions in China. The jury is out on this one though and clearly you’re going to struggle to grow any kind of brand in China without your own localised brand website, but worth considering that it’s not a step they everyone will or has to take.
To summarise; successfully launching into the Chinese market will be a roller-coaster, with likely higher highs and lower lows than you’ve seen in any other market.
Enjoy the ride as much as you can, test with low risk strategies, learn from your mistakes and be prepared to scale up FAST if see your sales stating to take off in China.
Good luck – you’ll need it!
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