Have you ever tried to build a new overseas brand and fail in your attempt? In any approach to China, foreign brands often make some common mistakes when trying to sell their products in China mainland. Although such misconceptions are not exclusive to online environment, we will focus on those that particularly affect your approach to e-commerce in China. China is already the world’s first e-commerce market.
Are you going to miss its enormous potential?
First bug: China is mobile, and you better record it
It is not the first time we tell you this, and for sure it won´t be the last. As we mention before in our article “How to Take Advantage of the Latest Ecommerce Revolution?”, Ecommerce has been a great revolution for both companies and customers.
Nowadays, Chinese prefer to use their mobile devices rather than their laptops and according to the new trend, companies have already starting to adapt themselves to portable devices. Moreover, those companies using U-commerce are focused on improving the customer experience through customizing and navigation created in cooperation with the User.
Second bug: E-commerce may be an asset in your country, but in China is irreplaceable
We cannot fail to mention Frank Lavin, CEO of Export Now, when he says,
“In China, Ecommerce is the cake.”
This may mean that you will need to adapt your business to the new environment. Do not expect it to be China who suits you, this does not work this way.
Remember that whoever hits first, hits twice. Embrace e-commerce as the enabler of your business it is, and take advantage of the immense benefits that electronic commerce can bring to your company to start selling around the World!
Third bug: Social Media is there to stay. Register your account and start moving!
Not only around the 93% of the online searches in China are done in their own search engines –Have you ever heard Google does not work in China?– but also about a 68% of the customers take a look on the official Social Media account before buying.
Do not miss the opportunity to have a voice in that huge chicken coop is the network, start developing a tailored communication strategy for your brand and gain your piece of the cake!
Fourth bug: Domestic and lazy thinkers, or how the triumph from a day doesn’t make it daily
Do you think you will keep doing in China pretty much the same things you were doing before and as a result you will achieve success?
A basic rule you should never forget again is, no matter the experience and the many different markets in which you have entered before, is that new horizons always implies a new starting on your understanding of the target, so we definitely encourage you to start a market analysis.
Will your brand be competitive in China?
Do you offer something different regarding your competitors?
Is there a suitable market niche in the country ?
These and a thousand more questions require a prior discussion, keeping in mind that China should not be underestimated: the country enjoys some peculiarities you definitely must know before starting your landing.
We strongly recommend you seek assistance from professionals focused on the Chinese market, in order to enhance your chances of success in the country.
Fifth buf: Do not try to do everything by yourself, ask for advice
We are not tired of saying it, and will do so again: China is not a flat road. Do not try to embark on this mission unaccompanied, but pick very well with whom.
Look for complementary partners interested in joining forces, go to Government agencies dedicated to external actions and internationalization and definitely search for specialized agencies in the country to start outsourcing some tasks.
Already in search of a consulting expert in digital marketing and e-commerce? You have come to the right place.
Any approach to Chinese landscape ends falling into the same debate: Will China evolve or break over the next years?
Although experts do not agree (And neither do we!), in the team we believe it is important to name some of the most immediate challenges ahead for China.
Current challenges are also the challenges of the future
When we talk about China, no one agrees. The huge boost experienced by China in the last thirty years has not buried the doomsayers who year after year have sown doubts about the future of China. Faced with them there are some enthusiasts who proclaim that the next world leadership belongs to China. Who has the reason? Not everything is white, not everything is black. Both sides are right.
Reforms, Where to start? Ten points to keep in mind
China is characterized by the dynamism that has developed in recent years. In order to ensure the future growth of the country, Chinese authorities must address some issues of particular importance:
First, Local Government Debt:
Local and regional government debt have been a terrible headache for analysts. We would like to underline the explanation Nicholas Zhu, senior analyst at Moody’s, gave,
“For the local government direct debt, we believe the government is finding a handle by capping it at 16 trillion yuan ($2.45 trillion) overall and improving the structure by swapping some existing debt into bonds at lower cost and longer maturity.”
However, in recent times the central bank started to allow qualified individual investors to buy and sell the bonds through commercial banks.
Second, Reform State Companies:
The Government is attempting to reform the state-owned sector while continuing to maintain its currently control. To do this, some different attempts have been made, such as: mixed formulas, restructuring, mergers, open up protected service sectors to private and foreigners, them all focused on enhancing their competitiveness and autonomy on private-sector markets.
Third, Liberalize the Financial Sector:
Financial liberalization is a key in Chinese reform, and it is closely linked to the privatization phenomenon itself. Both reforms will be needed to maintain Chinese growth, and facilitate the creation of jobs and the reliably channels credit to companies. The success of economic reforms carried out, will be a determining point of stabilization or social destabilization, and are a sensitive issue in governmental action. As the country opens its doors further, as the former Australian ambassador to China, Geoff Raby said,
“Equally China will be more open to capital inflows.”
Investment in China is drived by Foreign Direct Investment, as a key which gives advantages to the supplier and also to the host. Moreover, is a thermometer of the future of the business, and China has already started to capitalize its benefits. At the same time, FDI depends on some key – factors:
- Capital Availability: China is already the world’s largest recipient of foreign capital.
- Competitiveness: Rests on the country’s capacity to develop its infrastructure, resource availability, productivity and workforce skills.
- Regulatory environment: A difficult legal doctrine and excessive regulation, have been a serious handicap for investment in China. Things are changing, but it is still far to be as it should be.
- Openness to trade –especially international one.
To achieve the Chinese structural goals, it is a necessary condition that the country’s growth rate is maintained over 5 years above 6.5%. Moreover, in China Dollar strength prevents avoid closing 2016 with deflation, and has contributed to high capital outflows in recent years.
Sixth, Chinese Demand for Hard Commodities:
A very important point to consider for countries that produce raw materials as iron, copper or aluminum. Its prices will drop sharply as long as its demand will go slower. This expectation is opposed to food, which will keep increasing due to the growth of Chinese middle class.
China´s export competitiveness are based on three main principles: low unit – labour costs and interested rated, and an undervalued yuan. Due to the paradigm shift, it is expected that China’s strength at this point has begun to crack; an opportunity for others countries after all!
Over the past five years, China has promoted with great vehemence its innovative sector. The technical, economic and human development are impressive, especially its efforts in Science & Technological graduates. According to Mckingsey Global Institute,
“China must generate two to three percentage points of annual GDP growth through innovation, broadly defined. If it does, innovation could contribute much of the $3 trillion to $5 trillion a year to GDP by 2025.”
China lives in a permanent Environmental crises: air and water pollution, deforestation and desertification, biodiversity, high rates of cancer and the growth of a middle-class who is adopting a Western –style consumer patterns have become a huge problem for future. China needs to change the course of its current model. Therefore, he has embraced renewable energy.
We cannot talk about Environment without mention Consumption. The sharp increase of in domestic consumer patterns and the Chinese middle-class prosperity, will need of a sustainable and growing consumer economy based on the need of big service sector reforms.
Companies must be ready. How to be competitive in China?
The rapid evolution of the world stage precludes long-term estimates. Having an updated database and the example of a specialized agency, is always a clear advantage in any approach to the market, but even more in China. It has never been enough for global business to know what is coming, but also knowing how to take advantage of every opportunity that arises in the market.
In search of a specialist Agency in the Chinese environment? Are you interested on Digital Marketing and Ecommerce?
How does Chinese Market work? How can companies promote themselves without Facebook and Google? How do people survive under huge competition there?
China is -still- a mystery for foreigners. The country means a huge cake, but before entering the market you will need to answer to this and other questions. To make it easier to you, in 2 Open we have taken a brief look of the Chinese market and done a list of the most basic tips you should consider before landing in China.
Gone wrong? It can go much worse
When many companies started their business in China for the first time, the things they used quite a lot in local made no sense in China.
Ebay is one of the biggest e-commerce platforms around the world and a perfect example to explain the experiences many foreign companies face in China. Due to its leadership, the company assumed that its landing in China would be no much different to that experienced in other countries, so in the beginning they refused to establish a partnership with JD.com. The company soon realized there were no more choice but to cooperate with them.
What are the most common problems that foreign companies face in Chinese territory?
Foreign enterprises in China often fall into the same shortcomings we analyze below. Let´s see:
First, Always try to show their high-end enterprise images
Foreign enterprises always show their best face: high-quality services, responsible attitude, respect to the customers… and so on. But in China, price is the key and can always be the KPI which attract the customers’ sight immediately.
Second, Focus on high-end target audiences but ignore the rapid growth of China
When companies like Blueberry entered China, they set the target group to those corporate users. As the earliest and past No.1 smart phone, Blueberry had already been famous in China. But within 7 years (2006-2013), they retreated from China and closed their Chinese official website.
When Huawei set off their business, what they did was to set the target audiences as all people who want smart phone. Since the average income of Chinese people is increasing, so that more and more can afford a smart-phone. Huawei was right about its strategy.
Third, Copy the promotion strategy directly to China
Many foreign companies would prefer to make a wonderful advertisement, an amazing poster and advertise in the subway stations, supermarkets… and everywhere. But they always find out that the ROI is quite low, since they might only get 1 customer for a 100 RMB budget. Does it outweigh? We don´t think so.
In China, since the civil quality is still on a shallow level, what the customers care most is whether they are interested in, but not what is a good design. That is why when Taobao.com stepped out their first step, they even promoted on some illegal websites which had huge traffics every day.
Fourth, Think too much about customers but ignore what the customers are thinking about ICQ. The instant messaging software also failed in China!
The U.S. companies are always stricts on protecting the users’ privacy. With such a policy, users can’t find the chat record if they log in on another PC, since the software will not memorize or save these records in order to protect the privacy to the most degree.
Its counterpart in China, Ma Huateng, found out this fault which doesn’t fit the Chinese users’ requirement. In response he created QQ, which is based on the technology of ICQ and make this software become the most-used IMS in China.
Fifth, Rely too much on the Western promotion ways, companies do not want to do things directly
E-mail, Mail and SMS promotion require low budget and have huge audience quantity. Well, they do not make sense in China. For many Chinese people, it is absolutely offensive if they receive advertisement in these channels since they have watched and received too many advertisements already. Moreover, for most Chinese these all are considered private.
They don’t like to be bothered by anything they don’t even know. In China, what people prefer is face to face, no matter if it is for sales promotion or negotiation. The Chinese only trust the people in real life. That’s why when Zhou Hongyi took the responsibility of Yahoo China, he fired all employees who only did E-mail promotion but never visited the clients.
What should you do, then?
First, Pay attention to Chinese culture
Chinese culture is totally different comparing with the Western cultures. Different political systems, different History, different religious beliefs. Thus, the culture strike shows extremely seriously in China.
Your company should do its best to avoid the culture strike and assume their role. We suggest you yo have a look to Lancôme experience in China.
Second, Explore the Chinese consumer behaviour and preferences
Knowing the Chinese consumer behavior and their preferences make the difference. What are the KPIs to attract them? What they care the most? What they pay less attention to? What channels they prefer to get promotion information?
All these questions need to be taken into account when setting up the marketing strategy in China.
Third, Know the correct channels
Due to the firewall in China, many foreign websites (Google, YouTube, Facebook, Twitter, etc.) are not allowed in the China mainland. Thus, use Chinese sources.
Fourth, Speak that language
Chinese people still prefer to speak Chinese. So, when doing business with them, try Mandarin: it is always more than welcome.
There are still lots of thing we need to explore and learn about China. In search of an Ecommerce and Digital Marketing Agency?
This article has been edited by Paula Vicuña, from 2 Open.
In the first part of this article, we showed and identified 5 main points that differentiate a Chinese website from its western counterpart that we need to keep in mind in order to build a good one.
Let us summarize some of the main points addressed in the previous article:
- The style, design and structure are more complex and with much more information in opposition to the cleanness of the western websites
- Where to host your Chinese website is one of the first decisions to make. The most of the times we advise you to have a hosting in China. For that you will need a Chinese company to apply for an Internet Content Provider (ICP License)
- The Chinese Great Firewall blocks all websites that do not meet the content requirements that marks the Chinese government
- Your website needs to be ready to integrate with the main Chinese players. Google, Facebook and friends are banned in China; instead you will need to use the BATs (Baidu, Alibaba and Tencent).
After this little updating, we would like to further develop this post showing you 5 more crucial things to take in consideration when building a good Chinese website.
When building a chinese website, What else should I know?
6 – CHINA IS MOBILE. BE RESPONSIVE
Adapting our website to mobile is very important in any country, but in China is mandatory.
The Smartphone is, in many cases, the only way they have to access the Internet. Therefore Chinese users are much more familiar with the use of mobile devices. Keep in mind that almost the 50% of all Ecommerce transactions made in 2015 were done via mobile, compared to the also quite high 22% in the United States.
Don’t think any longer and start working on a nice mobile design… Mobile first!
7 – DOMAIN. WHICH ONE IS THE RIGHT OPTION FOR ME
In your approach to domains, three are the main options:
– Not that long ago, to have a .CN was a must. It was not possible to get it if you didn’t have a Chinese legal entity. This has changed over the time and now you can easily get a .cn domain, no matter where your company comes from, just providing a copy of your Company’s ID. As the Chinese international top level domain, your brand might be perceived as having a strong presence in China and might also bring some trust
– On the other hand, we have the .COM domain. Chinese Internet users are increasingly getting used to this domain. Major Ecommerce platforms like Tmall.com, JD.com or Sunning.com may bear much of the blame for this. It can be very good for foreign companies trying to sell their products in the Asian giant to have a .com domain as it might help to highlight the international feel of the brand
– .COM.CN is the ugly duckling in the middle still in use by many brands mixing the good things from the previous mentioned domains, but without reaching their full advantages. In any case it can also be a good solution.
Which language should I use?
Another point to think about is the language to be used. Does your brand have a Chinese name? Then you can also use its pinyin term. Pinyin is the romanization system for standard Chinese: Chinese search engines recognise the pinyin words in the URL and then link them to what they stand for in Chinese characters in order for the website not to lose coherence.
Don’t get crazy about the domain, they are usually not that expensive. So, in case you can afford it, try to get the three of them (.com, .cn and .com.cn), plus their pinyin variants and redirect them to the main one; depending on your strategy.
8 – CONTENT. DON’T GET LOST IN TRANSLATION
It is important to know very well your main target markets as the language will differ depending on it. It might be obvious to mention it, but it wouldn’t be the first time that a company’s target consumer is in Hong Kong, Taiwan or Macao and the language used for the website translation was simplified Chinese instead of traditional Chinese and the other way around. That is a major and silly mistake that takes a long time to revert.
I don’t want to mention either the fact that a Google translated web does not help at all, but I am doing it because I have seen too many. It is mandatory to let a professional team take care of the translations. In 2 Open we separate this process in three parts:
- Translation, interpreting the main message that the customer wants to transmit to the final customer, done by a marketing professional in our team
- External review, done by a professional translator outside the team
- Final review, done by another marketing professional in our team
You might not believe it, but in certain cases we still get minor complaints. This is because Chinese language can be interpreted in many different ways. Therefore translations are always a difficult point in the list.
Is Customization a mandatory requirement?
Let’s not forget about the Chinese cultural customization. Website localization embraces translating and localizing a site into different languages making sure all content (text, images and videos) is translated correctly in an accurate, cultural and technical manner.
As stated before when talking about content, we are also talking about images and videos. There are no written rules and it has similarities to the domain section we discussed above. There are brands like Nike or Zara that prefer to maintain their international feel using western models in their multimedia strategy. Many young Chinese users welcome this method, but not all of them. Depends on the strategy you want to follow.
9 – PAYMENT OPTIONS. CREDIT CARDS? NO, THANKS
In the previous post, we wrote about the BATs (Baidu, Alibaba and Tencent). In China, the online payments market is currently dominated by two of these two tech giants – Alibaba’s Alipay and Tencent’s WeChat payment with 49.2% and 20% market share respectively.
These companies try to increase their market share by adding more brands and merchants within their ecosystem; something that both companies effectively handle. Also cash is king, as cash on delivery holds a strong position. The fast and vast adoption of electronic payments via mobile is likely to counter this trend in due time.
It is actually China and not the US at the leading edge of the trends towards mobile payments technology. Just for putting an example, both WeChat and Alipay have long used the now famous QR codes to let Chinese netizens pay for purchases and transfer money. It seems they have jumped over some natural technological development processes. This kind of behaviours can be quite normal in undeveloped countries that start to grow very rapidly.
What happened is that they adopted the mobile payment technologies even before implementing some existing ones as a huge percentage of the Chinese population accesses the Internet via mobile devices.
Get ready to integrate Alipay in your website as first and mandatory option. And seeing how fast Tencent WeChat payment is growing, that would be your second natural option.
10 – SEO
Once your website is ready, you will need to submit it to Baidu creating a Baidu Webmaster Tools account (only available in Chinese). That way Baidu will be able to index the site properly and your great Chinese adventure starts!
Search engine optimization done in Baidu is not so very different as the one you could do for Google. Anyway, we would like to note a few differences I think you need to know:
– Meta description – unlike Google and Bing, Baidu still uses Meta descriptions as a ranking factor. Keyword targeted description match users’ queries and their demands, which would help with the click through rate (CTR).
– Indexation – Baidu’s web crawling bot, Baiduspider, is not as advanced as the one from Google. As a result, you will need to help Baiduspider to discover and index your pages in different ways. Without mentioning that you can go to sleep and wake up with huge traffic losses or de-indexed pages usually caused by a penalization. Be careful what you do!
– Link building – On Baidu, it is not about the quality of the publishers’ website, it is more about the unique relevancy of the content (as it relates to your content) and the quantity of links to your pages. Baidu penalizes duplicate content and it also disallows irrelevancy. Authority and quality of the publisher is not that important (for now). In short, the more the merrier as long as it is not duplicate.
– Baidu services – Baidu offers a lot of different products apart of Search; use them and leverage their integrated marketing power. The most useful are Baidu Zhidao (questions and answers service) and Baidu Baike (Wiki service), but there are tons of other services that might be helpful to increase brand awareness and for content creation.
As for the tracking, most people use Baidu Tongji and/or Google Analytics. Yes, you read it well; Google Analytics still works in China and it is the only Google service that still does. You will find many detractors, but for what we have seen there is no huge discrepancies between the data collected by both systems (usually not higher than 5%). And Google Analytics has more functionalities than Baidu Tongji.
It is also important to mention the typography. Chinese language is not easy to read due to the difficulty associated to its typography. With 40,000 characters, they are divided in strokes which amount can vary between 1 and 60. Therefore the font size should be at least 12px.
At 2 Open, we would be pleased to help you.Take the advantages the Chinese market offers.
With the cooperation of our Digital Marketing and Ecommerce Agency, China will be at your fingertips.
Do not hesitate to visit us We´d loved to hear from you!
This article has been edited by Paula Vicuña, from 2 Open.
Most western economies enjoy an abundant offer of qualified talent that proportionally lacks in China. Nevertheless, China’s macroeconomic situation is starting to increase the demand of qualified talent, and more importantly, it is starting to value it more, rewarding it in ways that we do not often see in other economies, or at least not back in Europe.
All of this creates a reality of scarcity due to the fact that an increasing amount of knowledge is being accumulated in just a few hands and results in a division between talent knowledge and labor knowledge. When competing in the knowledge market, being capable of assembling a talented team is the key difference that will give you the competitive advantage.
Big companies and well-funded start-ups are very aware of this fact, they put a lot of effort and invest a lot of money on the recruitment of talented personal.
So what about small and medium-sized enterprises then? What can they do in order to be competitive as employers in the Chinese market? And what can they do when big foreign companies tend to concentrate on tier 1 cities candidates that have good English communication skills?
The questions mentioned above have very difficult answers. Truth be told, most foreign SMEs in China have no chance of succeeding, or being competitive, as an employers in such a shark tank, that is, tier 1 cities. Looking at it from a market perspective, tier 1 cities are a horrible place to build and sustain a capable and long lasting team.
Probably, trying to move out of a tier 1 city is the first advice for foreign SMEs. Even if the idea of living in a truly Chinese city, without Starbucks or McDonalds hanging around, frightens you, it will make it a lot easier for you to grow your company. The only real issue here is that clients and movement is mainly happening around cities like Shanghai and Beijing and less in other cities, nevertheless there are plenty of other means through which you can get clients. At the end of the day there is no perfect place to grow your business without a few drawbacks, maybe once your company has grown enough you could consider moving to a tier 1 city.
It is worth mentioning, however, that finding clients is the first stage of every business, that initial stage where it is considered a top priority. With its years of experience, 2 Open has long surpassed that, right now, finding clients is for us only a secondary priority. We are now focusing in process excellence, in nurturing scalable ways of working that continuously add value to our clients, keeping a stable and financially balanced organization that will last for many… many years…
This is one of the main reasons why our company does not only have offices in Weihai and Cáceres, but is based in Shanghai and Madrid. We are constantly making changes in order to maintain competitive advantage, we have already been in the market for 3 years and we are preparing for the upcoming 30. We strive in order to offer reliable, sustainable and long term oriented solutions that add value to China as a whole, not only its tier 1 cities
Probably you do not think that moving to tier 3 in order to assembly a powerful team is something you would like to do yourself. Well, do not worry about it. If you want to know more about how we work and how we help, engage, support, and lead our clients to succeed, contact us. We DO Open. Do you?
This article was edited by Andres Arroyo Olson from 2 Open.