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.
What are the risks that could arise from the economic slowdown in China? How does China affect to other countries? Since starting its market reforms almost thirty years ago, China´s currently economy cannot be ignored.
Even if China has not left behind its centrally-planned economy yet, it has introduced some big measures to turn into a market-based country. Such efforts have resulted in a huge GDP growth and has lead the country to reach all the Millennium Development Goals by 2015.
Currently China has become the second largest economy in the world, but deals the first in the ranking by the quantity of goods and services produced. Moreover, according to the expectations published by the International Monetary Fund (IMF) for the present year, China will be responsible of the 18% of the entire World economic activity.
If to all this we add the expectations of its huge and richer population, its rapid change on production models and its consequent role on the World stage, we can conclude that the importance of China in the world has become a matter of vital importance in today’s global interregional balance.
But its big hits cannot make us forget that China still remains a developing country, and as we have mentioned before on our article “Ten Challenges on Chinese Future“, not only market reforms are incomplete, but also it has huge challenges ahead which must start to face.
After the financial crisis of 2008, neither the business community nor Governments have fully restored their confidence on the global economy. The doubts about the economic bonanza and the future role of Western countries have underestimated the increasing influence capacity of China in the international arena, while doubts have generated certain fear of a possible blowout of the country.
Trade effects are a game changer
The channels through which China affects the global economy can be summarized on:
- Decrease in trade and exchange rates
The Chinese leadership on trade makes hard not to affect global demand. China’s import volumes keep growing, but less than expected. This becomes a huge problem to those countries dependent on Chinese exports: raw materials are highly susceptible of the slowdown.
This effect creates a bidirectional paradox: China affects the world as much as the world affects China.
Although there has been much speculation about a possible future depreciation of the RMB in order to relaunch Chinese exports, in the team we believe that a currency war is currently off the table.
- Oil lower prices and commodities
The latest drops in oil prices are caused by the lack of confidence on Chinese economy. Its weakness has led to enormous imbalances on exporting countries of crude oil and raw materials: Russia, Brazil, OPEC countries and the U.S. still suffer for it. China’s falling demand has greatly contributed to the new situation and with it, deflation has knocked on the door.
However, according to the latest analysis made by the IMF, the negative effects are supplemented by growth in the purchasing power of the population. The Organization still thinks that lower prices on commodities have a positive effect on general economy.
- Monetary and inflation policies
The recent affordability of RMB should not make us forget that Chinese weakness can lead to a global new paradigm surrounded by deflation and debt. Once again, lower prices stimulate consumption, and this leads to boost demand, bigger sales and prosperity. Lower prices have become the stimulus of global economy.
- Cultural hegemony
Even if the Western countries have underestimated China’s rise, the consequences can already be seen. Although Cultural power follows to Economy and Politics, China already shows its increasing political and cultural power on international arena: mandarin language and Chinese diplomacy have become a key to Government policy.
Its empowerment is more visible in East Asia, but runs fast around the rest of the world. We have started living in a China-centrism, in which global power gravitates around Chinese policy.
Nowadays, confidence in the global economy is vital for prosperity but unpredictable. The ripple effect that is lived in the global area, is greater than ever.
Understand this huge spider web which is China, seize opportunities to launch your business and boost your sales, are our goals.
In search of a Digital Marketing Consultancy? Interested on Chinese Ecommerce?
Visit us on 2 Open. We would love to hear from you!
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?
This post comes to underline the strategy played by Spain on EU’s China policy, a role which has received virtually no attention so far, as well as the major reasons why Spanish e-commerce is potentially attractive for Chinese companies.
Spain´s strategy is based on promoting a political resemblance with China in order to gain a preferential economic treatment, a plot which has led to disparate results for both China and Spain.
A general view of bilateral trade
Even though both countries feel friendliness each other, they do so for different reasons: Spain emphasizes on economic benefits, while China is interested on Spanish political weight on the European stage.
In the last thirty years, Spain has tried to turn China into a key-partner, with mixed results in practice.
- China is the 5th non-EU destination for Spanish exports
- China is the 1st non –EU origin of Spanish imports
- Spain is the 7th trade partner of China in –EU
- China is the 11th destination of Spanish exports
- China is the 14th destination for Spanish investment (less than 1% of total)
- Spain is the 9th destination for Chinese investment in -EU
When looking at the evolution, some positive trends can be underscore:
- Spain’s exports to China have double to 4 billion in 2014
- China’s exports to Spain are growing since 2013
- Both country´s exports are well diversified
After the financial crisis in the West, Spain has redoubled its efforts to trade with China. There is still a huge growth potential for both countries to further develop.
Political understanding to facilitate Chinese future investment
The difficulties encountered by the Spanish companies in their landing in China contrast with the political temperance shown by Spain in its approach to China. The policy marked by Spanish governments regarding its Chinese counterpart has never shown significant differences: whether the party in power, Spanish policy has always been the same.
Far from stagnating, Golden Visa and Spanish Treasury Bonds are just two examples shown by Spain to attract Chinese investors, as well as the constant reminder of its close ties in Latin America.
The potential of Spanish E-commerce: an opportunity for Ecommerce business
Comparing to other mature markets, there are still loads of fresh chances to seize in the country: Spain’s ecommerce market as a whole is relatively small.
According to the latest analysis –Ecommerce Europe ´14-, Spain is the largest Ecommerce market in Southern Europe, far from Italy (2nd) and Turkey (3th).
Around 60% of Spanish customers already shop online, spending on average € 900 per year. Moreover, more than the 60% transactions are cross-border: UE, US and China lead the Top-3.
Its growth potential can be prompted by some aspect anyone thinking on approaching Spanish ecommerce should take into consideration :
- Improvement in logistics
- Take an advantage of the lower cost for online marketing
- Customer acceptance of foreign W-shops
- Spanish consumers distrust on websites, so offering a secure payment method is a must. Paypal is the favorite of more than half of buyers
- Spain is the European leader in mobile usage, and keeps growing
- Spain is the best gateway to test Portugal and Latin American countries
The bilateral relationship between China and Spain is one of our tasks. Thanks to our understanding of the market, in 2 Open we can help you boost your digital business.
Leverage the benefits both countries offer to your company,
Have you ever heard about Guanxi?
This post seeks to provide practical guidelines to Companies on how to handle business interaction between Chinese and Foreign parties to ensure business agreements.
While doing a Market Research, Companies should be aware of some of the basic particularities which can condition their success or failure.
To develop an appropriate strategy of internationalization, it would be necessary to analyze some of the key-factors which can be decisive. Due to deep social differences among East and West, in China the importance of personal connections is crucial.
Major differences in negotiating with Chinese firms face many challenges which can eventually destroy a future profitable relationship.
Throughout this article we will make special mention of the term Guanxi.
Guanxi is essential for successfully doing business in China. The term is used to refer to a mutual trust between both parties, based on a long-lasting and reciprocal personal relationship.
Guanxi connections in China
There are some Chinese thinking patterns you should take into consideration before starting your business in the country:
- The importance of interpersonal relationships in business, terms specially related to hierarchy and reciprocity concepts.
- The effectiveness of moral over legal practices
- Prestige and public standing to guarantee the Face
In your approach to establish a networking, patience will be required in all the stages: to generate trust, to select the accurate network and to invest in a lasting relationship.
Why is Guanxi so important?
In China, economy is still strongly based on relationships. Trust remains the basis for economic transactions between Chinese people.
Therefore, Guanxi is a particularly valuable resource and becomes an essential facilitator of trade and economic transactions.
Three are the cornerstones on which to build Guanxi:
- A common social identity
- The existence of a third party in common
- A common aspiration of collaboration to create the potential bases for relationship
Chinese people do not show loyalty to the company, but to their personal relations
Networking can make the difference: eventually, right relationships will move your business faster in future.
But Guanxi also implies more traditional concepts to put it in practice:
- Mianzi: The care of positive prior appearances
- Renqing: Reciprocal favors as a moral obligation
- Ganqing: Emotional and enduring commitments that comes from the intimate social ties
The importance of an intermediary as a business enabler
Usually called Zhongjian Ren, the Intermediary deals with both parties to settle the differences in order to achieve a better solution to each problem.
Because Companies with best Guanxi win, having a proper Intermediary to represent your company can facilitate the business dealing and establish a successful business in Chinese market.
In search of Guanxi experience?
In 2 Open, we have the expertise you need to boost your Company to take advantage of the Asian market.
Over the last fifteen years, Chinese Government has experienced an increasing attention on the possibilities that Latin American market can provide to them.
This article seeks to shed light on the current situation between both regions, and their future possibilities.
According to Chinese policy, in recent years the country has developed a new global strategy: Africa, Latin America and the Caribbean have become as key-players on its rise to the international scene.
Since 2000, China has settle its action on bilateral free trade agreements and loan commitments. Despite its evolution, the role assumed by China is yet far from a real partnership with Central and South America.
In future, commerce and investment will be the basis for establishing a lasting partnership and a socio-economic development in manufacturing, labor, services and financial support.
Which are the main factors that define their relationship?
The relationship is based on three basic purposes:
- Political Relations:
China has currently become a permanent observer in the Organization of American States and a member of the Inter-American Development Bank. The country also participates actively in the Economic Commission for Latin America and the Caribbean.
In addition, China has signed free trade agreements and institutional arrangements with some of the regional countries.
- Economic Relations:
China plays a leading role in the future economic scene in the region. Latin America exports to China are raw materials, such as minerals, ores, oil seed, meat, cooper and soybeans.
Economic Relations are mostly conducted by Chinese Public Sector: Trade, Investment and Financing enhance the mutual cooperation and the collaboration is constantly increasing.
The Chinese investment effort has been particularly strong in two important fields: Energy and Infrastructure.
- Cultural Relations:
Chinese cultural expansion is closely linked of their latest conception of International Relations based on pragmatism and soft power.
In recent years, many Confucius Institutes have started their activity in Latin America, but also Spanish language has experimented a huge growth in China: educational and cultural exchanges are on the rise.
Is there ROOM ENOUGH for a common trade based on high value-added?
Latin America suffers from a scarce innovative effort, while China struggles to turn its economic system into an innovation model, highly rooted in the high value-added.
ICT-based services, Information technology and also Ecommerce are expected to grow in Latin America. The Global trends in Crossborder Ecommerce will be a challenge to the international integration of Latin America and a great opportunity for MSMEs.
Are you already familiarized with Crossborder Ecommerce and B2B, B2C, C2C, B2G and C2B Models? In search of an Ecommerce Consultancy Agency?
From 2 Open we can help you develop your business and to boost your company into International Sales.
China is an interesting country filled with peculiarities in the day-to-day life. Business culture is one of the many peculiarities that China has to offer. It is a country where business contacts play a more important role than in other countries, or should I say, a different role. For Chinese, it is crucial to have some “good friends” and with “good friends” I am referring to well-connected friends.
Chinese have one expression that refers to these types of relationships: “guanxi” (关系). “Guanxi” refers to all the personal influential networks that somebody has in the business field. It is the way they define the relationships they have and the networks in which they are involved. Chinese have a different point of view when it comes to “networking”, for them, the best contacts they have are the ones that they should be kept for themselves, they do not think it is appropriate to share this types of friends. Why should you trust somebody that you do not know?
Whether we like it or not, a “guanxi” is a fundamental part of the Chinese culture, especially for those who want to enter the Chinese market. It may end up being a huge barrier for those who are new to China and plan on developing their business here, however, if you have the proper references, multiple and unexpected opportunities can arise.
Now, with respect to Online Social Business Networking, there are many different ways in which one can get in touch with interested parties. LinkedIn is the most important one with around 6 million users in China, as a matter of fact; it is currently the largest business network worldwide. Despite the fact that it is not a Chinese social network, it is not blocked by the great Chinese firewall, nevertheless, there are other competitors that have to be considered if one intents to enter the Chinese market.
Apart from LinkedIn there are many other popular Chinese alternatives, here is a list of the most popular ones:
With more than 30 million users, it is the largest business social network in China. When it comes to the Chinese market it has more users that LinkedIn, it must be said that younger people use it more frequently. Most of people registered do not have much working experience. This is the main reason why is commonly used by companies to recruit younger people who just got their degrees.
It is the second largest in China with 20 million of users. This one is more similar to LinkedIn, which can be considered as a more professional alternative than Dajie. This social network is used for companies to find skilled professionals, it also makes is easier to find research and further specify the profile they are looking for.
It also has more users than LinkedIn in China, but in comparison with the other two, it is quite smaller (7million). This webpage is more oriented to professional managers or administrative works. As a result, the financial and investment sectors, as well as executives, more commonly use it.
In China, this one is smaller than LinkedIn, with just 5 million users. The main difference with respect to the rest is that you can get access to almost all the content without having to be registered. The most common use for this social network is recruitment. Most of the ads on this website are posted by job seekers and recruiters.
It is really small compared to the rest (1.2 million users). Although it does not have so many users, it is very well known from abroad and this one has an English version. Actually, the functionality is really similar to the one from Linkedin, and that is why it is very useful for the non-Chinese people.
All in all, it is important to remark the importance of networking in China. Many contracts and businesses are being agreed on depending on the contacts that people have (“guanxi”). So, if someone wants to succeed in the extremely competitive Chinese market it is necessary to get some “good friends” that might be able to help you and your business. Social business networking is a good place to start and can help you develop these relationships which will consequently further develop you business in China, however, if you want to jumpstart your business you should get in touch with 2Open. If you have any questions or require any information about our services, please do not hesitate in contacting us, our group of specialists will happily assist you.
This article was edited by Andres Arroyo Olson from 2Open.