With a forecast of $470 billion in 2017, e-commerce in China is estimated to continue to grow at the rate of 20 percent each year by 2020. China is already the biggest online retail market in the world, and will continue to race ahead of the pack. However, entering the lucrative China market is not only difficult but can be very costly.
The highly competitive market requires western brands to understand China’s complex landscape and conduct thorough research before venturing on their Cross-Border E-Commerce (CBEC) journey. Whilst big players like Facebook and Google have accepted defeat in China, a few including Estée Lauder, LinkedIn, Evernote, Mei.com etc have actually found their success in this infamously difficult China market. After analysing some of the successful stories, we have learned the following 5 points are the key to success.
Tip 1: Localise, Localise, Localise?
Brands need to understand the uniqueness of the Chinese market and treat China as a stand-alone market as it is very different from any other market in the world. According to Zhang Fei, a cosmetics analyst with Brand Finance, the key reason for Estée Lauder’s success in China is to develop a program specifically for China rather than adapting a Western strategy.
Tip 2: WeChat store - the new rise
E-Commerce is booming in China and digital platforms have become an integral part of individual’s life. It is estimated that 50% of e-commerce is driven by social media in many parts of Asia and the trend is the ability to purchase directly from social platforms.
"Dior was the first luxury brand to launch a campaign on WeChat platform during last year’s Qixi Festival. And one year later, more than ever are joining the club for this day of love, and of course gift shopping."
In addition to the WeChat store, there are many other CBEC platforms including Tmall global, JDWorldwide, Suning, Kaola, Amazon China, Xiaohongshu, Yiguo etc. Each of these platform/market place has its own advantage and disadvantage, and also has a different entry procedure.
Tip 3: Choose a trust worth local service provider
It does not require foreign merchants to have a Chinese business entity to sell goods via CBEC. However, it is crucial to partner up with a reliable and suitable service provider as it’s impossible to execute a western brand’s e-commerce strategy without local knowledge and expertise.
Local service providers speak the local language and understand the Chinese online market best. Therefore, they can tailor a brand’s image to the Chinese market.
Tip 4. Protect your intellectual property rights (IPR)
IPR violation is one of the main jeopardies foreign business face when engaging in Chinese CBEC. It is strongly advised that brands prepare and register a Chinese version of their trademarks.
Foreign businesses are also advised to do regular checks on search engines and
e-commerce platforms to identify potential infringers or can use ‘trademark monitor service’ provided by law firms and trademark agencies.
New Balance has scored a landmark trademark victory in China against counterfeit goods.
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Tip 5. “Listen to the boss”
When venturing into a new market especially in China, understanding and applying local rules and regulations are extremely important. It also has a huge impact in the way foreign business sell their products to their Chinese consumers.
Tech companies like LinkedIn, Evernote have played the Chinese government’s tune by storing their data locally and censored all content. The co-optation with government’s restrictions on content earned them “more favour in the eyes of the administration and led to ease in regulatory red tape.”
Source : http://www.thexnode.com/blog/14-foreign-startups-companies-who-succeeded-in-china