UK brands Can export to China because they are becoming increasingly popular in Mainland China. The figures speak for themselves with over 350 million middle-upper class affluent & brand-conscious consumers as well as GDP growth of over 7% year on year. Dramatic economic development has led to changing attitudes and expectations when it comes to shopping habits and items in demand. Enter from the wings.. Quality British products. BRANDS FROM UK SHOULD EXPORT TO CHINATHE BENEFIT OF ‘BEING BRITISH’International, ‘British’ brands are increasingly viewed as reputable status symbols. The Chinese don’t buy products, they buy brands with British entities often employing a ‘soft sell’ approach that resonates with Chinese upper-middle class consumers.The other main benefit is that ‘international’ products are typically a by-word for quality in a nation often associated with counterfeits & fakery. ‘British’ equates to quality. ACADEMIC STUDIES SUPPORT THE APPEAL OF ‘BRITISHNESS’‘Qing Wang’, professor of marketing and associate dean of Warwick University Business School conducted a series of studies into brands in China. Key aspects were identified as being special with the UK’s long and multi-facted history, heritage, and almost unbroken presence of the British royalty. “This represents prestige and class in the minds of Chinese consumers”, Wang said. Several British Schools in China used the British Heritage to attract wealthy Chinese families.ONLINE E-COMMERCE BOOMSChina’s ecommerce market remains the largest and most lucrative in the world, with over 800 million Chinese now connected online and 350 million middle class consumers actively engaging in e-retail purchases, there is no denying the potential for international brands. Ecommerce now represents 20.5% of total retail sales in the whole of China.The National Bureau of statistics reported that the e-commerce market growth rate increased by 26.2% in 2016 and generated ¥5.16 trillion. The fastest growth rate in online shopping adoption is now occurring in the smaller, third tier cities as the marketplace widens and levels of wealth continue to grow as GDP increases by 7% year on year. The market in the larger cosmopolitan centres also remains strong as it matures.FINDING QUALITY DISTRIBUTORSThe most difficult part of launching into China is to find a quality distributor for your product, if you are Burberry, with such a quality reputation, it’s evidently not a problem but for smaller-medium brands (without such visibility in China) it can be tricky.Chinese distributors are notorious for being ruthless in their selection of products & brands, they are looking for initial success, sales evidence, branding and reputation in the Chinese market.This underscores the importance of a comprehensive marketing campaign as part of any serious e-commerce launched. The two areas to focus on are visibility & reputation. With evidence of this online you are far more likely to build connections with quality distribution networks.
WHAT ARE THE KEY APPROACHES FOR UK BRANDS LAUNCHING IN CHINA?CROSS BORDER E-COMMERCE PLATFORMSChinese Cross Border Retail has never been more developed. There is now a powerful infrastructure offered by the largest players such as Tmall & Jingdong (providing you have the budget) as well as smaller players such as ‘Little Red Book’, Taobao Global or WeChat Stores (to name a few).Cross border allows British brands to customize pages, leverage the large & active user base of shoppers as well as market directly via relevant social and commerce platforms.Setting up shop on China’s cross-border channels allows British brands to utilize Chinese payment methods as well as the delivery infrastructure offered by many of these platforms. Cross border sites are looking for quality British brands with a continued upsurge in sales for ‘Global Products’.
Beware however.. Setting up on Cross border allows for point of sale , you must also develop an effective marketing strategy in order to drive qualified and engaged traffic to your store. Cross border in China is not simply a ‘magic bullet’.
BIG DISTRIBUTOR + STRONG ONLINE BRANDINGThe most typical approach for a large-scale launch is to apply for stores on Tmall or JD, connect with a big distributor & promote the product range via strong online branding. China requires a large investment, not just in terms of e-commerce set up and distribution but also with branding, the Chinese buy brands. Quality material needs to be created, the right tailored strategy adopted with DSP ads, PPC & re-targeting reducing bounced traffic from your store. It’s worth re-iterating you cannot simply expect to drive sales through large cross border and distributor networks, marketing makes or breaks a product launch. Burberry’s Tmall Account, an example of high profile branding in China ‘DAIGOUS’ OR PERSONAL RE-SELLERSDaigou’s are a huge phenomenon in China, forget influencers / opinion leaders, in terms of driving sales re-sellers offer the best ROI in terms of budget outlay. Consider that each seller typically buys the product at wholesale cost, you therefore can drive sales from the word go by disseminating to individuals who in turn re-sell to their communities & network.Firstly your product and brand are validated by local networks & additionally Daigou’s are often reputable themselves with large followings of thousands of consumers. You don’t outlay huge funds on a single influencer post, rather the ‘re-seller’ actively goes out to sell and promote the product to their personal social groups, it is an individual recommending a product to an individual, very effective in a collectivist society such as this. WECHAT STORES + ‘SOCIAL COMMERCE’WeChat stores represent a powerful method for growth for UK brands. WeChat launched these in-built stores to cater simply for the Chinese demand for e-retail. It is a great, cost effective way of reaching a large audience (providing you are actively driving traffic) as WeChat now boasts over 877 million daily active users. You can take advantage of the WeChat wallet, a highly trusted digital payment method linked directly to a users bank account. This convenience & ease of payment facilitates effective flash/impulse sales. Remember this is ‘social commerce’, in China a conversational, social approach is required by brands on all platforms in part because of the more receptive attitudes towards brand presence.OWN RETAIL STORES & FRANCHISEOpening stores is certainly the most traditional way of establishing a presence, without doubt China is a digitally dominated arena but a physical presence in cosmopolitan centres such as Shanghai, Beijing, Guangzhou & Shenzhen is considered a must for luxury brands. There is certainly a high footfall in active shopping area’s but rentals come at a price. Franchising is another option but you must ensure you can provide adequate services for Franchisees.Overall in terms of ROI, e-commerce and digital marketing allows for the most viable strategy which can then support developing relations with a network of quality distributors in terms of getting your product in store. Our advice would be; test the water first, validate the concept online and then move to a full expansion with products in physical stores.