Strategies for selling successfully to China

Elena Gatti, Managing Director Europe at Azoya, talks about four main changes that are happening in the Chinese retail sector, providing pointers on how to sell successfully to China

The Chinese retail market presents enormous opportunities to international brands. It is one of the largest consumer markets in the world, with a population of over 1.4 billion and more than 200 million middle-class citizens who like to shop for international products. However, China has always been a challenge for brands and retailers from around the world, as it is just so different from any other market we know from the West. 

China’s online ecosystem is always one step ahead, and it moves at breakneck speed. eMarketer forecasts that China’s ecommerce market will grow at 18.5% YoY for a total of USD 2.564 trillion by the end of 2021. And the market is changing rapidly, as new trends evolve at light speed. 

Livestreaming and short videos have been the top trends for the past two years, and they continue to grow. With Alibaba kicking off Singles’ Day 2021, China’s ‘Lipstick Brother’ Li Jiaqi, who is one of the two top Chinese livestreamers, sold goods totalling a record USD 1.9 billion in one day, and his counterpart, Viya, sold about USD 1.3 billion worth of goods on the same day, in a show that lasted 14 hours. Li’s livestreaming show was two hours shorter. In comparison, in 2020, the first 30 minutes of Alibaba’s Singles’ Day presales campaign on Taobao Live generated USD 7.5 billion in total transaction value by all livestreamers combined. 

There’s more to China’s retail sector than livestreaming, however. Keeping track of what’s going on and adapting your strategy to the changes in the market requires flexibility and a highly open-minded mindset. Entering the Chinese market and applying here the exact same strategies that worked well in your home country may not be successful. If you try to have the perfect market strategy without any room for flexibility, you will either be too late or not succeed at all. However, if you regard the Chinese market as a test track for campaigns you never dreamed to implement – then you have a good chance of winning over the Chinese consumers’ hearts. 

Four changes that are happening in the Chinese retail sector 

New ecommerce channels have emerged in the past few years, and this has changed the way brands approach consumers in China. The key to success is understanding the constant evolution of consumer behaviour, trends, and market shifts. Let’s look at four recent developments you should be aware of if you want to sell your goods to Chinese consumers. 

1. Shopping behaviours constantly change 

When it comes to the shopping behaviours of Chinese online consumers, an Insider Intelligence analysis has found out that daily shopping behaviour and screen hours become increasingly scattered. During the 2021 edition of the 6.18 festival – JD.com’s equivalent of Alibaba’s Singles’ Day that takes place every year on 18 June – consumers used an average of 2.7 apps per capita. So, they don’t focus on just one channel anymore. They do multi-channel price comparisons, which has become clear during the shopping festival, as another report by QuestMobile reveals. The report highlights that diversified consumption scenarios have led to consumers no longer being limited to specific platforms, meaning that brands should consider adopting a multi-channel approach in China – if their budget allows it. 

2. All major platforms can drive customers from building awareness to purchasing products 

Going from stirring up interest to determining a purchase without the customer leaving the platform is making shopping as easy and convenient as possible. On WeChat, for example, customers can easily buy via mini-programmes, which can be launched when reading an article, chatting with friends, or sharing the shopping cart with friends and relatives. 

China’s TikTok (also known as Douyin) only allows consumers to complete their purchases within the Douyin shop, which will drive merchants to launch their shops in the video-sharing app in order to improve their conversion rates and at the same time keep the entire process (from stirring up the customer’s interest to determining the purchase) within the app. This is a rather recent development, as Douyin has recognised the power of video sales, and they don’t want customers to leave the platform to complete their purchase with a third-party provider. 

3. WeChat mini-programmes represent the best platform for O2O and building customer loyalty 

O2O (Online-to-Offline and vice versa) has been an amazing tool to connect ecommerce with in-store retail. WeChat mini-programmes have proven to be the best tool to connect these two worlds, and they are also considered a great platform for executing viral campaigns. Beauty players like Lancôme are relying heavily on pop-up stores for brick-and-mortar buzz, encouraging in-store customers to scan a QR code to follow the company’s official WeChat account and register as a new member. Then these new members can receive a free sample of the latest lipstick, which they can usually pick up at a vending machine near the pop-up store. I have seen many people queuing in front of these machines for a free gift. 

4. Tencent and Alibaba open services to each other 

The most recent development revolves around Alibaba introducing Tencent’s WeChat Pay to its own ecommerce platforms Taobao and Tmall. In return, Tencent may allow Alibaba’s ecommerce information to be shared on WeChat, or it may enable users to employ some of Alibaba’s services through its mini-programmes. 

What does this mean for international brands and retailers? For merchants, removing external chain shielding can reduce the traffic cost of small and medium-sized enterprises, decrease operating costs, and bring more convenience. And they can migrate their advertising to WeChat because it has lower customer acquisition costs. 

Opening ‘walled gardens’ helps both Alibaba and Tencent consolidate their current market position and user base. As a result, this move will create a more even competitive field, and consumers can expect greater convenience – for example, they will no longer be constrained to pay within single apps. 

This editorial was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 

About Elena Gatti 

Elena Gatti is Managing Director Europe at Azoya. She holds a bachelor’s degree in Telecommunication Engineering from the University of Parma and a master’s degree in Computer Science & Communication Engineering from the University of Duisburg-Essen. She has been working as a consultant at her alma mater, Accenture, and Macromedia GmbH before joining Azoya in 2015. 

About Azoya 

Established in 2013, Azoya is a borderless e-tailing group with headquarters in Shenzhen, China, that powers global retailers and brands with fully managed end-to-end ecommerce solutions and consulting services to help them expand to Asia. Over 220 young and talented employees around the world give retailers a truly global reach.