We all know that China is a huge market. But it’s often a market that US SMEs and startups overlook or choose to ignore because of reports on how US corporations have failed in China, for example, Google is banned in China; Uber couldn’t crack China. However, there is also successful stories, Apple’s total revenue from greater China was almost $40 million, making it company’s the biggest market.
Risk and reward are two-sides of a coin. Today, we list tips to help mitigate these risks for you so that China could be a niche market for your company.
Register Trademark in China
Trademark registration is critical to a company’s long-term success in China. Just because your brand is registered in the US, it DOES not mean that it’s also registered in China. For a small and rising company, registering a trademark in China could be a lengthy/costly work that many prefer to put aside in the beginning.
If you are curious, you can check the brand’s trademark registration in China at the Chinatrademarkoffice.
However, there is resource to help you. The U.S. commercial service staff are available. The department has a website dedicated to explain topics on US exports to China.
Additionally, for companies that are not sure about the market opportunities, one could also do it in parallel – pilot in the Chinese market and in the mean time work on registration. At the end of the day, if the pilot proved a success, then it would be worthwhile for the investment.
Market Intelligence and Research | China
Doing market research is critical for a business’ success. China has a different culture than that from the US.
Business is conducted through relationships, consumers are increasingly buying oversea products, and entertainment/leisure spending has increased significantly in the last two years. In the mean time, counterfeits and knockoffs are common. It makes foreign companies scratch their heads.
Here is a tip on where you could find potential counterfeits that would impact your products sales in China. Do a quick search of product or brand name on Taobao. It will list all products that you should care about. Taobao is part of the Alibaba group. See picture below.
Enter China Wholesale vs. Ecommerce (Sell Direct)
Selling wholesale through Chinese retailers and distributors has been a mainstream approach for many companies. The benefit is a complete hands-off approach – let distributors figure out marketing and sales channels.
Along with such a benefit, risks are
- low profit margin
- finding a trustworthy distributor
- growing brand in a way that the brand owner prefers. For example, while the goal is to target high/middle-income customers, distributors sell products in channels that are accessible only to low-income consumers.
There is a solution to this dilemma, a niche market – selling direct through the cross-border ecommerce. Look at this eMarketer’s link on why you would want to get on the China’s cross-border ecommerce. In this approach, the brand could sell directly to Chinese consumers, retain a high profit margin, and most importantly, control how to grow the brand in China.
Can I Sell Through My Website Hosted Outside of China?
The short answer is you can. But we would not recommend it. Here are the top-3 reasons:
- Site load time – Your website would appear to load very slowly to consumers from China due to the country’s firewall. In general, the best practice on page load time is less than 7 seconds for an optimized user experience. A temporary work around is to use CDN solutions such as: Cloudfare, Chinacache.
- Payment – Chinese consumers use different payment online solutions than do consumers in the US. PayPal is not widely adopted there; inputting a Chinese payment address for a credit card transaction is potentially a deal-stopper. In China, people use Alipay and Wechat payment.
- Language and product-related specification – if you are an apparel designer and want to sell products in China, it’s very likely that Chinese consumers would ask a lot of questions on size, as US is using a different metric system.
We hope the above tips help you. If you have any questions, email us at firstname.lastname@example.org