You Want To Sell To China? How Far Are You Willing To Go?

Michael MicheliniBlog, Business, Ecommerce0 Comments

We all have the China dream, if we can just make a dollar from a billion people, life would be good, right? The numbers in China are massive, and so are the opportunities. I receive a ton of emails from friends and readers asking how they can tap into this massive consumer market, and today I am brain dumping all I have to get you want you need to get on the fast track.

Half of what you need will be the education and experience in order to do it, and there are so many ways to sell in China it all boils down to strategy.

Step 1 – What Are You Selling?

Are you a product business or a service business? This will greatly affect the rest of today’s blog, and I will have to spin off separate blog posts for each of these variations.

Now, for anything in business- you can’t force people to buy what they don’t like/value/need. So we have to first evaluate if the Chinese market is suitable for your product or service. For example, in our Ecommerce Gladiator series, we have a potential car washing kit we want to sell on Amazon USA. My wife has been seeing the samples flow into our studio here and says what is this stuff? Who would by a car washing kit? I explained to her in America people like to wash their own cars in their driveway. But in China, she says this is stupid – everyone just goes to a car wash center to have it done for them.

So, don’t sell home car washing kits in China. Hope this saved you a lot of hassle if that is your product line.

How can one do product market research in China? There are plenty of research firms who can help you, here at GFA we have friends such as Elaine Ann and Xiaoning who have research agencies for the Mainland China market. Or, if you want to come to China yourself and spend time on the ground doing focus groups, asking around in your target market, this is another way.

Even better is if you already notice Chinese customers buying product from your overseas store.

You can localize (not just translate) your product for the Chinese market – and you can host the website overseas. This is something that can always be transplanted to your Chinese Wechat official account later.

Step 2 – Will You Sell From Within China (Legally) or From Outside of China (Cross-Border) or Leverage Chinese Distributors

Now that you have validated your product or service enough to work towards selling to China – you need to think about your corporate structure strategy. Will you be “going legit” and filing a Mainland Chinese company as a foreigner, filing fees, taxes, Chinese bank accounts, the whole 9?

What I advise my consulting clients is to go step by step. You can potentially sell cross-border into China (depending on the products) and see how it goes. But keep in mind, this won’t be cheap either – if you’re using a Chinese marketplace such as JD Worldwide or Tmall international – they have deposits and other requirements in order to assist you with doing it the proper way. You could also just sell it directly in a Wechat store such as Walk The Chat if you need an English interface.

The other option to consider is – do you really need to have full control on your distribution? Would you rather find a local Chinese distributor to help you get your products into China and sold through stores and/or online retailers? I’ve worked with massive multi-national corporations who have used this strategy as well, granting licenses and approval to local Chinese firms – for both product and service based businesses.

Doing the distributor route, you still should own the trademark and grow the brand through marketing. If they need to do all of that, they should negotiate pretty aggressively and may not have much incentive to be your partner.

Step 3 – Social Media and Internet Marketing Strategy

Now, as many of you know – marketing is a huge chunk of change to do right. And China is a totally new world where Facebook and all the global social media platforms are blocked. You’ll most likely need to focus on Wechat, and need to register an OA – Official Account – so that your new Chinese buyers and fans can follow you for updates.

The trick here is you need to have a local Chinese company in order to get a Chinese Wechat Official Account that reaches people inside China (the great Firewall as they call it). So this is another decision you need to make – do you register a local Chinese company yourself or do you find a local Chinese partner who does it for you. The tradeoff is they ultimately own the account if they use their company to register it.

Overwhelmed with Wechat marketing? We have a dedicated free blog post giving you tips and strategies to build your Wechat OA here.

Step 4 – Decided To Register a Company?

So what I have noticed most clients I work with choose is invest in setting up a company in China. The funny thing is, the main reason I have seen this happening is for 2 reasons.

1. To get a Wechat Official Account (OA) that can reach Chinese people and that they own. You can read more about registering an official wechat account with us here.

2. To file a Chinese ICP (Internet content provider) license – which is a Chinese server so that your site loads fast in China and is not blocked. You can read a full article on Chinese servers and hosting we have here.

Step 5 – Sales Strategy and After Sales Support – Maintenance

How are you going to be doing your sales and customer service? Will you be hiring locally, opening a proper office?

While I know a ton of my readers are digital nomads, and I envy them (as I’m a new father now, which I love, but not as location independent as before) – China business is not as easy to be a “digital nomad”. You, or someone in your founding team needs to have boots on the ground in China. Or hire a qualified and TRUSTED Chinese general manager. The risk here is, how will you ensure they are not, let’s say, getting a feeling where they are doing all the work and why not do this on their own?

Chinese customers are accustomed to having real time chat support, being able to visit the office of the company, and getting fast service. So if you’re not willing or able to provide this, you will have to find an agency for this.

How Do You Feel? Big Investment With Big Potential ROI

As we started this blog post, the China dream is more real than ever. But don’t underestimate the time and money it will take to do it the right way. With risk, comes reward. If you are willing to take the bigger upfront risk of registering a proper Chinese company, hiring local Chinese staff, building out a local Chinese marketing strategy, and having superb Chinese customer service and after sales support, you will win.

What it really boils down to is trust in the Chinese marketplace. Also known as a brand. Having a popular brand overseas will give you a head start, but to grow and scale you need to prove you can also replicate this quality and trust within the local Chinese marketplace.

I wish you the best of luck and if you are willing to budget the time and money required to grow your business in China, our consulting agency is here to work with you!

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