• Ellen Sun

E-commerce through Brand Website? No For China!

Five reasons why your website doesn't work in China

As European and US-based emerging brands dip their toes into the Chinese market, they ask themselves: “Is China different?” The answer undoubtedly is “yes.” Yet, after many years of shifting strategies, are they doing whatever it takes to win? Why is China such a big deal anyway? 

These infographics can explain why:

China is bigger than the top 10 global markets combined
Gen Z is growing up and hungry to buy

Chinese “Gen Z” shoppers in their early 20s are emerging as an increasingly powerful force in the market. The number of Chinese college graduates has increased steadily, and by the end of 2019, there will be over eight million graduates every year.

College graduate employment rate

In 2017, more than 90% of college graduates landed a job successfully. A highly educated, highly employed Gen Z is joining the 200-million strong Gen Y population that is already willing to spend on luxury brands, and financially able to do so.  On the past November 11 ("Singles' Day", which is culturally equivalent to Black Friday in the U.S.), Alibaba, the most popular E-commerce platform in China, reported a record of $38 billion in sales in the first 24 hours.

Employees celebrated Alibaba's sales volume reaching ¥268.5 billion

- Try to fit China Into Your Global Channels -

Western brands entering China usually attempt to make China's giant market fit to their brand rather than the other way around. Companies generally do two things:

  1. Cooperate with cross-boundary delivery companies and continue to use their original official websites;

  2. Sell on Chinese e-commerce platforms such as Taobao or JUMEI and use import bonded warehouses for their logistics.

When functions such as marketing, finance, and logistics are forcing China operations to adopt global norms, they throw up barriers. If you want China to go right, solve problems in China specifically or put trust in your China team. To be successful in China, brands must realize that differences in marketing go deeper than East versus West.

- Your Website Doesn't Make Sense  - Literally -

While the consumers are there in droves, brands don't necessarily know how to reach them or know what information they are receiving. From an e-commerce perspective, most international brands'  official websites generally support English and maybe French or Italian. Often when there is a translation, it's a direct translation that doesn't cater to the regional differences in and across China. Chinese consumers landing on these pages cannot connect with the channel and brands are losing these opportunities to engage.

- You're Relying Too Much on Platforms -

Many brands have an Official store on mainstream E-commerce platforms such as Taobao and JD. Unfortunately, there are also plenty of copycat stores that look exactly the same. Making matters worse, your website may be blocked in China, and consumers have no way to differentiate what is real and what is fake, hurting both your sales and brand image.

- Your Website is Outside China and Slow -

International websites or social media platforms, such as Instagram and Twitter, have their servers located outside of China. Foreign websites may be blocked or very slow when customers try to access them from Mainland China, making shopping difficult for Chinese consumers. 

- Your Logistics Hurts More Than It Helps -

There are two different tax models: B2C & C2C. For many international companies, B2C is not an option simply because they are not capable of filing with the PRC Customs. Therefore, C2C is the only possible route and they will have to rely on a third-party logistics firm, usually DHL, to complete the transaction process. 

You can see under C2C, by regulation, consumers need to pay between 13% to 50% duty tax depending on the commodity. What makes matters worse, no matter what type of item a consumer buys, the third-party logistics firm charges the highest tax rate or even more!

China importing tax structure

Let's see an example. One of the major e-commerce platforms cooperates with an international third-party shipping company. When Chinese customers buy YSL lipsticks on the platform, they need to pay more than 1.5 times the original price. You can see in the picture: the original price is ¥220, and the “taxes & duties” costs ¥176.17. Taxes and duties are almost 80%, so where is the extra 30% coming from? On top of it, there is a delivery fee. In the end, customers pay a total of ¥441.17 for a ¥220 lipstick

Price gouging is not the only reason people complain about some third-party logistics companies. 

There is a saying in Chinese translated as "takes money but does nothing." In this scenario, someone buys a bag with the same international logistics company as the delivery company, and of course, everything is paid in advance. However, what they got after months of waiting is a tax bill instead of the bag.

custom clearing request customer received from the logistic company

- Your Website Doesn't Mix with Chinese Behavior -

China's economy has experienced rapid development in the recent 15 years and has dramatically changed Chinese consumption habits. In China, people have leapfrogged traditional payment types such as cash and credit cards, and use mobile payments instead.

Good Luck trying to use cash!

What is the most significant difference between online credit card payment and mobile payment? Mobile is a seamless one-click payment system. People don't need to perform a tedious checkout process as they only need one click. Mobile payment makes people's consumption more convenient than ever. The checkout process is dramatically shortened which improves conversion rates.

Also, Chinese speakers are more likely to communicate and use social media platforms such as WeChat, whether it's in a professional or personal setting. Consumers receive their information by subscribing to brands official accounts on WeChat, Weibo, and RED (Xiaohongshu). In the western world, websites, text messages, and email subscriptions are still some of the primary channels to supply information to customers, but these channels never took off in China. You’re missing the mark if you are not tailoring your messaging specifically to the Chinese consumer.

- What Should You Do Then? -

You can replicate what you do at home for China, but to have really effective operations in China there’s a lot of work to be done. Considering the market potential, it’s definitely worth a shot. Here are some quick suggestions to empower your path into China:

  1. Create an official WeChat account, Mini program, and Chinese Website. (Mini Program is a WeChat in-app E-commerce platform) WeChat, as the most popular social media platform in China, is a great place for brands to gather traffic. According to a survey, the average daily usage time length on WeChat is 4.7 hours per person, nearly 1/5 of a day. Such prolonged usage can give the brand more exposure and make the brand information more accessible. Also, what's the point of having a Mini program? It is because in the mini-program, once the customers sign in, they can finish all the shopping steps from adding to cart to after-sales services in one place. It's a convenient one-stop-shop for purchases and customer service.

  2. Tailor-make Your Content for Chinese Culture Content here consists of two parts — 1) Channel of your content. Chinese consumers are more likely to follow influencers on WeChat, Weibo, and RED. So, the content needs to fit on those platforms. The content should also follow the norms of combining pictures and text to fit a story. 2) Quality of the content. A direct translation doesn't work. To ensure your brand's values and messages are delivered to the Chinese consumer correctly, you have to find professional translation companies.

  3. Setup the Right Logistics Infrastructure Try to cooperate with Chinese domestic logistics companies. Chinese consumers are more familiar with domestic shipping companies such as "SF Express" and "Shen Tong" and make a world of difference when completing the online purchase. These companies also have overseas warehouses to house your products. Overall, they make the delivery and customs process easier for both the consumer and you.

It's not easy to do set-up business in China. Tailoring a strategy that's right for China takes time, expertise, and commitment -- all limited and valuable items everyone doesn't have enough of. 

You can benefit by finding a reliable Chinese partner, and HOOLU can be your authentic Asian partner.

We not only think about how to run the business but also how to build an ecosystem that fits culturally, both for you and Chinese consumers. Our experts can navigate through legal and logistics minefields, while also delivering the true essence and values your brand has to offer. You'd want a partner like us that respects your brand's designs and values, and builds a community of consumers around them, rather than anyone that's only providing a cookie-cutter solution.

For Independent brands, finding a reliable, professional, influential, and diversity-based partner is crucial to create a winning strategy in China. And HOOLU is here for you for that purpose. Get in touch with us to learn more about what your best next move is in China.

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