www.remodista.com Beginner’s Guide for Retailers in China Strategy, best practices and lessons learned from those who have come before. Sponsored by: Executive Snapshot of Global Retail Disruption
www.remodista.com
Beginner’s Guide for Retailers in China Strategy, best practices and lessons learned from those who have come before.
Sponsored by:
Executive Snapshot of Global Retail Disruption
www.remodista.com
The opportunity is eye-popping. McKinsey
and Co. projects that China's online sales will
reach $420 billion annually by 2020,
becoming the world's largest online retail
market in the process. China's population of
Internet users stands at 500 million today,
and stands to grow by leaps and bounds as
the Internet becomes accessible to even
more of China's 1.4 billion-strong population.
Jack Ma, the billionaire founder of Alibaba,
China's answer to Amazon.com, says it best:
"In China, e-commerce is a lifestyle."
Simply put, there's never been a better time
to enter the Chinese market. The
opportunities are staggering—but so are the
challenges. What best practices can you, a
North American-based retailer, use to break
into the Chinese market? To see real return
on investment in the Chinese sector? And,
most importantly, to have the kind of staying
power in that marketplace that guarantees
longevity for your brand, year after year?
If success in China is your goal, these
lessons will help you get there.
Marketers are lining up to get into China, and for good reason.
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China's Consumers: More
Alike than Different
If there's one mistake foreign retailers make
when entering the Chinese market, it's
assuming that the Chinese consumer is
fundamentally different from the Western
consumer. The fact is, we're more alike than
different. Yet, it's the subtle differences that
brands entering the Chinese space must
understand in order to thrive:
• China's social media platforms are their own
• Brand authenticity is key in a marketplace
flooded with knockoffs
• The value of a friend's recommendation on
brands they can trust is worth more than a
hundred spiffy display ads on China's top
commerce sites
The Chinese consumer isn't one-size-fits-all. They are as varied and complex a customer base as North American customers. -Remodista Think Tank Panel Discussion
“ ” It's a young, mobile, and modern
consumer population. In many ways,
Chinese customers are more sophisticated
than North American and European
consumers. They have their own social media
sites (Sina Weibo), their own commerce sites
(Alibaba, Tmall), and they're constantly on the
move. You won't find a laptop in their hands
unless you put it there yourself; China's
buyers are wired for a mobile experience. The
mobile-only commerce world is coming in
North America, but in China, it has already
arrived.
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Chinese consumers use their online tools in a
highly sophisticated way. For example, North
Americans use WeChat, a messaging app, to,
well, message. China's buyers use it to reach
out to a brand's customer service team when
they're on a buying site, to do transactions,
and to look at brand videos. If there's a way to
make an online tool useful in the purchasing
process, the Chinese consumer has figured
out how to do it.
Retail Trends in China:
Western Brands and
Authenticity Win the Day
According to China Digital Review, retailers
entering China often make two mistakes:
They assume Chinese consumers want a
"Chinese" version of their product
They assume that the Chinese only pay for
products that will help them gain
"face" (prestige), such as luxury brands
Yet the biggest international winners in the
Chinese retail industry include more than just
luxury brands. Western food products are
doing well (because they're perceived as
safer), for example. No matter your sector,
products with true authenticity will gain trust,
not a "Sinofied" version of it that feels like it's
engineered for one particular market.
Chinese consumers want "the real deal" in a
marketplace flooded with pirated goods and
cheap knockoffs—and that's one big reason
why a brick-and-mortar presence that allows
customers to interact with your brand,
alongside a strong commerce presence, will
help you build credibility in China.
A deal is a deal until it changes. It pays to develop relationships with your prospective partners to ensure that you’re well represented.” -Mitchell Binder, President, King Baby Studio
“ ”
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Best Practices for Diving into the Chinese Market
Avoid the Identity Crisis
As soon as you think you might be entering
the market (or somebody else might "steal"
your brand, forcing you to pay large sums
to gain ownership so that you can legally
market under your brand name).
TAKE ACTION: Be quick to register your
brand trademarks. Talk to other companies
who have gone through contract
negotiations. Contracts are never
"completed" in China; signed contract are
often re-negotiated over the life of a
business deal.
Find a Partner
Because a deal is never done and the
nuance in China is primed for complication,
it’s important to find partners who can help
you navigate the waters.
TAKE ACTION: Staff up with people who
understand China from the inside out.
Invest in those relationships. You might
even find yourself singing karaoke with your
Chinese team before your first business
meeting with them.
To market successfully in China, reach the consumer with an authentic, relatable brand they can trust—
one that they feel comfortable recommending to their friends. Invest time to understand the business
environment as well: it’s a world where trademark and contract law is fundamentally different than in
other parts of the world.
WHO?
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Every deal you get into in China is an ongoing project. That's why developing relationships with partners who understand the social nuances is critical to success. -Kelly Stickel Founder & CEO, Remodista
“
”
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Online Natives
The digital landscape is different in China.
The way they experience and utilize
technology and mobile commerce requires a
different approach.
TAKE ACTION: Research the top commerce
sites, like Alibaba and Tmall. Use Google
Insights to find the search terms they use
most frequently. Once you understand the
landscape, start small. Commit to the market
knowing it may take time to see a real return
on investment. The most successful
companies make long-term commitments in
China, understand the culture by having
experts on the ground, and focus on the
quality and authenticity of their brands.
Best Practices for Diving into the Chinese Market (cont.)
It's not a race to get North American retailers in front of the Chinese consumer. It's a global effort to offer better products and services to them—and they know the difference. -Samantha Kent, Director of eCommerce, JackThreads
“ ”
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We can’t overemphasize how quickly the Chinese are mirroring Western demand for authentic, quality, premium goods that reflect modern consumer discernment. -Chinese Digital Review, 2015
“ ”
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China was once a faraway "Middle Kingdom,"
but today, it's poised to be at the center of the
marketing world. Learning best practices for
getting your brand in front of Chinese
consumers, and mastering the nuances of the
business environment you'll experience, will
help your company have a long and fruitful
relationship with the largest buying population
in the world.
Start small, find the right partnerships, hire
China experts for your on-the-ground team,
demonstrate that you understand the
business culture, and reach the consumer
with a message that's both mobile and
authentic. The time you invest in getting the
basics right in China will pave the way for
your brand's success for years to come.
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ABOUT THE AUTHORS
McKinsey projects that China will become the world's largest online retail market by 2020 with online sales forecasted to exceed $420 billion annually, driven by a growing consumer class and the world's largest population of Internet users, now more than 500 million people.
REMODISTA FOCUS AREA: China Commerce
Remodista RETAIL & MOBILITY DISTILLED
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Remodista is a think tank examining disruption in global retail. Our mission is to provide insight, education and innovation to global brands through collaborative research and analysis.
• Kelly Stickel, CEO, Remodista • Ernie Diaz, Publisher, China Digital Review • Andrea Guthrie, Independent Global Consultant • Sheila Donovan, Global Marketer, Global DM Solutions • Kelland Willis, Product Development, SAP • Chau Banks, EVP,CIO and Channel Integration, NY&Co • Katy Tonkin, Director of International Search, Point It • Samantha Kent, Director eCommerce, JackThreads