Chinese consumers have been fascinated by American products for a long time now. The popularity of American products among Chinese consumers is the main reason, of increased categories of consumer products in Chinese marketplace. Similarly, this trend has given great opportunity to American brands to offer their products to Chinese consumers. Now thanks to technology and China’s fast paced digital space, cross-border e-commerce has proved to be the most effective medium to accelerate sales of American products among Chinese consumers.
With constant increase in disposal income, demand of American products among Chinese consumers has skyrocketed. According to iResearch the most popular categories of American products in China includes: cosmetics and personal care (46%), mom and baby care, formula milk (39%), nutrition supplements (39%), and fashion, apparel and bags (38%).
Child formula Milk
A Shanghai-based representative for the U.S. Dairy Export Council says the lifting of one-child policy in China has increased the infant formula consumption up to10 percent in the recent years, and the demand is expected to rise even more, promising new opportunities for U.S. dairy exporters. As of 2015, China made up about one-third of the world’s total infant-formula market, with imports valued at $US2.47bn ($3.25bn) annually.
Rising demand for American nutrition supplements is mainly stirred by the ageing population, environmental pollution and rising consumer health-awareness in China. Moreover, rising disposable incomes of middle-class in China has enabled consumers to purchase American nutrition products.
American nutrition products are popular on online platforms and gradually becoming more and more utilized by tech-savvy population, and Ecommerce sales are growing every year. By 2020, the market of vitamin and dietary supplements in China is expected to reach CNY 149 billion (US$22.3 billion), with a CAGR of 6.4% in the 2015-2020 period.
Why American Brands should sell their products in China’s digital space?
China claimed $681 billion in online retail sales last year, China is expected to be the first country to reach $1 trillion by 2020, according to Forrester. China boasts explosive e-commerce growth, as 19% of all retail sales take place online (vs. 9.5% in the U.S.); Forrester predicts it will reach 24% by 2021.
In global economic transition the U.S. and China represent opposing consumption trends. Demand in the U.S. continues to decline, with store closures and bankruptcies; however, demand for U.S. products remains strong in China.
What makes Chinese customers to buy American products?
For Chinese consumers following aspects are of high importance, while purchasing American goods:
Chinese shoppers have appetency for foreign, high-quality goods from trusted sources. Chinese shoppers believe that foreign websites offer superior product quality (57% foreign vs. 21% domestic) as compare to domestic websites.
The biggest issues that Chinese consumers come across while shopping domestically are of counterfeiting, food poisoning and poor quality of products. Chinese shoppers perceive U.S. and foreign products as safer and more trustworthy than domestic products, especially in categories like baby care products and nutritional supplements.
- Brand Prestige
Among Chinese Consumers, American products play a role of high status symbol. American products are considered prestigious and are highly valued. By continuously providing various varieties of merchandise in China, which includes big brand names and niche brands, U.S. retailers help shoppers to have a unique experience.
Chinese millennials are particularly, passionate about niche brands that help them to reflect their unique tastes and lifestyle. For instance, several Chinese customers are passionate about buying luxury and branded bags online like Michael Kors and Guess. American brands capitalize on demand for products by making shoppers feel how some brands fit their lifestyle. This trend is extremely popular on social media.
Chinese shoppers indulge in intense research before purchasing a product online. Tech-savvy Chinese shoppers have a close network on social media where they share reviews about a product. Chinese shoppers follow influencers and KOLs that endorse the products according to their lifestyle. Usually price of American products is cheaper from the price of luxury brands as compared to other countries.
Branding of American products on Chinese Ecommerce
With immense popularization of American products among Chinese consumers, more and more American brands are struggling to find the right strategy to rise above all existing brands and capitalize on increasing demand in Chinese marketplace.
When an American brand enter China’s digital ecosystem, it is not known until it creates deafening buzz on digital platforms of China. Apart from some American product categories that have already gained well reputed image among Chinese consumers.
Therefore, three strategies are for utmost important when entering Chinese digital sphere, firstly, to create awareness, secondly, building E-reputation and third being actively present on Chinese e-commerce platform.
How can American brands have presence on Chinese e-commerce platform?
Overseas companies need to have online store on one or a few of the Chinese e-commerce platforms, this depends on the products it’s promoting. Here is an overview of e-commerce platforms in China, where local digital marketing company can help overseas companies to enter Chinese e-commerce sphere.
TMALL holds the biggest market share in e-commerce market of China at 57%. It mainly focuses on premium brands. This characteristic makes TMALL most expensive e-commerce marketplace in China. It provides an opportunity to International brands to open exclusive online stores and directly sell products to Chinese consumers without being physically present in China.
TMALL has invitation-only policy where only qualified international brands can either be invited to join or can apply through a local digital marketing agency. For more information on how to sell International products through TMALL, please contact digital marketing agency.
JD.com is China’s largest online direct sales company. It relatively has less market share than TMALL.com. International companies can open individual online stores on JD.com. JD’s cross-border service enables suppliers to sell directly to Chinese consumers without a local presence.JD.com is less expensive than TMALL.com. JD.com has a zero tolerance policy for counterfeit products.
Cross-border on Chinese E-commerce
There are several cross- border websites that cater overseas brands. Cross-border B2C e-commerce refers to a form of B2C (business to consumer) online purchasing where consumers can purchase foreign goods online via e-commerce platforms and marketplaces, such as kjt.com, Tmall Global, and others, who are set up to operate within special Free Trade Zones (FTZs) in China. Chinese consumers prefer buying imported products from Haitao websites. To learn about which Haitao is suitable for you brand please contact local marketing agency catering International brands.
Taobao is owned by Alibaba Group. It offers largest C2C e-commerce marketplace in China. Taobao allows registered or non-registered businesses to sell directly to consumers. Establishing a store on Taobao is virtually free but the online marketplace is ruled by small sole sellers who compete fiercely on price and honesty and authenticity is an unwritten rule of their trade ethics. Sellers with low budget and low quality products opt for this platform.
WeChat is engrained in lifestyles of Chinese consumers. It is all-in-one-app which integrates social e-commerce seamlessly. Wechat store gives numerous possibilities to International brands to reach Chinese consumers effectively. Possibilities ranges from Branding to campaigning and easy payment methods.
Overseas brands on Wechat stores
WeChat Service Account is considered the most suitable for business and organisation that aspires to access advanced WeChat Official Account. Service accounts allow more APIs (Minisite) and companies are can open their own store. The online store can be used to manage products, take orders, display products, and manage customer complaints. For more information on how to manage Wechat store, international companies are advised to partner with expert Digital Marketing Agency, willing to apply for an Official WeChat Account on behalf of the international company.
Overseas brands interested in Chinese E-commerce market, and want to learn how they can target Chinese consumers digitally? You are welcome to write us and learn about your brand’s prospects in Chinese E-commerce market. Our Digital Marketing agency provides, international brands with tools that are optimal to unlock this enormous market to earn their full potential. If you are interested in exploring Chinese Digital E-Commerce platforms, reach out to us for a customised advice.