The burgeoning Chinese economy has created many wealthy individuals, more dispensable incomes, and rapid urbanisation. Along with this economic growth the government’s liberal policies on spending have made China a very attractive consumer driven market. Chinese today, are spending more than any other consumers, they are ranked number one for spending in many fields, and almost all businesses are trying to woo Chinese customers.
China is full of potential for foreign brands
Chinese consumers have always been obsessed with quality and trusted brands with reputation and credibility. Many Chinese travel to foreign shores to buy products from reputed brands. The technological revolution ushered in by internet has opened this huge Chinese market to foreign brands. Now, Chinese can buy foreign brands right from the comforts of their house.
China has more than 600 million internet users, with a strong online presence, and shopping is one of their favorite activities. American businesses are interested in entering Chinese market for its sheer size, but sadly, many factors primarily government policies on entry and operating of foreign companies in china, issues relating to language and culture, payments etc have always been stumbling blocks for entry into china.
The Tmall Global initiative
Tmall, with its new initiative, Tmall global is trying to bring foreign brands closer to Chinese consumers, without foreign companies actually owning a store in China. This helps foreign companies access, and test their products in the gigantic Chinese market. Tmall’s global platform, a Chinese website showcases products from more than 140 countries. This helps foreign businesses sell products to Chinese consumers without having a store in china, nor do they need any kind of licenses to trade there. The goods ordered on Chinese website can be shipped, to the consumer’s door steps, with the help of Chinese partners, directly from the warehouses abroad.
The Tmall’s global platform offers a “win-win’ solution to customers desirous of owing foreign products, and businesses interested in exploring Chinese markets. On this platform, there are three types of stores:
- Flagship Store: Products, business with a trademark such as ® or TM can have a flagship store. The brand will have to be represented by the owner of the store, or a representative of the brand. He must possess all documents, from the brand, authorizing the setting up of such a store on Tmall’s platform.
- Speciality Stores: Persons holding a brand’s distribution rights to sell without any geographical restrictions in china.
- Monopolized stores: Merchants who own two or more brands from Tmall’s product range can start a monopolized store. There is a restriction of one store per merchant in a chosen product category.
Thus, Tmall offers a great platform for international brands to reach out to people living not only in urban cities, but also in remote areas. Tmall makes payments between foreign businesses and Chinese customers easy with the help of Alipay, safe payment system from Alibaba group. Depending on the products merchants will have pay an annual fee of $5000- $10000 to set up their store on Tmall’s global platform, also a refundable deposit of $25000 would be required to sign up. For every sale made on Tmall’s global platform, it makes a 3% – 6% commission. Sure it looks like a lot but it helps while waiting for a proper entry into the Chinese market for instance. Some industry that would definitely be very appealed by this type of initiative would be the cosmetics industry where you first have to endure a very lengthy registration process.
Tmall Global offers a solution for foreign brands to enter the market; however it still falls to them to improving their brand awareness and brand image to the Chinese audience. If not done properly there are very little chances that a newcoming foreign brand will become successful in the Chinese market.
Digital campaign is the key
Setting up a digital marketing campaign along a Tmall global shop is ideal to raise the success of such an enterprise. The main steps would include but are not limited to:
- A properly China market-adapted website, see here for more information
- A proper activity on social media like Weibo, wechat
- Online PR
If you want to know more about e-commerce in China and what would be most appropriate for your project, go take a look there to get started