Chinese consumers have been fascinated by American products for a long time now. This trend has given a great opportunity to American brands to offer their products to Chinese consumers. Despite geopolitical indifferences and what could be seen as a turbulent relationship between the US and Chinese governments, the popularity of American products among Chinese consumers is rising at an incredible rate and is the main reason for increased categories of consumer products in Chinese marketplaces.
There is great potential for American businesses that are looking to enter the Chinese consumer market at this point and looking into the future due to the incredibly high demand for American products and services from Chinese consumers.
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CBEC growth is opening the door to American brands in China
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 the constant increase in disposal income, the demand for American products among Chinese consumers has skyrocketed. According to iresearch the most popular categories of American products in China include cosmetics and personal care (46%), mom and baby care, formula milk (39%), nutrition supplements (39%), and fashion, apparel, and bags (38%).
American Baby Formula are popular
A Shanghai-based representative for the U.S. Dairy Export Council says the lifting of the one-child policy in China has increased infant formula consumption up to10 percent in recent years, and the demand is expected to rise, even more, promising new opportunities for the U.S. dairy exporters. As of 2020, China made up about one-third of the world’s total baby-formula market, with imports valued at $US2.47bn ($3.25bn) annually.
American Nutritional Supplements
The rising demand for American nutrition supplements is mainly stirred by the aging population, environmental pollution, and rising consumer health awareness in China. Moreover, rising disposable incomes of the middle class in China have enabled consumers to purchase American nutrition products.
American nutrition products are popular on online platforms and gradually becoming more and more utilized by the tech-savvy population, and Ecommerce sales are growing every year. By 2021, 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 want to buy American products?
For Chinese consumers following aspects are of high importance, when purchasing American goods:
Chinese shoppers have a huge appetite for foreign, high-quality goods from trusted sources. Chinese shoppers believe that foreign websites offer superior product quality (57% foreign vs. 21% domestic) as compared to domestic websites.
The biggest issues that Chinese consumers come across while shopping domestically is 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.
Among Chinese Consumers, American products play the role of the high-status symbol. American products are considered prestigious and 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 the demand for products by making shoppers feel how some brands fit their lifestyle. This trend is extremely popular on social media.
Good Price for Imported Products
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, the price of American products is cheaper than the price of luxury brands compared in other countries.
Branding of American products on Chinese Ecommerce
With the 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 the Chinese marketplace.
When an American brand enters China’s digital ecosystem, it is not known until it creates a deafening buzz on the digital platforms in China. Apart from some American product categories that have already gained a well-reputed image among Chinese consumers.
Therefore, three strategies are of utmost importance when entering the Chinese digital sphere, firstly, to create awareness, secondly, to build E-reputation, and third to be actively present on Chinese e-commerce platforms.
How can American brands build a presence on Chinese e-commerce platforms?
Overseas companies need to have an 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 companies can help overseas companies to enter the Chinese e-commerce sphere.
Start selling on Tmall
TMALL holds the biggest market share in the e-commerce market of China at 57%. It mainly focuses on premium brands. This characteristic makes TMALL generally the most expensive e-commerce marketplace in China. It provides an opportunity for international brands to open exclusive online stores and directly sell products to Chinese consumers without being physically present in China.
TMALL has an 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 our digital marketing agency.
JD is also a great choice to sell in China
JD.com is China’s largest online direct sales company. It has relatively less market share than TMALL.com but 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 but also has a zero-tolerance policy for counterfeit products.
Cross-border on Chinese E-commerce
There are several cross-border e-commerce websites that cater to 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, that are set up to operate within special Free Trade Zones (FTZs) in China. Chinese consumers prefer buying imported products from foreign websites.
Taobao: innovative app for a tight budget
Taobao is owned by Alibaba Group. It offers the 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 rules of their trade ethics. Sellers with a low budget and lower quality products opt for this platform.
WeChat: another eCommerce alternative
WeChat is engrained in the lifestyles of Chinese consumers. It is an all-in-one app that integrates social e-commerce seamlessly. Wechat store gives numerous possibilities to International brands to reach Chinese consumers effectively. Possibilities range from branding to campaigning and easy payment methods.
Overseas brands on Wechat stores
A WeChat Service Account is considered the most suitable for business and organization that aspires to access an 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 a Wechat store, international companies are advised to partner with an expert Digital Marketing Agency who can assist in applying for an Official WeChat Account on behalf of the international company.
Are you an overseas brand interested in the 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 the Chinese E-commerce market. Our 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 customized advice.
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