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The growth in China’s Mother & baby market has been well documented and shows no sign of stopping according to Mr. Enlong Hou (COO Suning commerce group). As stated in the China Online Retail Market Data Report 2018-H1, the market size of China’s mother and baby e-commerce in the first half of 2018 reached RMB 274 Billion. By the end of 2018, the number was estimated to be RMB 747 Billion.
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Currently, China’s existing online community represents young demographics, having a bigger spending power than ever before. This generation, born in the late 80s and early 90s has witnessed China’s digital and economic prosperity, they have more disposable income as compare to previous generations. Families in this group are willing to pay heaps on products beneficial for their babies and mothers to be. Consequently, the market is categorized by a higher price-per order than other industries. Moreover, they are also quality conscious buyers who would choose to pay more for a better quality product.
Chinese Millennials are choosing to have more than one child
Progressively, couples living in cities, earning significant income who were born as single children are choosing to have a sibling for their child. The increasing size of this new population is now making China the world’s second-largest consumer market for babies and children goods after the United States (reported by China e-commerce Research Centre.)
Presently, infant care products are extremely popular in China’s e-commerce landscape. The growing trend among Chinese parents of providing their children with the best possible quality has fuelled the growth of cross-border e-commerce in the Chinese digital marketplace. Due to the presence of counterfeit products in the local market, Chinese parents trust foreign products more than local products.
High Demand in China: Foreign Maternity and Infant Care Brands
Quality is more important than ever for Chinese parents, which presents a significant opportunity for international companies, which are often perceived by Chinese consumers to be of higher quality, safer, and more reliable than their Chinese counterparts plagued by food safety scandals.
The effects of this drive for quality can be seen in ever-more specific and detailed consumer demands for products to be healthy, pollutant-free, environmentally friendly, and contain minimal added additives, as well as to have a long service life.
Chinese Consumers are researching online
From community E-commerce to user reviews left online, to simply discussing new products on social media, Chinese mothers are using the internet as an information source more than ever before. on the Chinese search engine, Baidu, more than 100 million searches related to Mother & Baby products are conducted each month.
Opportunity for International Maternity and Infant Care products in China
Among the fastest growing sub-sector within China’s market for Mother&Baby products is fast-moving consumer goods, seeing a growth rate of 9.0% in 2017 as shown in figure 2. meanwhile the largest product categories are infant formula and nappies, which grew at 8.87% and 6.8% respectively in 2017.
Solutions for Foreign Maternity and Infant Care Brands to Enter Chinese Ecommerce Market
Both online and offline distribution channels are dynamic and complex, with major companies across both channels seeking to take advantage of the growth in the Mother & baby sector, and differentiate their approach to the market from those of their competitors. online sales made up 16.3% in 2017, with expectations to increase to 27.7% by 2022.therefore, there are effective ways to ace maternity and infant care e-market of China. Among which two are extremely vital to penetrate and sustain Chinese e-commerce platform; Branding and presence on well-known e-commerce platforms of China.
Branding maternity Brands in China
The Infat Case Study
INFAT 7.0 an advanced lipid infant formula milk headed to the Chinese market to roll out its products. INFAT 7.0 has done really well in other markets around the globe. Seeing its success, it wanted to enter the Chinese market digitally. Initially, INFAT 7.0 came across resistance due to the language barrier, unique culture, and purchasing habits of the Chinese market. The first problem it came across was brand awareness, and search engine optimization techniques in order to be noticed on the web.
With the help of a local Digital Marketing agency, it produced quality content regarding its products, advertised its benefits on its Chinese website that provided an edge over its competitors, and communicated with potential customers with the help of Q & A forums using the Chinese language and WeChat. This strategy enabled them to avail of a comprehensive market share and generated 12 qualified leads in 2 months’ time.
Presence of International Brands on Chinese E-commerce Platforms
To enter the e-commerce market of China International brands must learn policies of digital platforms. This includes TMALL, JD.com, Haitao, Taobao, Xiaohongshu (social eCommerce), Kaola (crossborder eCommerce), and more.
Use TMALL to Sell Maternity Product
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 the most expensive e-commerce marketplace in China. For Chinese consumers, high price indicates high quality therefore many customers prefer buying their products from TMALL. TMALL is owned by Alibaba Group. The platform offers an opportunity for international brands a cross-border service and directly sell products to Chinese consumers without being physically present in China.
- flagship store: Merchant is the brand (trademark) owner, or possesses exclusive authorization from the brand owner when opening their storefront on Tmall.come flagship Stores may open under the following circumstances:
- The store sells and acts on the behalf of a single brand that is owned by the merchant opening the store
- The store sells and acts on the behalf of multiple brands that are all owned by the merchant opening the store*
- The store sells and acts on the behalf of a multi-brand marketplace (service class trademark) owned by the merchant opening the store*
*Requires special approval from Tmall.com
- authorized store: Merchant holds authorization documents from the brand owner to open a store on Tmall.com.
Authorized Stores may open under the following circumstances:
- Store authorized to sell products from one brand
- Store authorized to sell products from multiple brands, but all brands belong to the same entity*
- specialty store: Merchant sells products of two or more brands that belong to the same product category. Specialty Stores may open under the following circumstances:
- The store sells products from two or more brands that the merchant does not own
- The store sells products from a brand (trademark) owned by the merchant and also sells products from a brand not owned by the merchant
- The store sells products from two or more brands that the merchant owns
A single merchant may only apply to open one Specialty Store within a single product category.
To protect the exclusivity of the online marketplace, TMALL has an invitation-only policy where only qualified international brands can either be invited to join or can apply through a certified third party agency (TP). To sell products through TMALL, foreign brands need to follow some strict guidelines, the list is hereunder:
Requirements for an International brand to operate an online TMALL store
- To penetrate the Chinese e-commerce market, international brands must be an authorized distributor and have a corporate identity outside China.
- The company must be independent and hold retail and trade rights
- The company must be the brand owner or authorized agency having the authority to sell products under its name
- The company must hold relevant inventory certification for the stock
Cost breakdown for International brands to operate TMALL store
- Flagship Store, Franchise Store:™100,000RMB; ® 50,000RMB
- Specialty Store: ™ 150,000RMB; ®: 100,000RMB
- Specialty Categories:
- Flagship Store of a multi-brand marketplace – 150,000RMB.
- Other specialty categories are subject to review and can be consulted with us.
Apart from the aforementioned formalities the brand needs to have a strong digital marketing strategy catered towards Chinese online customers. The foreign brand needs to gain visibility and build E-reputation in order to have success on TMALL.
Sell Maternity Products on JD
JD is China’s largest online direct sales company. It has less market share than TMALL.com and operates seven fulfillment centers and 166 warehouses in 44 cities. JD.com has 4,142 delivery stations across several districts of China. International companies can open individual online stores on JD.com and brands are permitted to import food, beverages, apparel, and shoes from overseas. JD’s cross-border service, JD Worldwide, enables suppliers to sell directly to Chinese consumers without a local presence.
JD.com is less expensive than TMALL.com but still rather expensive. It provides active global promotion of JD Worldwide (mainly in the U.S. and Australia) and supports in-house logistics service. JD.com has a zero-tolerance policy for counterfeit products.
Requirements for an International company to operate an online JD store
The basic requirements to enter to JD.com /JD.hk are outlined below:
- Be an established non-Chinese company (you need products and a track record before you can start selling)
- Brand owner, or at least license a brand. Thus, you must be able to provide trademark registration documents or licensing agreements
- Have a USD bank account
- You should, preferably, not already launched your products in China
- Further, you must also provide business registration documents, the ID of the major shareholders and directors.
- Chinese customer service must be provided and product details page should be written in Mandarin
- Products must be dispatched within 72 hours after order placement
- The process for product return centre must be available in Mainland China.
JD store types
Brand Flagship Store
- The products shall have the relevant trademark registrations in overseas.
- If Merchant is a brand owner, they shall provide the trademark registration certificate for their products.
- If Merchant is an exclusive authorized dealer, he shall provide the trademark registration certificate for the products and the letter of authorization for selling his products.
Outlet-Type Flagship Store
- Merchant shall have or have applied for a Class 35 trademark (the “Service Mark”) in overseas for its brand.
- If Merchant is the owner of the Service Mark, the Merchant shall also provide its trademark registration certificate.
- If Merchant is not the owner of the Service Mark, the Merchant shall provide the Service Mark and evidence of their exclusive authorization to use or operate a store on JD Worldwide Website using the Service Mark
- The products shall have its trademark registration in overseas
- If Merchant is not the owner of the trademark of its products, he shall also provide evidence of his authorization to operate a store on the JD Worldwide platform.
- Evidence of product source, and invoice of the products purchased.
- The name of the shop shall not infringe on the legitimate rights of others.
- Special store types may sell products of up to two categories
Cost breakdown for international brands to operate online JD store
Once you have been approved, JD requires that you pay an initial deposit, of US$15000. This is not a fee, but a refundable deposit.
In addition, JD.com also charges a yearly fee of US$1000, per store. And, a 2-8% commission based on the order value, for each sale.
While this may change in the future, JD Worldwide is so far charging significantly less than Tmall Global.
Apart from the aforementioned formalities, international brands are expected to have a Chinese consumer-oriented digital marketing strategy to attract targeted customers.
Ecommerce Opportunities in China via Haitao Web Interface
In the Chinese language, the term Haitao means; buying goods online from overseas. Along with Amazon.cn there are a couple of websites that cater to the Maternity and Infant care market of China.
- M6go.com is an online retailer that focuses on foreign goods for children and their parents in China.
- Website Miyabaobei.hk is an infant care online retailer, that provides international products for babies and mothers in China. It received a $60 million investment from the H Capital firm.
- Website Meitun, sells milk powder, nappies, and toys.
- Davdian.com (大V店) an e-commerce platform catering to mothers, has attained at least RMB 10 million for its series C.
- Lamabang (辣妈帮, literally “Band of Hot Moms” in English) is the largest online community for mothers and has 66 million registered users. It has partnered up with Suning, the largest O2O retailer in China to further develop its e-commerce capabilities. Lamabang completed its series D earlier this year for an undisclosed amount.
An expert local marketing agency can provide further information on how to promote international products using Haitao websites.
Ecommerce Opportunities in China via Taobao
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. It has more than a million sellers, along with countless product categories. 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. Mostly, Chinese web celebrities are the most prolific sellers. They take advantage of their popularity and drive traffic to their Taobao online store from blogs, online videos, and social media. Chinese web celebrities are mostly known for selling cosmetics, baby, and clothing products on Taobao. Sellers with a low budget and low-quality products opt for this platform. However, just like all other online platforms in China, Taobao also needs strong digital marketing skills to be visible to online customers.
Cost Structure for having International Brand online store on Taobao
Alibaba charges a small fee per transaction made via Alipay. Creating an online store is free, and retailers need to show their Chinese ID card.
Logistics: Individual stores manage logistics (including warehousing, customs clearance, customer delivery) and use their own third party or a recommended Taobao nominated the third party.
Customer Payments: Online transactions paid by customers are managed through Alipay.
Ecommerce Opportunities in China via WeChat Official Account
WeChat is a Swiss knife of the digital ecosystem of China. It is all in one app which integrates social e-commerce seamlessly. There are three types of service accounts available for promoting a business on WeChat; WeChat Subscription Account, WeChat Service Account, and WeChat Enterprise Account. Businesses present on WeChat via the aforementioned accounts can broadcast information to their followers. The information post can be shared, reposted, or generate comments by the followers.
WeChat Subscription Account
The subscription account is the most basic version of all official WeChat accounts. It can be used to push information to followers. The messages sent to followers are grouped in one folder containing all other subscription accounts that the user is following. It is generally used for the daily news and information broadcast. However, upon received a message the user is not notified, in fact the user needs to go into the desired subscription folder to retrieve delivered content. Secondly, subscription accounts have much less integration ability and advance functionality that can be integrated into the service account.
WeChat Service Account
WeChat Service Account is considered the most suitable for business and organization that aspire to access advanced WeChat Official Account. Service accounts allow more APIs (Minisite) than Subscription Accounts and companies are enabled to build their own application, get inquires, and broadcast promotional content to its followers. With the help of Service Account, one message per week and 4 messages per month can be sent to the followers. Users are able to receive a push notification when the message is delivered. WeChat Service Account provides a higher degree of functionality to users, with the help of customized menu along with integrated e-commerce facility within the app.
WeChat Enterprise Account:
Enterprise Accounts are also called Corporate Accounts, these are mainly used for internal company use, for example; sharing memos, private group chat, or a simple project and task management system. These accounts are being increasingly used in Chinese organizations. These accounts are secure and followers have to go through an authentication process, unlike other WeChat account where gaining followers is the primary goal.
WeChat Official Account Guidelines
The WeChat accounts formed to target Chinese users must be registered inside China or else it will not be visible to Chinese users. Possessing Official WeChat accounts to require a legal Chinese entity, a Chinese Residence ID, and A China mobile phone number. International companies are advised to partner with expert Digital Marketing Agency, which is willing to apply for an official WeChat account on behalf of the international company. Together with opening an official WeChat account, it requires sound and expert knowledge of the market and digital strategy to target the right customer group and successfully penetrate the WeChat landscape.
Chinese economic development has established investment opportunities for International brands by providing in-house state of the art social e-commerce platforms that are engrained in Chinese consumer’s lifestyle. Digital Marketing agencies provide International Brands with tools that are optimal to unlock this enormous market to earn their full potential and multiple sales with millions of users. If you are interested in exploring Chinese Digital E-Commerce platforms, reach out to us for customized advice.
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