Developing a comprehensive China marketing entry strategy can be a daunting task. More and more brands find China an attractive market, not only due to its size, but also due to its growing middle class, demand for new product categories, and new regulations favoring imports from a list of countries. There’s plenty of room for new brands big and small to enter this market, given they know where to start.
What are the business models of retail channels in China?
Depending on the industry, retail channels may include large retailers (shopping malls, specialized stores), convenience stores, and large and small brand stores.
Online markets can be categorized according to two models: localized fulfilment, with most platforms belonging to this category (Tmall, JD, Douyin, and other social commerce platforms), and cross-border fulfilment, where products are imported only after they are sold to the customer (Koala, Tmall Global, RED cross-border, etc.)
How do distributors choose the brand to work with?
To answer this question, we have invited the co-founder of Export2China, Mrs. Xin Lingling who is specialized in fashion retail and has more than a decade of work experience with brands like Lacoste, and many more.
Q: What are the distributors in China looking for in foreign brands?
A: Distributors are looking for a unique proposition to offer to the market. Either the brand is strong and popular in the brand’s home country already, or the brand is offering a very competitive price, or perhaps the brand is ready to work on an aggressive digital marketing strategy in China in order to take the market share. Length of the contract also plays a big role, as no distributors will want to put years of effort educating and engaging with the local target audience just to see the brand go to the competitor.
Q: What is the general rule for brands when choosing their distributors in China?
Brands choose their distributors according to a set of criteria including the distributors brand portfolio, the yearly purchasing budget, the geographical location, and the size of the business. Other factors are also important. For example, does the distributor have a strong network and favorable conditions to enter the most suitable shopping malls of the regions? Will the distributor support the brand in marketing activities in the area?
Q: What type of marketing activities do brands need to prepare for in order to attract the local audience and the best distributors? How early do these activities need to be launched?
A: Nowadays distributors realize the power of marketing in China and strongly prefer to work with brands who are willing to invest in digital marketing.
So, what does that mean, exactly?
Marketing Study: brands need to have a clear picture of the market, including the interest of Chinese customers in the product, both in brand’s home country and in China. Focus group studies, competitor analysis, pricing strategy, target audience definition, all these elements are important in order to create an effective marketing plan in China.
Brand Name Localization and Trademarking: this is an important step and should be completed early on, before the brand is even physically present in China. A Chinese trademark is needed for many administrative tasks, such as registering a corporate social media account or for e-commerce store registration.
E-Reputation: here we are talking about the brand’s digital footprint in China. It needs to inspire trust among the Chinese local audience. This includes press releases, reviews, social media mentions and other publicity.
Social Media Groundwork: Create a WeChat Official Account, establish a presence on RED (Little Red Book) with reviews and recommendations, and ensure other digital activities related to the brand’s business model and industry are covered.
KOL Marketing: if the brand falls into the categories of fashion, cosmetics, mother and child products, or food and beverage, KOL and KOC activities are crucial for setting up the brand for the market.
How to find a trustworthy distributor in China?
There are a few ways to approach your search. Traditional trade fair participation is a solid way to meet many business players in your industry. But with the recent travel restrictions to China, this way is not the easiest.
Online search and outreach can be another way to connect with a China market distributor. But this runs the risk of landing an inexperienced distributor with a pretty website. In fact, not many local Chinese brand distributors even have websites, rendering this option suboptimal.
Word of mouth and relationship building can be an excellent way to find the perfect business fit. It demonstrates that your brand already has built solid business relationships in China and possesses channels for gaining insider information. However, it’s unlikely that a brand of the same category or even industry would be willing to share their effective Chinese distributors. In this case, a China-based business partner or a representative will be able to help.
It is important to remember that there is no “magic solution” for China market entry. No honest company will ever “guarantee quick results” for one simple reason – the market is just too complex and competitive. The era of foreign products shortages is long over, and the Chinese market is now one of the most developed and dense markets in the world. That’s not to mention China’s increasingly rapid technological advancement and demanding customer base.
Do you need a local partner in China?
Having a locally based partner company provides a crucial advantage to any brand that is aiming to enter the Chinese market. From aiding in setting up the essentials to advising on best practices, a local partner serves as a foothold in a new market. Your local partner can help establish a network of distributors, find warehouse solutions, and procure other necessary resources. This company can be your brand’s eyes and ears when it comes to dealing with local affairs, whether it be distributors or TP management, as they have the ability to judge the project by the domestic market industry standards. By being on the ground, they are able to see and report local market reactions in real-time and rapidly assist with necessary adjustments.
Export2China is a Chinese-based consulting firm focused on fashion and education industries.
HI-COM is a multilingual communication agency dedicated to providing China-specific social media communication and e-commerce marketing services to businesses around the world. Working with more than 100 brands, HI-COM is the go-to partner of companies that want to enter China market! Contact us for your free consultation today!