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How to put your products in front of 500 million consumers in China
There are currently over 500 million people in China who use Internet to shop, for entertainment and to search for information. The online retail market in China should be not overlooked by US consumer goods companies; however, it is very important to point out that this market works quite different than it does in the US. Getting to know the rapidly growing “e-tailing” phenomena will help you to capture many new business opportunities.
Why the online approach is the best way to enter China’s market:
Getting a foreign product into the brick and mortar retail channel in China is an expensive and lengthy endeavor. The initial investment is large in order to do business with conventional retail chain stores such as Metro Cash & Carry, Carrefour and others. Many companies that are new to China’s market are having a hard time justifying associated up front costs.
Expanding to have a nationwide business presence in China is extremely difficult as well because of the complex geography and intercultural differences cross China.
The two main barriers preventing US companies from succeeding in China can be eliminated if products are introduced online to consumers in hundred of cities simultaneously.
How to Tap into the Burgeoning Organic Market in China
The organic market in China not only exists, the demand for imported organic products is increasing daily. However, it has not been easy for foreign companies to take advantage of these market opportunities.
The primary obstacle is that China does not recognize any foreign organic certifications. You, as a foreign company, are required to get certified by any of 23 China certifying institutes prior to selling. Otherwise, you may not use the word “organic” anywhere on the product.
Obviously these regulations have stopped many motivated foreign suppliers from approaching China’s market, whose Chinese distributors have found creative ways around the regulations.
Let me share a few useful tips:
1. Modify label to read “No preservatives, No addictive, No chemicals used”.
Organic products with labels like these are often seen in the stores. Consumers seem to understand what it means and are willing to pay a higher price for these products.
It is quite common for organic fresh vegetables to be priced 4-5 times higher than conventional ones at the supermarkets.
2. Do not state organic in either Chinese or English, but leave organic logo on the package. Some Chinese consumers are able to recognize foreign ...
Will you be lucky in the year of the dragon?
The year 2012 is the year of dragon or water dragon. It is said that the water dragon is the best dragon of all. It is the most powerful, magical, and promising dragon and comes only once every 60 years.
The dragon is symbolic of Chinese emperors. Any child born during the year of the dragon will have every good trait that the legendary dragon has—smart, leadership qualities, and a bright future. This is Chinese astrology that the Chinese swear by. Apparently, Chinese couples plan ahead to have a dragon baby since they can have only one child under China’s “one child” policy. The birth rate in China this year has been projected to be 13 per 1,000 people, which is at least a 5% surge from
last year.
Let’s take a look at what happened in the last year of the dragon, which occurred 12 years ago. The birth rate jumped to 16.9 per 1,000 people, while the average birth rate around that time was in the range of 15 per 1,000 people. Other reasons may explain this noticeable increase in the birth rate, but having a dragon baby is certainly the main ...
Have you ignored private label business opportunities in China?
Entering the Chinese market is not an easy task and requires investment as well. Cost of entry varies per industry, which depends on regulation requirements and the competitive environment.
For instance, health food products, such as nutritional supplements and pharmaceutical products, or cosmetic products, such as antiaging cream and lip gloss, are all subject to import regulation by the Chinese Food and Drug Administration. Application is lengthy and costly, and many US companies are unwilling to invest in regulatory compliance before being able to sell.
Is there an alternative for US companies to achieve fast growth in this highly regulated industry? Yes. The secret is selling as a private label business to Chinese buyers.
Characteristics of Chinese buyers:
1. They have a very strong brand in China
2. Their main business is selling their products domestically
3. Their business grows rapidly, and they regularly launch new products
4. They have the know-how to deal with regulation compliance of China’s FDA
5. Their research and development performance cannot keep up with market demand
6. They buy market-tested products and formulation as private label from such developed countries as the USA and Canada
7. Their staff does not always speak English well or know how to reach out to ...
What Are Chinese Importers and Distributors Looking For? – A message to foreign companies looking for China distribution
When companies have talked to us about distributing their products in China, the most common request has been to find someone there who will buy their products and who will also take care of sales and other operations within the country.
There is nothing wrong with this request, but few companies understand what it takes to get someone to buy your product. I often find that companies looking for an export opportunity to China tend to focus on getting someone to buy in the short term, while Chinese distributors tend to think long term, asking if you are a good partner for them.
Let’s take a look at what a Chinese distributor is thinking about. Understanding their thought process will help you determine ways to approach and engage them.
When a Chinese distributor is presented with a brand and product line from a foreign country, the following questions are likely to be asked:
1. How well do you do in the domestic market?
2. Do you have brand recognition in the domestic market, and what markets are you selling to?
3. What is your market share?
4. Who are your customers and main distribution channels?
5. Do you sell to other countries, and how well do you ...
Learning from the Masters
Many U.S. information technology companies are successful exporters. I attended the Interop conference in Las Vegas this past May and spoke with a number of companies that have been quite successful in overseas markets, such as Europe and Asia. These companies have products that are quite different from one another—from cloud computing, IT management, information security, and wireless to networking. Their export strategies are very similar, however, and quite successful. Let’s learn from the masters.
Export Strategy 1: Sell through third-party distribution companies
This strategy is the most cost-effective way to enter a foreign market that you know little about. The distribution company is supposed to know about the marketplace and how to get customers. The strategy works very well when doing business is based solely on existing relationships, such as selling to government agencies and large state-owned corporations. A local company has a clear advantage.
The downside of this strategy is that a distribution company may represent many companies and products at the same time. Their focus on your product is not 100 percent. Communication between you and your distribution company can also be an issue from time to time and finding ...
Dim sum versus PowerPoint
In the middle of July, I flew from Los Angeles to Taipei while Bill, my client, left home in Canada for the same destination. Before the trip, I agreed to meet him at Taoyuan International Airport in Taipei, since his plane would arrive a few hours after mine.
The weather was hot and humid as we walked out of the airport and jumped into an air-conditioned cab. During the 45-minute ride to the hotel, Bill and I had a lot to catch up on. I recapped our itinerary for the next day and a half while we were in the city.
13th – Dinner with Joanna, the Merchandising Director, and Desmond, General Manager of S&G
14th – Meeting in the office of S&G in the morning
A quick lunch in the afternoon
Store visits in the afternoon
Dinner with Desmond and Eli, the Sales Manager
15th – Leave Taipei for Shanghai in the morning
Having dinner with potential business partners just a short time after first meeting them is not what a business owner like Bill is used to in Canada. In China, however, businesspeople often do this to get to know each other. Bill followed the advice.
Joanna suggested ...
A letter from Hong Kong
Mainland China is certainly an important market to capture, with its 1.3 billion consumers, including 300 million middle class and upper middle class people who can afford to buy lavish brand-name products from all over the world. Many industries, such as construction material and services, aviation, information technology, and much more are all growing rapidly.
Western companies that have dealt with China understand that it offers tremendous opportunities but also presents many challenges.
If you feel the Chinese marketplace is too big to conquer, would you consider Hong Kong? Although Hong Kong is part of China, it is a special administrative region under the principle of “one country, two systems.”
What makes Hong Kong an ideal gateway to the Chinese market for Western companies?
Hong Kong is the world’s 11th largest trading economy and has a close and unique relationship with Mainland China, its most significant trading partner. Hong Kong’s business influence across China is extensive and deep, and more than 16 million tourists from Mainland China shop and dine in Hong Kong every year, presenting an excellent opportunity to reach Chinese consumers.
Hong Kong itself is also a great consumer goods market, depending on imports more than ...
Myth about the Chinese marketplace: Are Chinese people really slim?
Last year, an Australian weight loss company was interested in selling its products in China. A senior partner in my firm has raised a very interesting question—“Chinese look so slim to me. Is there a demand for slimming products in China?”
In the 1980s, the Chinese were regarded as being among the most fittest people in the world in terms of body mass. Today, they face serious health issues due to a high-calorie, high-cholesterol diet over the past twenty years. Unfortunately, this condition is a by-product of increasing Chinese economic development and a vastly improved quality of life. A recent study revealed that 92 million Chinese adults have diabetes, and nearly 150 million show early symptoms of the disease. Between 70 and 90 million Chinese are actually clinically obese (mostly in urban areas), and between 6 and 10 million adults become obese each year. Most alarming is that as many as 200 million Chinese are predicted to become morbidly obese by 2015.
Obesity is also a major problem for Chinese children. In a city in southern China, more than 12.5 percent of the city’s 350,000 students in primary school and high school are obese. This situation has resulted ...
A starting point for outsourcing virgins
Recently, we picked up two new clients. They are alike in that both are start-up Western companies offering unique designer products, and each faces many challenges when working with Chinese suppliers, some of which are due to the language barrier. To outsource successfully, a great connection must exist from the very beginning between the buyer and the seller.
As a start-up company, your outsourcing needs are somewhat different from those of a company that has been in business for a while. Supplier qualification should feature many variables concerning your specific needs, and this is especially important in order to get the right product at the right time in the end. To determine the best supplier, you need to consider your particular requirements before you proceed to search for one, as in China.
As a start-up company, the following requirements may be necessary:
Get a complete set of samples from an overseas factory. In the process, open and direct communication is required, and detailed information can be exchanged.
Place an initial order once you receive satisfactory samples, but the size of the initial ...
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Be Aware: Using email to market China’s businesses is a non-starterThe experiences of several American companies tell us that attempts to develop a dialogue, ...
How to put your products in front of 500 million consumers in China
There are currently over 500 million people in China who use Internet to shop, ...
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Be Aware: Using email to market China’s businesses is a non-starter
The experiences of several American companies tell us that attempts to develop a dialogue, via email, with potential trade partners in China is an exercise in futility. Not for lack ... -
How to put your products in front of 500 million consumers in China
There are currently over 500 million people in China who use Internet to shop, for entertainment and to search for information. The online retail market in China should be ...