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How to Penetrate the Chinese Market? An Introduction for eCommerce Businesses
With China accounting for over 50% of all eCommerce globally, global brands can no longer afford to neglect this market.
Since opening our offices in Hong Kong and Shanghai in 2020, we’ve been focusing on assisting many companies to penetrate the lucrative Chinese market. With China making up over 50% of the global eCommerce sales, business owners can not afford to neglect this market.
How to Penetrate the Chinese Market?
With Google and Facebook banned in China, and the dominance of local players and ecosystems, the strategy which has worked for you globally would simply not work in China. You, therefore, need to have a good understanding of the market and know which channels would work best for your products.
The leading online shopping platforms, Alibaba (owner of Tmall & Taobao), JD.com, and Pinduoduo are expected to account for over 75% of the China eCommerce market in 2022.
In this article, we will go through each of these marketplaces and highlight the pros, cons, and suitable products in order to assist you to come up with the most suitable strategy to penetrate the Chinese market.
1. Tmall
Tmall is a marketplace owned by Alibaba and is by far the largest eCommerce platform in the country. T-mall Global opened up in 2014, allowing overseas companies to start selling directly to Chinese consumers.
Pros
- Largest marketplace by sales share
- Known for overseas brands
- Professional store design
Cons
- High set up cost
- Chinese customer support required
- Product descriptions and labels must be provided in Chinese
Which Product Categories Perform Best?
- Clothing
- Jewelry
- Cosmetics & Personal Care
- Luxury Goods
Fees
- Upfront deposit: 8-25k USD
- Annual fee: 5-10k USD
- Commission Fee: 2%-5%
Requirements:
- Overseas business registration
- Chinese language product labels
- A verified Alipay cross-border escrow settlement account
- Bank statement
- Contact details of shareholders/directors
- Trademark registrations/Licensing agreements
- Products need to be dispatched within 120 hours and be delivered to customers within 14 days
- Chinese customer support
- Returns must be handled in China
Registration process: 4-6 weeks
2. JD.com
With a market share of 16.3% and over 20,000 brands for sale, JD.com is the second-largest marketplace after Tmall. JD Worldwide launched in 2015 and is a platform that allows Chinese consumers to buy goods from international, non-Chinese companies in an easy and secure way.
Pros
- Largest marketplace by sales share
- Known for overseas brands
- Professional store design
Cons
- Chinese customer support required
- Customers must be able to return their products to a Chinese address
Which Product Categories Perform Best?
- Electronics and Home Appliances
- Food, Beverage & Alcohol
- Fashion
- Cosmetics and Personal Care
- Baby Products
Fees
- Upfront deposit: $15,000
- Annual Service Fee: $1,000
- Commission Fee: 2-8% of sales (depending on category)
Requirements
- Overseas business registration
- USD bank account
- Operational history
- Provide a 7-days refund policy
- Provide additional documentation upon request
- Chinese customer service for customers
- Chinese language customer service for customers
Registration process: 2-5 weeks
3. Pinduoduo
Relatively new, Pinduoduo was founded in 2015 by ex-Googler Colin Huang. It has since grown to be the 3rd largest marketplace and has pioneered new trends such as social commerce and consumer-to-manufacturer (C2M).
Pros
- Simple and quick setup
- Good penetration of lower-tier cities
- Utilizes social selling
Cons
- Price sensitive consumers
- No English version platform
Which Product Categories Perform Best?
- Household items
- Clothing
- Fresh Produce
- Low priced electronics
Fees
- Upfront deposit: $1,000 – $10,000 (depending on category)
- Annual Service Fee: $0
- Commission Fee: 0.6%
Requirements
- Overseas business registration
- Contact details of shareholders/directors
- Distribution/Logistics documentation (e.g. proof of warehousing)
- Trademark registrations/Licensing agreements
- Customs declaration information
Registration process: 3 weeks
Boosting Traffic With Chinese Search Engines
The easiest way to boost traffic to your store and items is by utilizing Chinese Search Engines
Baidu
Baidu is the #1 Search Engine in China by market share. There are over 1 billion search queries per day, the number goes up to 20 billion when you take into account their affiliate websites. We view Baidu as a must-have channel for PPC Ads.
Similar to Google, you are able to run search, shopping, and display ads as demonstrated in the picture below:
360
Although the potential and reach of 360 are not as attractive as Baidu, it is still the #2 Search Engine in China. Stats + 80% user engagement rate
From our experience, this is the best search engine to penetrate 2nd Tier Cities
The Road Ahead
To sum up, T-mall, JD.com, and Pinduoduo are the 3 largest marketplaces in China and provide the best stepping stone to reach the Chinese market, which is simply too large to neglect.
To succeed in these marketplaces, it’s crucial to have local expertise in the market.
In part 2, I will be going through the importance of influencer marketing in China, along with the importance of WeChat.
If you need more information on penetrating the Chinese market, book a demo with our sales team
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