Marketing your business

China: The market everyone wants a piece of

With over 1.5 billion people and 40% of the World's ecommerce volume, it's no surprise so many businesses are turning to China to expand their sales worldwide. 

But with some many businesses interested in this booming market, it can be hard to successfully differenciate yourself from the competition and to choose the right path to the chinese market. Chinese consumers are bombarded by both local and foreign businesesses that want them. But a quick look at any demographic report will tell you how much your bottom line would benefit from a foray into China.

China is a tough market to penetrate. With so many local trade restrictions for foreign companies trying to reach the chinese consumers, making a first sale can be a challenging adventure. 

In this Getting to Global guide, we will guide you through the process of reaching your chinese consumer, succesfully making sales on ecommerce channels, and getting your products from your shop to your consumer.

The Chinese Shoppers

China has the world’s largest online population with more than 600 million internet users. The penetration rate however is only about 47 percent, leaving significant room for growth. The number of online shoppers has grown rapidly from 74 million in 2008, to more than 460 million in 2015, a compound annual growth rate (CAGR) of nearly 30 percent. 

China’s emerging middle class has money to spend. Urban disposable income levels have increased since 2008 at a compound annual growth rate (CAGR) of 11 percent, from US $2,505 in 2008 to US $4,698 in 2014.

Much of the wealth is concentrated along coastal provinces and in Tier 1 cities. E-commerce is providing access to inner provinces and lower tier cities which have been underserved by traditional brick and mortar retail channels. Online shoppers in Tier 1 cities spend the most money on ecommerce, however, online shoppers in lower Tier cities (i.e. Tier 3 and Tier 4 cities) spend a higher percentage of their disposable income shopping online. The charts below illustrates this.

In gender terms, 54 percent of online shoppers are male, while 46 percent are female. Male shoppers usually purchase electronic products such as laptops, cameras and mobile phones. Female shoppers tend to purchase apparel, cosmetics, home décor, maternity and baby products. 

The majority of online shoppers are between the ages of 20 and 39 years old with incomes between RMB 1,000 to RMB 5,000 per month. The top 10 product categories online include clothing, bags, cosmetics and groceries. [1]

Major Retail Categories

Apparel and consumer electronics are the most popular product categories sold online accounting for nearly 50 percent of all sales. The chart below illustrates the key product categories for online sales. China’s ecommerce market is extremely vibrant and can potentially provide companies with an affordable way to access China’s consumers. It is still important however, to understand the intricacies and unique dynamics of the market and the consumers shopping online. [2]

Major Retail Holidays

Chinese New Year The turn of the Chinese calendar, which falls in January or February, is arguably the biggest holiday of the year in China. For Westerners, the Chinese New Year is on par with Christmas in its calendar importance and the proliferation of sales and commerce. Hundreds of thousands of factories and businesses in China close for up to two weeks to give employees enough time to travel home to rural areas. With the shutdown and lack of employees comes congested shipping and delayed packages, so advanced sales are key. [3]

Singles Day Celebrated on November 11 (11/11), Singles Day was originally a tongue-in-cheek holiday invented by several college students in the ’90s as a day for young, single men to celebrate their bachelorhood. It wasn’t until Alibaba came along in 2009 and embraced it that Singles Day blew up to become an ecommerce phenomenon. In just six years, it has exploded into the largest shopping day in the world. Single, married, old, young — everyone in China shops on Singles Day. [4]

Double 12 Alibaba was also behind this brand new holiday, which exists to encourage retailers to improve the quality of products and services offered online. Singles Day has proven to be so successful that Double 12 has emerged as a follow-up. Double 12, celebrated on December 12 (12/12) is focused on small- and mid-size retailers. [5]

Children's Day Children’s Day is an international holiday celebrated by different nations on different days throughout the year. In China, it’s recognized on June 1 and is a good opportunity for selling toys and apparel. [6]

The Autumn Moon Festival In China, a full moon is believed to be a symbol of peace, prosperity and family reunion. The Autumn Moon Festival is one of the most important festivals in Chinese culture. This annual festival, usually falling in mid-September, is a thousand-year-old celebration where families gather to partake in festivities dedicated to admiration of the moon. Small gift items tend to sell well during the festivities. [7]

Social Media Use in China

Social media such as WeChat and Weibo are important to the overall marketing of a brand in China. WeChat currently has over 500 million subscribers in China and is extremely popular among the younger and affluent demographic. Social media is used by consumers to rate and discuss products and can also be used by brands for marketing. Note that a legal entity in China may be required in order to establish a corporate account on some of China’s social media platforms.

Half of the digital consumers surveyed use social media to do product research or get recommendations. More recently, consumers have used social media as a significant channel not just for deciding what to buy, but also for acting on those decisions. Of the WeChat users we surveyed, 31 percent initiated purchases on the platform—double the proportion of the previous year. These purchases begin in a range of places on the social platform, from official channels (such as JD.com entrances and brands’ public accounts) to user-generated content (such as Moments and chat groups) to links to other apps. [8]

Sources

  1. eCommerce Worldwide. China Country Guide. "eCommerce in China"
  2. eCommerce Worldwide. China Country Guide. "eCommerce in China"
  3. eCommerce Worldwide. China Country Guide. "eCommerce in China"
  4. eCommerce Worldwide. China Country Guide. "eCommerce in China"
  5. eCommerce Worldwide. China Country Guide. "eCommerce in China"
  6. eCommerce Worldwide. China Country Guide. "eCommerce in China"
  7. eCommerce Worldwide. China Country Guide. "eCommerce in China"
  8. McKinsey. "McKinsey."
Population:

1.38 billion

Median Age:

37 (▲5y since 2005)

Internet Use:

38.4% (109th)

Most Popular Social Network:

WeChat (900M users)