The prosChina?s ecommerce market is the largest in the world and internet use is already widely prevalent, continuing to expand with big investment from the government. The biggest ecommerce company in China, Alibaba, handled more transactions than Amazon and eBay combined in 2013, totalling more than $240bn. Chinese consumers see online marketplaces as a trustworthy source of products. These online marketplaces are responsible for 90 per cent of ecommerce sales, and the TMall and Taobao sites account for 80 per cent of all transactions. They?re a great place for SMEs to start selling products. Read more about opportunities in China:
- Buying goods from China to UK
- Who would have thought that China would be a golden opportunity for the UK cheese market?
- Untapped market alert: Only two per cent of exports go to China
- The entrepreneur selling tea to China
The consOf course, there are lots of barriers and hurdles which need to be overcome before you can even begin to try and turn a profit in China. Despite the Chinese middle class preference for higher end luxury goods, those in smaller cities and rural areas will still hunt online for the best deals and the lowest prices. Local producers drive a hard bargain which even behemoths like Walmart can?t undercut, so you?ll need to ensure quality beats price. The language barrier is a big one and shouldn?t be underestimated. There are many regional dialects and local variations which need to be accounted for, so writing translated content for a website can turn into a costly venture. The buying culture differs in China too. Assisted sales account for over 70% of online transactions, so it?s not simply a case of developing a website and then just letting it sell. You?ll likely need to have local sales associates online and be able to offer help and advice to prospective buyers. And you need to make sure you meet all the legal requirements. To establish a physical market presence, you?ll need to have a FICE (foreign-invested commercial enterprise) or WFOE (wholly foreign-owned enterprise) to get a business license. And to have a Chinese website, you?ll need an Internet Content Provider (ICP) license; registration is a lengthy process. Whilst there is a lot of potential for SMEs here, given the ever-changing political and economic environments in the country, stability can sometimes be an issue; a return on investment is by no means guaranteed.
What to doThe best route for SMEs into the Chinese economy is through marketplaces. As previously mentioned, they dominate the ecommerce industry in China, and Alibaba?s TMall Global is designed specifically to help foreign retailers sell products in the country. Although there are commission costs and annual fees to bear in mind, selling through a marketplace like this makes reaching Chinese consumers a lot easier, and reduces the risks of breaking into a new country. Read more about the GREAT festival of creativity:
- GREAT festival of creativity in full swing: UK companies are finding new opportunities in China
- 6 British innovators review Prince William-backed festival in China
- Taking 500 competitive British companies to the ravenous Chinese
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