China, a population of 1.4 billion people, with GDP growth of 6% in 2017. It is not difficult to see why the rush to gain market share has never been so great. But China is not without its difficulties. Put the big pound signs to one side and let’s get back to basics. Let’s create more boom than bust in a market that holds so much opportunity for brands willing to put the work in, for the long term benefits.
This week I caught up with Jack Porteous, Assistant Director, UK Retail Sector Lead, at the China Britain Business Council. A member’s based organisation, with a focus to advise and assist British companies to export to China.
Jack is a great font of knowledge when it comes to China. He lived in the market for 3 years and can speak the language fluently. He is definitely one to keep in your back pocket if you want to get ahead in China.
Having worked with Jack on a number of projects recently and also being colleagues in a previous lifetime, I thought it only fair that Jack put together a no-nonsense post for me on China. Great tips and information for you to follow up with, so I hope you are sitting comfortably.
First up – Happy New Year to everyone reading this blog – but should you wish people the best for the year by saying gong xi fa cai or gung hei fat choi? If you’re going to try to ‘get’ China, a fairly basic starting point is understanding that China is not one place, one people, but many sitting under one overarching culture. To friends from the Mainland, say the Mandarin – gong xi fa ca – and for any Cantonese speaking Hong Kongers it’s gung hei fat choi.
In the UK we’re curiously unexposed to China and Chinese culture, considering that it’s such a major part of the past, present, and future of the globe. Knowing a little can go a long way – nobody likes to be treated ignorantly or confused with another culture, be spoken to in the wrong language, or have assumptions made about them. With that in mind, for any retail brand aspiring to sell to China I think it’s important to first have a bit of understanding of…
The Chinese Consumer
It’s hard to summarise such a broad range of consumers in a few words, but it is useful to know a couple of overarching consumption trends which define the ‘average Chinese consumer’, who of course doesn’t really exist! The Chinese consumer is tech-savvy and socially active online, spending several hours on social media per day to do everything from sourcing services and chatting with friends, to shopping online and following their favourite internet celebrities. Confusingly both increasingly brand loyal and increasingly open to lesser-known brands, Chinese consumers value brand and quality, as well as value for money.
If you have a brick and mortar presence in the UK or sell through your own e-commerce site, you may already have Chinese customers. Try to find out about what this group looks like, why they value your brand, and what exactly they’re buying.
Selling to China – Offline
The most common, and usually straightforward, route to market is to sell to a store, be it one of an increasing number of high quality multi-brand boutiques like Anchoret in Beijing, Alter Shanghai, the chain of florists turned lifestyle boutiques The Beast Shop, the painfully cool Triple Major (BJ and SH), the beautifully curated The Ooak jewellery store in Shanghai, China-wide luxury outlet Attos, and countless others, or indeed to one of the established foreign department stores in the major centres – Lane Crawford, Isetan, Galeries Lafayette. Nearly all offer online sales as well – as you’d expect. The Chinese department stores – Golden Eagle, Intime – and some other Asian chains (such as Parkson and New World) operate on a 90%+ concession model, with direct purchase making up a tiny part of their business and mainly focused on key categories (mother and baby, beauty, personal care, some accessories) or ‘banker’ global brands that can fly off the shelf with minimal effort. Where do you meet these buyers? Many come to tradeshows overseas, particularly Paris and New York shows, in addition to Pitti for menswear, and all will likely attend China/Hong Kong shows relevant to their interests.
Selling to China – Online
The Chinese e-commerce boom has been buzzing for years now – and you’ve probably heard of some of the bigger players – Alibaba (TMall, Taobao), and JD. These platforms, who like department stores will only buy known brands and mainly rent online space to brands or multi-brands, have vast consumer bases and impressive GMV stats – but are they a good partner for you? Generally speaking if you’re going to be selling less than £1m/year on TMall it’s hard to make money going directly – but of course, partners (boutiques, distributors etc) might sell through their TMall or JD stores at no extra cost to you. Other platforms, like VIP.com – China’s third largest platform who is this year sponsoring London Fashion Week, Kaola – an e-tailer known for selling foreign goods, Secoo – a cross-border luxury platform, and more niche vertical market places can offer an easier route to market and considerable user bases.
- Protect yourself! IP protection is the equivalent of your prenup with China – own the brand, enhance its value, and don’t let anyone take it from you. China has a sometimes justified reputation for counterfeiting and for trademark squatting (although the situation is improving year on year) – and prevention is so much easier and less painful than cure. If brands like New Balance and Apple can’t win legal cases against people using their trademarks, you can’t either. Register up front and save the pain! See CBBC’s member directory for details of IP lawyers specialising in China.
- Know the competition! Competition from domestic rivals in China is greater than ever before, especially in all fashion sub-sectors. The shop floor in Lane Crawford is wildly different to ten years ago – it’s not uncommon for the stock to be 50%+ from Chinese designers. This means you really have to stand out and fit in with the current trends and zeitgeist. SEE: Culture Trip Article
- Get paid! Like with any potential new wholesale customer anywhere in the world, how do you know the company is trustworthy, that they’ll pay their bills, or even follow through on the order? Check in with CBBC if you want to know if we’ve heard of the store or buying group, and agree on terms in advance of dispatching the order. It’s almost impossible to chase payment from the UK, so for new customers be clear on terms and how much you ask for up front.
- Stay in contact! Not getting any response to emails? Use WeChat. WeChat is the social media app meets necessary life aid meets the online ecosystem. If you don’t know much, I’d recommend downloading the app. Be sure to add Chinese buyers you meet and make sure you label them in the app so you know who they are (17 contacts with names in Mandarin and profile pictures of cute animals isn’t going to help you know who people are in 3 weeks’ time…)
- Have you done your labelling? If selling directly into China – do you know the regulations around your products? Will it get into the market or is testing required (think beauty, childrenswear, tablewares, etc) Have you got the right labels in Mandarin on your products? Are you responsible for this or is the buyer taking over? If they’re not doing it can they help you out? There is nothing more frustrating for you and for the buyer than stuff getting thrown away in Shenzhen because the paperwork wasn’t right.
- Feeling alone? Talk to people with experience. This could be an adviser from CBBC, Toyin, your trade association, someone who you know separately who has worked with China in the past, or all of the above. At CBBC we do our best to offer advice, support, and contacts to companies across all sectors. Although we are a membership organisation, we do our best to support British business as much as we can more generally, and work closely with the Department for International Trade in the UK and in China. Our 100+ staff in China across 13 locations mean we are plugged into business and trade activity and offer a variety of services depending on where you are
- Keep learning! Confucius famously asked ‘Isn’t it a pleasure to study and practice what you have learned?’, and he definitely knew a thing or two. CBBC run a range of events, like our upcoming Conference, smaller classes on IP and contracting culture training, or specific seminars on retail issues – like selling to China through your .com.
For more information and discuss your business further contact
Jack Porteous – Assistant Director of Retail
China-Britain Business Council
T +44 (0) 207 802 2008 , T email@example.com
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