Eight Preceding Steps You Should Take Before Entering the Chinese Market
The Coronavirus outbreak plunged the global economy into uncertainty. And yet, as the second biggest market in the world, with hundreds of millions potential customers, The Chinese market it’s still worth addressing. However, before you step into this huge potential market, where language and culture are only part of its many barriers, it’s important to understand – is this the right market for you?
If you are considering the Chinese market but have no clue where to start, here are eight initial steps to ensure you are on the right track:
- Initial GO/ NO GO research - via both Chinese and English channels, you will understand the terminology and market situation. Any material about your industry will be helpful here: estimation of your market size, find related Chinese regulations, and make yourself familiar with all that concerns your market. The Chinese Internet is separated from the western one, directed to Chinese audience. Therefore, the materials you will find there are probably firsthand, not translated, and not targeting foreign companies. It is critical to understand both Chinese and western points of views of the Chinese market, as together they give a better understanding of Chinese customers’ behavior.
- In our day-to-day life, we know our key international competitors quite well: we are familiar with their prices and products as well as with their strengths and weaknesses. However, companies that are active in China frequently change their products, price policies and distribution methods to comply with the Chinese market. Analysis of these differences will give you the proper insight to your future efforts in China. Find your type of products online, check the prices, the customers reviews, and search for the platforms they appear on. Also, pay attention and compare Chinese marketing materials to international ones. Understand the procedure required to adjust your marketing methods to the Chinese public. In your research, don’t neglect your less familiar local competitors. Check if the Chinese customers prefer international brands to local ones. Such information can be found on social media and e-commerce platforms, such as xiaohongshu.com.
The analysis of both international and local companies will facilitate the definition of your value proposition.
If you have yet to sell in China, personalize your target customer and find the potential customers and distributors that comply with this classification. There are several channels that can assist you with finding relevant contacts. As an example, commercial consulates can assist with making contacts with relevant companies and several Chinese websites (like this one
) provide comprehensive lists of professionals in various fields.
Face to face meetings are the best way to build trust and deeply understand their needs, but since it could be a problem due to the Coronavirus crisis, even a video conference held in Chinese is better than emails and text messages. These meetings are not for selling purposes – they come to help to define the advantages and disadvantages of your product(s). My advice: decide whether the Chinese market is right for you only after these meetings. It could be costly, but will save a fortune later on.
- In China, regulations, certifications and procedures apply to every aspect of the commercial activity. Check in advance: do you need to comply with any special requirements in order to sell in China? Are there any limitations on your industry? In some industries, even warehouses have restrictions. Make sure to check thoroughly.
- Make a decision according to steps 1-4: do you have the will and means to enter the Chinese market? Make a SWOT analysis to this move, and make sure you know how to finance it. Israel, for instance, has governmental programs which support international marketing efforts.
- Find a model company, like your company in size and field, who has successfully entered the Chinese market. Consult a local advisor in research for such a company, contact their ex-employees who were in key roles during the process and understand what they did right and wrong. Again – this might be costly, but ultimately worth your while and cheaper than making the same mistakes on your own.
- It will be much easier to get new customers and good distributors after your name is known. Check how to establish your online appearance over the Chinese internet, before selling or even trying to reach distributors in China. Try to get KOL support, which will spread the word in the right channels. A good way of finding KOL is using websites like this one, which lists KOL in different industries. If you cannot find your own field, try to search relevant forums and contact their advisors and specialists.
- Contact the first customers yourself. Though it depends on your industry, face-to-face meetings will increase your chances to sell without distributors. This will help you reach full understanding of the difficulties in selling your products in China, and later will ease your work with local distributors, as it will be easier for you to understand whether they have real difficulties, or they are just making excuses.
The journey won’t be easy, but after obtaining your first customers, you will have a much clearer view on how to proceed. Check your advantages and disadvantages again and decide on the customer experience you would like to give your Chinese clientele, and how best to achieve it. Good luck!Tirza Arav
, is a China professional and Chinese fluent speaker. Spent eight years in China during which she worked in a local office and set-up and managed an Israeli WFOE. Currently, she is providing consultation and hands-on services for companies who sell or wish to enter into the Chinese market. She also advises companies applying toShalav and Smart money programs.