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“Rebuild the Intimate Relationship between People and Food”

This is probably the most romantic conclusion of fresh food e-commerce. In the blink of an eye, it has been ten years since the niche market entered our life. Nowadays, food e-commerce in China is already a billion-scale market; however, only a few major dealers survived while others ended up with bankruptcy or transformation. Is the romantic ambition of fresh food e-commerce fading away?

Overview of the Current Situation

In China, Food E-Commerce is constantly rising in popularity. Nowadays, online retailers already offer a wide variety of goods, from vegetables to dairy products to even sensitive ingredients like fresh meat. Such a diverse assortment surely is the right step to ensure continuous growth.

With the steady growth of consumption expenditure of Chinese residents in general, the consumer demand is going upwards, which motivates the development of the fresh food e-Commerce sector.

According to a report from Chinese consulting firm “iResearch”, the fresh food e-Commerce industry in China grew by 59.7% to the staggering amount of 139.1 billion RMB (22.1 billion USD) in 2016-2019. It is expected to grow by yet another 40% to almost 200 billion RMB until the end of 2018 – reason for that being the increasing popularity and convenience for customers. Shopping food online is becoming a new trend!

Although, clearly, it is not easy to build a working system for efficient food e-Commerce, no other country is as far ahead as China in that aspect. Good infrastructure and already existing mobile payment options have leveraged the industry. Many Chinese consumers fully rely on food delivery services like JingDong Daojia and Eleme for anything they might need in the kitchen. Why wouldn’t they – it is incredibly easy to do.

By the simple click of a button, the order has been placed. Payment is made via phone, using the already common mobile payment methods in China. Then, the delivery arrives within a maximum of 24 hours, but usually takes a couple hours only. JD Daojia for example offers one-hour fresh food deliveries.

From there, it will be stored in collection boxes, that are commonly located in front of apartment blocks. A quick barcode-scan and you have finished grocery shopping for the week! No wandering in stores, no hassle and the carrying of heavy bags restricts itself to your apartment stairs.

With so much convenience, no wonder the market is booming in China!

Opportunities for further development

Food Safety

Without doubt, food safety is one of the most constricting aspects when dealing with fresh food E-Commerce in general. But particularly in China, there is a lot of room for improvement. As food safety becomes a growing concern in Chinese agriculture and therefore could limit the rapid growth of Chinese food E-Commerce, it is mandatory for the government to put regulations in place and work with agriculturists. Since the fresh food e-Commerce relies on said fresh food, to ensure further growth of the industry, changes must be made soon.

Profitability

Although cold chain, storage and distribution usually are an issue when dealing with food e-Commerce, China’s online retailers heavily invested in the infrastructure from the start, which also meant trading in the possibility to make a “quick buck”. In fact, as for now, 88% of fresh food e-Commerce companies are losing money and an additional 7% are suffering from heavy losses.

Seeming shocking at first sight, investments going into sustainable logistics and the establishment of cooperation agreements between e-Commerce platforms and distributors are forming a basis for a rapid development in the near future. Being prepared to tolerate short-term losses, no wonder many companies make this visionary decision.

In fact, just recently one of the biggest e-Commerce websites in China, JD.com, signed a major deal with Air China to try a new business model for the direct delivery of fresh goods.

Open-Source Cold Chain?

As mentioned, the logistics are very good in China already. However, supply chain costs account for most of the expense for fresh e-Commerce food, limiting the possibility of high margins. Currently, the cold chain logistics distribution is divided into two types: one is the self-built logistics model, such as ShunFeng Optimization (顺丰优选) and Miss Fresh (每日优鲜). The other is the third-party logistics model represented by Miao Tmall (喵鲜生)，BenLai (本来生活), ShikeFood (食恪生鲜) and others.

To possibly reduce cost and further push the development of the business sector, the fresh food logistics need to be centralized and possibly even shared among different providers to be able to suit a wider range of consumers at lower cost. Whoever claims or partners with other, like-minded companies first, will be victorious in the race for the number-one online food supplier of the country.

Conclusion

Although being still in its early stages, the fresh food online market has a bright future ahead. Rising customer demand for both domestic and foreign foods has boosted the development of the relatively new business sector. Without doubt, the development of the fresh food segment will mark a new era of convenience for consumers.

However, the system is not perfect, yet. The high costs to ensure punctual delivery and the freshness of goods currently outweigh the low profit margins by far. Being extraordinarily challenging for smaller enterprises, it is still written in the stars whether those can quickly turn profitable to prevent an early bankruptcy. But the worrying numbers of nearly 5000 fruit, vegetable and flower e-Commerce start-ups closing by the end of 2017 are a clear indicator, that the winning spots might be, yet again, reserved for Alibaba and JD.com.

Clearly, this market offers great opportunities but risks alike, which both need to be addressed accordingly to kick off this revolution of “how we buy food” and ensure a continuous, steady growth for a healthy economy.

If you have been following the news lately, chances are that you have heard about the so called “Facebook-Scandal”. What exactly happened? And how does it affect China? We have prepared the most important points you need to know.

Facebook has been in suspicion of collecting, exploiting and selling its user’s data for quite some time now, but nobody was aware of the dramatic scale until a news report broke ground on March 17.

“The New York Times” and “The Guardian” exposed a data leakage, which accuses Facebook of forwarding personal information from over 80 million Facebook users without their permission to “Cambridge Analytica”, a company that specifies in mass-data collection and analysis to influence and predict potential voters in the electoral process. This has raised concerns about Cambridge Analytica’s involvement in important public decisions such as the 2016 US election and the Brexit referendum. However, so far there has been no official confirmation from either side to support the latter.

Needless to say, Facebook’s apparent dubious practices violate both US and European privacy agreements and an investigation is pending, which, if confirmed, could lead to a much-needed amendment to diminish information gained by internet services.

Given the public outrage on Facebook’s data leak, it even seems more fitting today that the social network was blocked from Chinese authorities following July 2009. At first, there was an outcry from national and Western media for “freedom”, condemning the internet censorship. But Chinese government was well aware of the amounts of data Facebook is gathering and wasn’t willing to exchange national data integrity for the limited amount of features Facebook offers compared to national social networking powerhouses like QQ, Weibo and WeChat.

Besides, it was commonly believed that after Google’s problems to introduce themselves into the Chinese market, Facebook wouldn’t stand a chance against “Renren”, a Chinese platform with very similar features.

Following the recent data leakage, it seems like a good choice to keep Facebook out of the country.

However, Facebook’s issues haven’t gone unnoticed, even in China. Investors fear the dawn of increased regulations over social media companies which led to a huge stock sell-off. Facebook’s share alone dropped by more than -16% within two weeks after the reports were published, carrying along various other technology and communication providers on their downward trend like Snapchat, Twitter and Tencent.

Tencent, which has been dubbed the Chinese Facebook, experienced a heavy drop following the Facebook disaster, too, as their share went down almost -14% as of April 2nd. Although some of that came from their biggest shareholder, Naspers Ltd., that surprisingly sold USD 9.8 billion worth of stock, Tencent’s announcement to trade short-term margins for large investments in artificial intelligence and mobile payments has left many investors confused and influenced them to sell shares.

Additionally, the dilemma around Facebook raised concern about the amount of data Tencent is collecting themselves as both their business structure is very similar. With super-apps like WeChat, that support functions from vendor payments to bank transfers, railway and flight ticket booking, reserving a hotel room and various other features, clearly, there is a lot of information being transferred to the tech giant. One can assume that the firm could paint a very clear picture of their users if they wanted.

Although being an annoyance for the privacy concerned users among us, the amount of data collected is pure gold for marketing intents. Companies that have access to such comprehensive data can easily identify suitable target groups and plan their marketing strategy by precisely monitoring consumer behavior.

Considering the advantage this can give, all the fuzz around Facebook’s data leakage is not expected to have any impact on current Chinese privacy laws. Also, through China’s well audited internet it is unlikely that any potential regulation for Facebook could have impact on Chinese social media.

Moreover, although Tencent’s investments in future technology might slightly reduce the company’s revenue in the next few years, it is certain they will be beneficial in the long-term to assure Tencent’s future growth and the development of the Chinese technology market overall.

Maybe your website is compatible for the Western market, you possibly even come up top on the Google search engine, have a strong Facebook, Twitter and Instagram following… But unfortunately, that means absolutely nothing in China. Chinese social media platforms are an entirely different ball game and ensuring that your brand is visible on Chinese social media platforms and accessible to the Chinese market is critical. This blog post will outline the key features you need for your website when looking to expand into China.

What is Google?

Google, as you most certainly know, is the largest search engine worldwide. If you have a question, want to find directions or look up a brand/company, then all you need to do is “Google it”. Therefore, being present and visible on Google is, most certainly, a great advantage for your company – as long as you’re not looking to target the massive Chinese market. Keep in mind that Google is inaccessible to the Chinese market and, in most cases, also unknown. Therefore, being present on Google means nothing if you haven’t considered Chinese search engines, too.

 

Baidu is the Chinese alternative to Google, so if you want to be known in China, Baidu is your friend. In fact, Baidu controls around 80% of the Chinese online search market share with Google only owning about 10%¹. Therefore, it is critical to get your brand out there on Baidu to increase traffic to your site, improve brand awareness and gain access to the masses of Chinese consumers.

Social media

Of course, Chinese search engines are important, but so is social media. It’s all great having lots of likes on Facebook, followers on Instagram and Twitter – but again, this is pointless if you’re looking to access the Chinese market. The social media landscape is very different in China compared to the Western world.

Interestingly, the average internet user in China spends 5-6 hours more time online per week than US Americans. Moreover, Chinese users spend an average 90 minutes per day on social networks, and 38% of consumers make product purchase decisions based on recommendations they see on social networks. As a result, ensuring your brand is present on Chinese social media is essential if you want to access the Chinese market and gain access to the large number of potential customers and the substantial amount of online purchases they make.

In theory, it is still possible to access popular Western social media platforms, undermining the governmental restriction. But even so, the slim number of users is a drop in the ocean compared to the Chinese alternatives. For instance, the number of Facebook users in China was around 53 million in 20162. Compared to the 938 million active users on WeChat, it is more than obvious that Western social media has very limited influence on the Chinese market. Therefore, growing exposure on Chinese networking websites instead will most certainly prove useful to your business.

So what are the social media platforms to consider?

We have presented WeChat earlier as a great option to join the complex Chinese market and have a more detailed post about WeChat’s functionality on our website, so we will not go into detail here. Besides obviously WeChat, what are other social networking websites to consider? Although this depends entirely on your business and the type of consumer you aim to target, we will present a couple options here:

Weibo

Weibo serves as the Chinese alternative to Twitter and has 340 million active monthly users – a lot, compared to only 10m Twitter users in China⁴. Considering Weibo solely targets Chinese consumers, it is apparent that the platform has an extremely large audience.Using Weibo to market your brand is most certainly a good way to market your firm, get access to a big number of consumers and allow you to gain access to the Chinese market effectively.

 

Youku and Tudou

Youku and Tudou act as alternatives to YouTube. YouTube has 1.5 billion active users per month⁵ while Youku has 580m users. Although Youku’s absolute user count is far lower, it reaches a substantially bigger relative audience, since it caters to Chinese-speaking countries only.
Furthermore, there is an important main difference between Youtube and the Chinese alternatives: YouTube is more based on user-generated content whereas Youku and Tudou are rather focused on films, TV programs and legal copies of domestic TV and films. Using Youku and Tudou to market your brand can help you accessing the Chinese market effectively, although this very much depends on the sort of marketing you plan to engage in.

Clearly, to succeed in China, it is required for you to consider marketing on social media platforms like Weibo and Youku, too, depending on your marketing strategy and your company’s target group. We offer personalized strategies for your business to enter the vastly different world of networking social media in China and find an ideal way to promote your business.

 

References:

1 – https://www.investopedia.com/articles/investing/051215/baidu-vs-google-how-are-they-different.asp

2 – https://www.statista.com/statistics/558221/number-of-facebook-users-in-china/
3 – https://www.bbc.com/news/technology-39947442

4 – https://techcrunch.com/2016/07/05/twitter-estimates-that-it-has-10-million-users-in-china/
5 – https://techcrunch.com/2017/06/22/youtube-has-1-5-billion-logged-in-monthly-users-watching-a-ton-of-mobile-video/

Maybe your website is compatible for the Western market, maybe you even come up top in the Google search engine and have a substantial social media following… But that means absolutely nothing in China. Chinese social media and search engine platforms are an entirely different ball game and ensuring that your brand is visible on Chinese platforms and accessible to the market is critical to ensure your company’s success. Nowadays, an appealing website is critical – here are the things to remember when looking to expand into China.

Website

The most important consideration when deciding to access the Chinese market is to ensure that your website actually works in China and is compatible with Chinese apps and on smartphones. A few key points are:

Hosting and domain

Ensuring that your website works in China starts with getting your hosting (where to put your site) and your domain. It is important to get this from very early on! Leave it too late and your domain name may be taken or may now be extremely expensive, particularly if you have gained popularity by the time you buy it.

ICP Licence

The next step is an Internet Content Provider (ICP). This is a license from the government to approve your website, essentially a state-issued registration number that allows you to run your website in China and host on a mainland Chinese server. By law, for your site to go live in China, you are required to apply for one.

It is important to clarify that ICP licenses don’t technically determine whether your site is visible or blocked in China. It is possible that sites with ICPs are taken offline, while sites without them may remain visible indefinitely. The ICP merely confirms that you’ve been approved to host your website on a mainland Chinese server.

Interestingly, many non-China-hosted sites exist that do not have ICP licenses. Typically, if a site is small enough and doesn’t contain anything politically sensitive, it may slip through the “Great Firewall” and work in China. However, to avoid connectivity issues and increase the loading speed of your website overall, server hosting in China is recommended. Plus, if run from outside China, monitoring will soon reveal the lack of an ICP license, and the website will be blocked. Once blocked, there is no way to unblock it, given you are essentially outside of the system. Thus, if hosting outside of China and not getting an ICP licence is an option for your firm, you should be aware of the consequences.

Many firms decide to host their website in Hong Kong, since Hong Kong servers are geographically close, but governed by a different set of laws. Hosting offshore may be a viable short-term solution, however it doesn’t guarantee a satisfying internet speed for users in mainland China, with the possibility of your site being difficult to reach.

Consequently, having an ICP and hosting in China is a must to deliver digital content quickly to Chinese consumers. This is particularly important when your site has an array of plugins or functionality to your site which makes it relatively complex. For example, if you want your site to include payment methods then an ICP is essential and hosting your website in Hong Kong would not suffice.

It is important to note that internet laws in China change all the time, so being up to date with current news and updates on setting up a website in China is crucial, a difficult endeavour as a non-Chinese speaker. As for now however, if you want a serious web presence in China, you will need an ICP License!

Different types of ICP

ICP’s vary depending on the type of company you are, and the sort of website you are looking to host. There are two types of ICP: a commercial and a non-commercial ICP. The former allows a website to engage in online selling and payment integration.

Obtaining a commercial ICP license is an imperative for any aspiring business in China that plans to have its own website and operate some kind of online sales on a server located in China.

Other considerations

When looking to set up a website to serve the Chinese population, there are a variety of other considerations besides legal and regulation issues. To expand into China, your website will most certainly need to be restructured as Western website structure varies dramatically from what Chinese consumers are used to. They have different, sometimes very specific requirements that decide how much time – if any, at all – they will spend on your website. For example, it is expected to contain a range of features, such as UX (user experience), payment methods, and social logins, and you need to hit all these targets to build a website that can make a difference in China.

Western websites are generally far more simplistic with less functionality; they are typically more cleanly and simple. On the other hand, Chinese sites are very colorful, overloaded with links, information, animations, flashing texts and banners. For example, the images below show a comparison of Taobao and JD.com with its Western equivalents (Amazon and Ebay).

Taobao vs Ebay

Issues to consider

As mentioned, hosting a website in China from abroad will result in a very slow website, however there are an array of other reasons that may result in a slow loading website, even if you do in fact host in mainland China and are using an ICP license. These issues will most likely come from the website’s structure and coding.

For instance, given that Google and other social networking providers are blocked in China, certain plugins and features your website might contain will prevent the page from loading or result in a slow site. Examples include Google Fonts, Google Maps, Twitter, Facebook, etc. Each of these commonly used features will prevent the page from loading.

In addition to this, the coding of your website is very important. A poorly coded website means a slow website, so using the best coding practices will result in an effective and speed optimized website. In addition to this, the coding should ensure that your site is compatible with Chinese apps.

In conclusion, to make sure your site will work effectively, it is important to consider each of these options which ensure that your site will provide a website speed that meets Chinese consumers’ needs and appeals to the Chinese market overall.

SEO on China’s leading search engine, Baidu

There is no doubt in the importance of SEO to invite potential customers to your webpage. The deliberations mentioned above will certainly help with that, but here are some other essential aspects to reflect on:

Getting the right domain name helps with SEO, as the “.cn” domain name makes your brand more Baidu-friendly. Furthermore, single domains are generally the best way to go, rather than using sub-domains. For example, using “name.cn” instead of “name.xyz.cn” increases search ranking on Baidu.

Moreover, another aspect you might want to consider is the need for a Chinese physical address, because Baidu favors sites that have a presence in its home country. This does not necessarily have to be an office address, but perhaps an agent with a permanent address in China, where mail can be delivered to.

At last, you will need to produce content in Chinese characters, preferably simplified Chinese rather than traditional, because Baidu prefers simplified Chinese. In fact, Baidu won’t index content in Chinese dialects, such as Cantonese, nor in any Western language.

Thus, if you want to outrank your competitors in China, you’ll need to optimize and adapt your website, provide content in simplified Chinese and have a Chinese mailing address. All these enhancements will increase your ranking on leading Chinese search engines and allow you to broadly access the massive Chinese market.

You’ve most certainly heard about Amazon or eBay, and it’s very likely that you’ve made purchases using them. In fact, I’d be more surprised if you hadn’t. Perhaps your business has a presence on either of these platforms, but why are there no customers buying off your sites from China? That is because although these online retailers exist in China, neither took off nor threatened the dominance of established ones like Taobao or T-mall or JD.com. So, in order to succeed in China, forget about Amazon and eBay and focus on the Chinese alternatives that dominate the market.

Online purchases

Consumers are becoming more and more likely to purchase products online³. his trend for online shopping is seen in China too, with 467 million Chinese making an online purchase in 2016¹, that’s more than a third of the entire population of China. The online purchasing market in China is massive and is still booming,⁸because shopping online provides a simple, convenient and practical way to purchase products. It allows consumers to easily compare prices and have the product delivered to them, with minimal effort or hassle. Interestingly, 71% of shoppers believe they will get a better deal online than in stores², which is the result of lower costs when selling online for manufacturers.

 

Not only is e-commerce an appealing proposition for consumers, it is just as rewarding for vendors and businesses. Selling online on websites like Taobao is a great way for your business to distribute your products and gain brand awareness while attracting a wider range of consumers from a variety of locations, without the same costs of having a physical store.
Additionally, selling online allows consumers to leave feedback and rate the quality of the product and customer service, which can be used as a great marketing tool to gain new customers and keep existing ones coming back. Just make sure you have good feedback! Negative feedback could harm your business, your credibility and the popularity of your brand, losing you customers and sales!

Let’s outline a scenario to help you understand how useful online purchasing can really be. Imagine you are at home and about to make yourself a cup of tea. But to your complete disarray you find out your favorite mug has cracked. You have lots of mugs, obviously, but this was your preferred; perhaps it has sentimental value or you simply just like the color. The option of leaving your house is unappealing and unnecessary, as you have the option to purchase the product online. You can browse the exact mug you are looking for across a range of different retailers, allowing you to easily find the cheapest, or best quality item – no afternoons wasted searching in physical stores or markets.

In addition to this, online shopping in China offers a variety of ways for collecting the item aside from home delivery. It can be collected from a post office or from large electronic collection boxes, which are often located at the bottom of apartment blocks or business buildings. The latter offers a lot more flexibility, meaning that you can collect your required mug at any time you please – simply scan a barcode or enter a code you have been sent prior.

Taobao, Tmall and JD.com

So, having the importance of online retail established, what are the Chinese alternatives to eBay and amazon that you should be aware of? There are many different sites that offer similar services, but the main three to consider are: Taobao, T-mall and JD.com. Unlike Amazon and eBay, each of these Chinese websites are very different; they sell different sorts of products and cater to different types of consumers.

Taobao

There is no doubt that you would have heard of Taobao before. Taobao is operated by the tech giant Alibaba, being China’s largest ecommerce site⁸ and one of the largest in the world with 369m monthly active users⁹. However, in terms of gross sale volume, Taobao has outsold eBay and Amazon combined.

To understand the sheer size of Taobao in China, it is important to note that the retailer is China’s largest creator of jobs (9.7 million) since it was opened. Taobao is China’s third most visited website in China (after Baidu and QQ)⁵ and the 11th most visited in the world¹⁰. Their business model consists of mainly providing a C2C (consumer-to-consumer) e-commerce platform. Therefore, it allows individuals to open their own online store at a cost but only if they meet certain requirements. As a result, Taobao offers a wide variety of products with over 7 million vendors and 800 million items⁴.

Taobao offers a variety of features that allow for an easier shopping experience. Users can purchase products by using their phone camera, which will bring up a variety of vendors selling the same or similar products.
Users can also access the seller’s profile to view the ranking and feedback from other customers, assuring them in the buying process. To increase consumer confidence even further, it is possible to contact the retailer at any time before, during or after a purchase if any questions should arise. Therefore, to guarantee success in the online retailing market, excellent customer service and quality products to guarantee positive feedback is crucial – especially if you have direct competitors.

 

Looking back at our mug analogy, you will be able to find the mug with ease, generating an abundance of sellers offering that same product. Based on price comparisons and customer feedback, you place your order. That easy!

Due to the Taobao app’s high functionality, it is essential to properly design your Taobao store. This includes having high quality photos, so the camera function on the app can detect your product. It also means ensuring that you use the correct buzz words, in the correct language. Otherwise, as competition on Taobao is tough, slacking in those points will most certainly cost you sales and lose you potential customers.

Tmall and Tmall global

Many people consider Tmall (Taobao mall) and Taobao to be the same thing. They both dominate the Chinese e-commerce market while being very different, however. Tmall was set up by Alibaba as a separate platform to Taobao, with the intention of preventing the distribution of fake goods and increasing consumer confidence. This approach essentially removes the risk of unscrupulous sellers with products of dubious quality. Therefore, Tmall guarantees authenticity and high quality in the products sold on its site. This is supported by certificates of authenticity, which can be found on each seller’s page.

Unlike Taobao, Tmall solely offers a B2C (business-to-consumer) platform and is China’s largest third-party platform for brands and retailers⁸ and the most visited B2C platform in China¹⁷. To ensure that businesses aiming to sell on the website are of legal entity, they must provide an array of documentation and paperwork. With having a market share of 55%, there is no doubt Tmall dominates the Chinese B2C market; Only followed by JD.com, Tmall’s main competitor, with 33% market share⁷

Over 70,000 official stores exist on Tmall all owned by known brands such as Nokia, Adidas and Samsung. Therefore, Tmall and Taobao cater different customer needs, with Tmall offering less variety, but guaranteed authenticity.
The costs of selling on Tmall are inevitably higher, coming from using the Taobao infrastructure, investing more in marketing, offering authentic products and providing evidence of authenticity. Consequently, this means a premium for consumers, but it guarantees quality products. Even so, Tmall typically offers lower prices than physical shops due to lower costs of operating online rather than in physical stores.

Opening a Tmall account is considerably costly as it stands approximately at 160,000 RMB, in addition to the mentioned requirements above. Even though 100,000 RMB is a refundable deposit, 60,000rmb is the yearly fee to use the Tmall platform.

Tmall global

Tmall global was set up in 2014 to enable overseas brands to sell directly to Chinese consumers. The branch aims to remove the concern of Chinese consumers about fake goods by supplying products via direct mail or bonded warehouses as it offers international brands to enter China with lower barriers.

Tmall global’s platform truly is an all-in-one package for foreign brands. It allows them to enter the Chinese market in a comparably cheap way, not needing a Chinese business license or a Chinese legal entity to join the platform, nor being required to register a Chinese trademark or worry about warehouse and shipment logistics.

JD.com

JD (京东 Jingdong), which is Tmall’s closest competitor, is also targeting the B2C e-commerce market. Initially offering only electronic products, JD has scaled and sells almost anything now, with 85% of JD.com’s revenue still coming from electronics¹¹.Therefore, JD is the go-to site for Chinese consumers looking to purchase electronic items to this day.

JD offers its own shipping platform and is linked to their own logistics company. This is fixed, meaning the seller cannot chose to distribute the product with another delivery firm. On the upside, the delivery service provided by JD.com is quicker than those of other online retailers, and goods are often delivered within a day.

JD.com generally charges slightly higher fees than Tmall, which is inevitable given the nature of its products and knowing the fact, that profits from electronic devices and home appliances is greater. Their transaction fee is between 5-8%, whereas the transaction fee for Tmall is 3-7%11.

Comparing each of these platforms to Amazon/eBay

Clearly, these online retailers offer greater functionality overall, but especially in their apps, which is something that appeals massively to Chinese consumers. The so called “super-apps” enjoy immense popularity in China, whereas the western websites offer simplistic and clutter-free sites with fewer functionality.

In addition to this, the Chinese counterparts typically offer a wider variety of products and services that are not available for online retail in the West. For example, on Taobao one can easily purchase digital services, but also large physical items such as an air conditioning system.

Overall, being successful on any of these platforms isn’t solely a matter of having your item listed, but rather of using the correct pictures, the correct key words and an effective marketing strategy, as well as excellent customer service and high-quality products. Do each of these things right and Taobao, Tmall or JD.com can be your ticket to the Chinese market, giving access to Chinese consumers and increasing your sales and brand awareness.

References:

1 – https://www.statista.com/statistics/277391/number-of-online-buyers-in-china/

2 – https://www.seosolutionsindia.com/blog/2015/02/23/amazing-facts-about-worldwide-e-commerce-online-shopping/
3 – https://www.nchannel.com/blog/retail-data-ecommerce-statistics/

4 – https://www.wsj.com/video/what-is-taobao/69BD4B54-0417-4075-A54D-5FC895B5B3F3.html
5 – https://daxueconsulting.com/success-of-taobao-on-chinese-internet/
6 – https://www.chinainternetwatch.com/19289/online-shopping-q3-2016/
7 – https://www.chinainternetwatch.com/22338/online-b2c-retail-q2-2017/#ixzz4tlltOAtL
8 – https://www.chinainternetwatch.com/tag/alibaba/
9 – https://expandedramblings.com/index.php/taobao-statistics/

10 – https://goodyfeed.com/10-facts-taobao-probably-didnt-know/
11 – https://www.forbes.com/sites/ericjackson/2014/02/04/jd-com-isnt-the-next-amazon-of-china-its-the-next-dangdang-of-china/
12 – https://www.chinasalesco.com/services/exporter-tips/110-how-does-alipay-compare-with-paypal
13 – https://www.statista.com/statistics/218493/paypals-total-active-registered-accounts-from-2010/
14 – https://www.chinainternetwatch.com/19551/alipay-2016/
15 – https://www.statista.com/topics/2411/paypal/
16 – https://www.forbes.com/sites/johnnyjet/2017/09/25/how-to-maximize-online-shopping-portals/#1af29dfb71c4
17 – https://ehubnordic.com/actual-difference-tmall-tmall-global-china/

Last week, over 60 Israeli companies gathered in Mianyang in Sichuan province for three days as part of a high-tech expo celebrating the 25-year anniversary since China-Israel bilateral relationships. Israel was the honored host and the expo had a record breaking number of Israeli firms, more than have ever taken part in any expo in China. This confirmed again China’s increasing diplomatic ties with Israel. Overall, over 700 firms from more than 40 countries attended the expo.

 

The Israel-China relationship has strengthened in recent years with 2017 being the first year of the China-Israel innovation partnership. In the first half of 2017, Chinese companies invested almost $40m into Israel and vice versa Israel’s investment into China is growing constantly, too. Currently, China is Israel’s third largest trading partner.
The expo and the growing relationship between the two countries in general acted as a great way to promote coordinated development and allowed the Israeli consulate and Sichuan province to agree on a plan of action to promote cooperation in ten different industries.

Up2China attended the expo and represented ourselves and five clients of ours, namely Zero gravity, Natural Sea Beauty, Curalife, Botanifique and Acoustiguide. We reached out to each of these companies to make them aware of the expo and designed individual booths and catalogues for each company.

 

We also had two of our employees working at each booth, providing demonstrations of the products and pitch sales. This increased awareness of our clients’ products, promoted the brands and increased sales volume. Within only three days of the expo, we reached a total sales volume of more than 60,000CNY.

   

In addition to this, we also worked with an array of our other clients whose booths we did not run, but we organized for them to be there.

Furthermore, we organized B2B meetings with distributers, increasing our exposure and visibility and improving business relationships.

 

Each stall gained a lot of attention as we set up a game prior to the expo which allowed individuals to scan each of our QR codes to enter a raffle and win a prize. This increased overall exposure and sparked interest in our clients.

 

Overall, the Mianyang expo was a very successful three day endeavor that enabled Up2China to successfully promote many of our clients, increase visibility, improve brand awareness, as well as a great opportunity for us to reach out to distributers and to understand even more about the Israel-China relationship.

 

Background
China is, arguably, the largest economy in the world with many sources claiming that China has, in fact, overtaken the United States to claim this title. Whether or not you agree with China being number 1 or number 2, you cannot question China’s global importance, impressive growth, and staggering trade volume. China’s rapid development has resulted in China becoming an appealing destination for many businesses.

Evidently, China is a very large and important player in the international market. Thus, in order to take your business to the next stage and expand internationally, getting access to the Chinese market is clearly an important consideration and would most certainly prove to be rewarding. The sheer size of the market and vast population size allows firms to gain access to a greater market and a large pool of consumers.

What makes China stand out?
Not only is China one of the largest economies in the world, but it has connections with countries all over the world. However, the interesting feature here, and the reason that China is so different to any other country, is the fact it is so closed off. This makes China a very difficult market to tap into and our future blogs will provide useful tips and key considerations in doing so, particularly in terms of the differences between Chinese and Western social media and marketing platforms. Being able to tap into the large Chinese population, the growing middle class and their rising western tastes is most definitely an appealing proposition. However, to get your brand out there you need to go beyond the great firewall and the closed nature of China!

Considerations
In light of all this positivity on expanding and marketing your brand in China, a crucial question you need to ask is “Will my brand have any influence on Chinese consumers?”. To ensure that it does, marketing must be effective and needs to target the correct market in the correct way.

A perfect example for the complex difference of the Western and Chinese market is the extent to which social media platforms differ. WeChat, a multi-feature application, is used widely in China, with approximately 963m active users² who spend 40 minutes (on average) on the app per day³. Using WeChat is a great tool to access the Chinese market and help grow your business. This is clearly very different to the Western world and is one of the many modifications that you will need to make to be successful here. As a result, expanding into China can be a difficult, but rewarding task and using WeChat to market your company is one of the many ways to access millions of Chinese consumers.

Another example is WeChat pay. WeChat pay is a very popular payment feature on the WeChat application. The feature has over 200m users5 and is a brilliant and convenient way to make payments without using paper money and coins. China is rapidly moving away from physical cash, and this sort of innovation is an important consideration for any business that desires to expand into China. This is one of the many ways you need to alter your marketing strategy to appeal to Chinese consumers. We will discuss this, and other, payment features in future blogs soon, so stay tuned!

Not only is it critical to market yourself on the correct Chinese platforms, it is also essential to ensure systems are compatible with Chinese phones and available in the Chinese language. China has become the “undisputed leader in mobile transactions”⁶ so don’t miss out on this trend as it is a great way to leave a lasting imprint in the Chinese market!

Clearly, the social media and marketing landscape is very different in China compared with the West. However, if you are looking to grow your company, then expanding into the Chinese market is an important move and doing so in the correct manner is critical. Smoothing out the apparent disparities is something we constantly work on to help you start your business. In future blogs we will continue to provide valuable content to make sure you get an insight into the diverse Chinese market. Stay tuned!

References:

1 – https://indianexpress.com/article/india/india-news-india/8th-brics-summit-goa-declaration-here-is-the-full-text-adopted-by-the-member-nations

2 – Q2 2017 – https://www.statista.com/statistics/255778/number-of-active-wechat-messenger-accounts

3 – Apr 15 – https://expandedramblings.com/index.php/wechat-statistics

4 – Peterson, 2015, https://www.linkedin.com/pulse/wechat-better-than-any-social-mobile-app-comes-out-silicon-peterson and Werner, 2017, https://www.cultofmac.com/430119/wechat-is-more-than-a-messaging-app-it-might-be-a-mobile-os

5 – Jan 16 – https://expandedramblings.com/index.php/wechat-statistics
6 – https://www.applause.com/blog/mobile-payments-global-adoption
7 – Xiao, 2017, https://www.techinasia.com/fake-qr-code-scams-china and Benji, 2017, https://www.marketingtochina.com/the-ultimate-guide-to-qr-codes-in-china

Imagine a world where Apple isn’t the be-all and end-all. Imagine switching from an iPhone to an Android device without losing files or having to re-download apps. That place does exist: China!
Unlike the West, the Chinese app ecosystem is very fragmented – you won’t see Google and Apple battling it out here.

Whilst the Google Play store wasn’t hugely popular before Google pulled out of China in 2010, its exit did pave the way for the rise of the domestic market. Today there are currently over 200 Chinese Android app stores, owned by a combination of third parties and smartphone manufacturers.

Android is overwhelmingly the dominating force with claiming 86.4% of the smartphone market share.

CHINA’S THRIVING APP MARKET

According to research firm App Annie, mainland China now has the world’s biggest iOS app store measured by revenue. However, China’s homegrown Android alternatives are also on track to reach $20 billion in revenue this year, and potentially overtake their rival.

It comes as no surprise, then, that China is predicted to drive the largest app revenue growth of any country in 2020.

THE TOP 5 ANDROID APPSTORES (2017)

• Tencent Myapp – Owned by China’s social media powerhouse, it attracts users through its other services i.e. WeChat, QQ and games.

• 360 Mobile Assistant – Belongs to China’s second largest search engine. Recently launched its own smartphone with built-in app store.

• Xiaomi App Store – Fastest growing Chinese smartphone manufacturer, moved up to 3rd since 2015. Also available as a web app and can be installed on any Android device.

• Baidu Mobile Assistant – Owned by China’s largest search engine, it has dropped by 4.3% since 2015 and claims to be moving away from mobile technology.

• Huawei – Smartphone manufacturer with largest market share in China, built-in app store.

WECHAT – THE SUPER APP

Apart from the vast number of app stores, the unique position of WeChat also makes China’s digital landscape a lot more challenging for Apple.

If Chinese consumers want to switch to Android, it simply requires re-downloading WeChat where typically all the user’s mobile payment records and files are stored. As such, China’s iPhone retention figures are around 50% compared to 80% in the UK and US markets.

Earlier in 2017, we also saw the launch of WeChat’s mini programs – essentially stripped back versions of iOS and Android apps which don’t need to be installed, instead they’re stored and run from within WeChat.

LOCALIZING YOUR APP FOR THE CHINESE MARKET

A few points to consider…

1) Be visible

For an app to be visible on Android devices in China, you’ll need to go through an approval process (usually around 2 weeks) with each Android app store individually. This must be done by a local Chinese entity with a developer account for each store.

2) Don’t rule out the Apple App Store

If your target market is willing to pay for premium accounts, consider having a presence on the Apple App Store as users in China tend to spend more on apps than Android users.

3) Host your app on a local server

There’s nothing worse than an app that’s slow to load or even disconnects. Hosting on a local Chinese server will ensure the user experience isn’t compromised. If your company doesn’t have a base in China, find a local partner or agency.

4) Apply for an ICP license

You’ll need permission from the ‘Chinese Internet Authority’ to run/host your app within the Great Firewall. To use a local server, you’ll need a few things:

• Local business license
• Domain name
• ICP License

Abi is a digital marketer currently living in Chengdu. Originally from the UK, she’s still trying to train her taste buds to cope with Sichuan spice!

WeChat (Weixin) doesn’t really need any introduction but if you want to talk numbers it has 767 million active monthly users in mainland China alone (as of Jan 2017).

For those enticed by the opportunities of the Chinese market, the question is not whether your business should be on WeChat, but which type of account you should use.

Subscription, service, enterprise, verified or unverified? I don’t blame you if it’s all a little hazy, after all, Facebook and Twitter make it incredibly easy to get a business online. China’s digital landscape, however, is unique and a little complex – but those who can navigate it will reap the rewards!

Let’s look at some of the key considerations for any social media strategy and how service and subscription accounts weigh in:

BRAND VISIBILITY

As a service account, your business will appear in a user’s chat feed amongst personal contacts and groups. Clearly a good place to be as users spend a lot of time scrolling and browsing here, and if they really like you they can pin your account to the top of the list. Probably even more valuable,your followers will receive a push notification every time you post new content.

You’ve essentially been invited to a user’s inner circle, so this is a chance for you to build top-of-mind awareness and keep that proactive engagement going in the long run.

Surely that will just lead to spamming? No, WeChat has limited this to 4 posts per month – it’s a user-centric platform after all (if only Facebook cared so much about us!).

With a subscription account, your brand is housed in the ‘subscription folder’ along with dozens of others. Crucially, the user must actively choose to read your latest post – no push notifications. As a new brand entering the market, this can be challenging, therefore, try to keep users coming back without the need for incentives (e.g. promotions and giveaways). However, as a subscription account allows you to send one message per day, it might just be the perfect choice for content-based businesses like BuzzFeed.

  

CUSTOMER SERVICE

Word of mouth is incredibly powerful in China so making sure your customer service is up to scratch should be a priority.

Available for both service and subscription accounts, WeChat allows you to manage customers incoming messages with a Message API. Additionally, service accounts have access to  template or event-based messaging, as the name suggests, specific messages can be triggered by different actions rather than an individual message to the customer.

This is particularly important for e-commerce as it can be automated for delivery updates, feedback messages etc. and is not included as part of the 4 messages per month limit. In fact, this could be adapted to any customer life cycle not necessarily just for e-commerce.

A word of warning – avoid using it for outbound marketing or you might feel the wrath of WeChat!

CUSTOMIZATION AND INTERACTIVITY

Both types of account allow you to customize the menu at the bottom of the chat interface. However, the service account gives you that bit extra and you can really create a much more unique and interactive brand experience.

Ticket reservation, check-in services, online stores, games, in fact, any mini-mobile site can be integrated into a service account, so you don’t need to build a standalone app.

For example, McDonald’s integrated store finder detects the user’s location and provides directions to the nearest store. CuraLife, a provider of homeopathic supplements, lets diabetes sufferers digitally record and track their blood sugar levels, receive advice and purchase products – all within WeChat.

 

FOLLOWER INSIGHT AND CHANNEL ANALYTICS

With a service account, you have slightly more sophisticated data analysis tools at your fingertips for segmentation, channel traffic, and follower insight.

Aside from the basic profile of your followers, you can also detect user location – perfect for location-based marketing. Even more useful is the ability to create multiple ‘parametric’ QR codes and track the performance of each placement e.g. on a flyer, on a website, at an event etc. Now you can finally get some feedback on whether those leaflets did the trick or not!

But wait, there’s more! Combine this with the ability to embed path rules i.e. QR codes routing directly to different products, services or campaigns depending on placement. Sales, customer service and user analysis could all benefit from this targeted approach.

E-COMMERCE

This is where service accounts really come into their own, especially for cross-border e-commerce! Your WeChat store is integrated directly with WeChat’s E-wallet, which makes it a seamless process for customers browsing and buying products.

Your product can be bought in one click without the customer even leaving the app (Note: This is not a feature of a subscription account whether verified or not).

 

What’s the point in a subscription account, then?

Service and subscription accounts aren’t necessarily mutually exclusive! It’s not uncommon to see companies making the most of the customization features offered by a service account, as well as setting up a dedicated content marketing channel using a subscription account.

(A brief word on the enterprise account – this is more for internal company use, think of it as WeChat’s answer to Slack or Trello).

VERIFIED OR UNVERIFIED?

Like Facebook and Twitter, it’s a straightforward way for users to guarantee the authenticity of the account (or stop people trying to pass off a fish eye for a pearl! 鱼目混珠). As a business, not only will you receive a gold badge next to your name and rank higher in search results but certain advanced features (WeChat Payment, WeChat geo-location etc.) are only available after an account has been verified.

For both subscription and service accounts, verification also unlocks the world of WeChat advertising… but that’s for another time!

OPENING AN ACCOUNT

It’s important to realize that whilst users with the foreign version of the app can access content and accounts from both inside and outside mainland China, accounts created by companies outside of China are not visible in mainland China.

To open a service account, you’ll need to be a registered company in China or an agency can act on your behalf. By comparison, a subscription account is slightly easier to set up, but you’ll still need an excellent knowledge of Mandarin and a Chinese ID number!

Want to know more about the potential WeChat has for your business? Get in touch, we’d love to chat to you!

Abi is a digital marketer currently living in Chengdu. Originally from the UK, she’s still trying to train her taste buds to cope with Sichuan spice!

Imagine yourself this scene – You’re having some troubles with your toilet and you have no choice but to call the plumber. The plumber arrives and fixes the problem. You examine his work and it seems that you’re satisfied: Time to pay the bill. The plumber tells you it’s just 35$ because he’s feeling happy that day and he likes you. “No problem”, you say as you reach for your wallet. Suddenly, you realize that you forgot to withdraw money – DAMN! that always happens.

Well, if you’re in China it’s not a big deal!

You see, this kind of situation happened to me here in China, and the plumber’s response was “no worries man, just send me the money via WeChat Wallet”. That situation got me to realize something – China truly is an E-commerce superpower, a place where even the simplest daily things become an E-commerce transaction. After all, when was the last time you paid your plumber, hairdresser or vegetable seller via PayPal? In China, that’s the norm.

That’s truly a surprising fact when thinking of a country like China, which is still, even if only officially, Communist. The Chinese economy is skyrocketing for years. China surely wasn’t the pioneer in the E-wallet market, but it absolutely is the one who took it to a whole new level.

Basically, there are two dominant E-wallets and several smaller providers. The most well-known providers are “WeChat Wallet” and “Alipay”. “WeChat Wallet” is basically a feature of an app called “WeChat”. This app, some would argue, is the Chinese substitute for Facebook and WhatsApp combined. “WeChat Wallet” allows you to send money to your WeChat “friends”, who of course can be your plumber or whoever you’d like to do business with. Pretty handy huh?!
But you don’t always have to add all mainland China to your friends list, many shops and businesses have a QR code stand on the cashier table that allows you to scan it and make your payment. WeChat also allows you to book flights, call a taxi, book hotels and even “Go Dutch” when you’re going to a restaurant with your friends and decide to split the bill! It doesn’t stop there. Many other handier and less handy features will wait for you on “WeChat Wallet”.

Alipay (run by Alibaba) is basically the Chinese version of the worldwide PayPal. Like PayPal, it allows making online secured purchases and can also be used as an E-wallet. Alipay is even more used than WeChat Pay but basically, there is no significant difference between them. However, while WeChat is more like a social network wallet, Alipay has more financial, bank-like features. For example, Alipay allows having a savings plan and earn interest on your money with no commission and no minimum amount.

Although it seems like Alipay is more secure and somehow more “professional” than WeChat Wallet, most people still prefer to use WeChat’s paying service, probably due to WeChat popularity with more than a billion users worldwide.

The change to digital mobile payment seems drastic but take into consideration that money has been present ever since the dawn of civilization and changed its form and system constantly throughout history. From the days of barter to modern credit-based economy, every time people needed to make a change, it made them feel anxious, and took some time until they got used to it (just ask your parents how they felt when they used a card to withdraw money for the first time, instead of the familiar bank teller). The E-wallet is a relatively new thing. And in China, people are more than ready for it.

Don’t miss out on your chance to take a part in tomorrow’s economy – today.

Slava is an entrepreneur that has been living in China for the past two years. These days he has been working on a new project that might change the world of import! Stay tuned…