China is the world’s largest ecommerce market by a large margin. However, western sellers have often been unable to take advantage of the opportunity the market represents. This is due to both perceived and real barriers to entry.

Most companies assume that selling to China is more difficult than selling to more traditional export markets. Indeed, barriers to trade do exist. However, ecommerce removes many of the barriers, and others can be overcome with the right knowledge.

Demand for western products among Chinese consumers is high and growing. Online retail presents the ideal route to respond to this demand. With retail ecommerce sales in China accounting for 42% of the global total, the opportunities Chinese ecommerce presents are vast^[1].

Unineed was one of the first companies to explore UK to China cross border ecommerce trade. Our 7+ years of experience have taught us that there are six key areas of focus. This article aims to give you an introduction to these key areas.

How important is web development and localisation doing ecommerce in China?

Web development and localisation are both hugely important to the success of any ecommerce strategy in China. Understanding how Chinese consumers use the internet, and developing sites that are easy for them to use is the difference between winning or losing sales.

Does page load speed matter in China?

All consumers demand fast loading times. Indeed it is the single largest factor determining a website’s conversion rate. Above 4.2 seconds, less than 1% of visitors will go on to make a purchase^[2].

Delivering responsive and reliable page load performance across a vast geography is difficult.  China has its own unique set of infrastructure challenges and requires a combination of technical solutions. Without the correct set of optimisations, an average EU/US hosted website will load in 30-40 seconds. This is long enough to lose most of your potential customers. Getting pages to load in under 2-4 seconds should be a key consideration to anyone wanting to sell products online in China.

Are Chinese ecommerce consumers using mobile or desktop?

Domestic UK consumers tend to use mobile to research and desktop to purchase (although this trend is shifting to mobile purchase). Chinese consumers are ahead of the west. Almost 80% of Chinese consumers regularly purchase products online through a mobile device^[3].

This means that ecommerce sites must be developed as mobile first sites, rather than trying to adapt desktop sites to mobile. Many western ecommerce sites still focus more on a responsive desktop site. However, Chinese sites typically focus on m-commerce (mobile commerce).

The “Great Firewall”

What is the Great Firewall?

The Great Firewall of China has been put in place by the Chinese government. It is a way of applying legislative and technical control over what is accessible and what is displayed to Chinese internet users^[4].

Does the Great Firewall impact ecommerce?

Most ecommerce sites are not blocked as default (unless they are selling items deemed to be inappropriate). However, the most common issue is the dramatic increase in loading times caused by some of the technological measures employed by the initiative. Long loading times lead to lost sales. This can be mitigated with the right know how.

Do I need local knowledge when doing ecommerce in China?

There are many cultural similarities that exist across Europe and the US (the “typical” markets for cross border ecommerce from the UK). Culturally and commercially, China’s ecommerce landscape can be very different.

Chinese local knowledge plays an important role in: content creation, customer service, payment methods, market trends, product preferences, trends, brand positioning and marketing channels. Without local knowledge, it is impossible to correctly position all these key factors.

Take for example the product offering. There is considerable variance and also overlap between top sellers in the Chinese and Western markets. Variations in product selection, presentation and promotional efforts are required to present a webstore that is appealing to Chinese consumers.

Many of the western brands who have been most successful in the Chinese market have adapted their product to local tastes. For example, McDonald’s uses dark meat in its chicken products (compared to the light meat used in western markets)^[5], while cosmetics brands, such as La Mer, offer different shades and colours to cater to local preferences.

As a brand or retailer, you need to be aware of these differences. You may have to adapt your product offering and emphasise certain product lines through localised promotions in order to maximise your sales into China.

Currency, does it really matter?

Most people are familiar with the importance of offering USD to the US and EUR to Europe. Chinese consumers want the ability to pay in RMB. Not giving consumers the ability to pay in local currency will significantly impact sales. It is a relatively simple and inexpensive function to get right.

What payment gateways should you be using when selling online to China?

The main way people conduct ecommerce payments in China is through a mobile wallet. The two biggest are AliPay and WeChat Pay. The choice of payment gateway is as important as currency, if not more so.

Chinese consumers have largely bypassed the use of credit and debit cards as a payment method online. In so doing they have moved straight to the use of digital wallets. These have become so popular and ubiquitous as to have displaced cash in physical transactions.

This is a trend that we are seeing in the West also, with Apple Pay and G Pay becoming increasingly popular. However, Chinese consumers are further ahead and use their own forms of mobile payment.

What is the difference between AliPay and WeChat Pay and western mobile payment gateways?

Chinese wallets, such as AliPay and WeChat Pay, differ to western ones in two major ways. Firstly, it is an established preference. For most Chinese consumers, ecommerce transactions have always taken place through the use of a prepaid virtual wallet. This method of transaction is very much the status quo. AliPay and/or WeChat Pay are a basic requirement for a China-facing website.

In the UK, most stores are likely to offer credit/debit card payment as a first option. Usually, PayPal is a second. With maybe Apple Pay / G Pay third. Conversely, in China, AliPay would be your first option. This is followed by or alongside WeChat Pay. Leaving UnionPay, the Chinese equivalent to Visa / Mastercard, in third.

The second difference between the Chinese and Western mobile payment platforms is technological. AliPay and WeChat Pay are prepaid wallets. On the other hand, Apple Pay and G Pay are technology layers built upon the existing credit/debit card infrastructure. This means they are taking money directly from a bank account or a credit account. The important distinction here is that Chinese wallets can be preloaded with funds from a variety of sources. Chinese consumers are not tied to an underlying credit or debit card when using wallets. Many Chinese consumers do not have or do not typically use credit or debit cards.

Is there a risk of fraud when selling products to China?

Unfortunately, fraud is an issue if you are selling internationally. All ecommerce websites experience some level of fraud. However, with a robust set of tools and procedures, sellers can avoid being caught out.

In China, the market is vast and companies may be unaware of cultural differences. Therefore, there is the potential to be caught out by scammers. A set of technological solutions and operational querying processes must be implemented in order to minimise losses to fraud.

If you work with Unineed, we bear the risk. We are so confident in our counter efforts, we bear the cost of any clawback from credit/debit payment gateways. This leaves you with no exposure to fraud risk.

Do consumers use credit cards when purchasing online in China?

Not as much as they do in western countries. The major credit card network is Union Pay. Union Pay is often accepted through the same payment service provider that you will be using on your domestic website. However, when using Union Pay, you are likely to be paying a higher fee.

Credit/debit card transactions in mainland China account for a far smaller percentage of sales when compared with domestic ecommerce. However, it remains best practice to provide the option. The Chinese expat market is far more likely to make use of this payment method.

Chinese ecommerce marketing, what do you need to do to market your website in China?

The vast majority of ecommerce marketing in Europe and the US is done through the use of Google and Facebook (including Instagram). Whether it is organic or paid traffic, display ads, retargeting or any of the other plethora of services offered. These two companies have a shared duopoly on the Western digital marketing ecosystem.

So what do you do when these companies don’t operate in the country you want to sell to?

Google or Facebook do not operate in China. In some ways their closest local comparables such as Baidu (for search) or Weibo (for public social) provide similar functionality. More broadly, however, the marketing and consumer buying patterns are very different and require a completely different approach.

The best ways to do ecommerce marketing in China

The four best ways to do ecommerce marketing in China are:

• affiliate marketing
• influencer marketing
• social marketing
• search engine marketing

On first look these sound very similar to the Western approach. However, understanding the differences and nuances of the local market is critical to success.

Affiliate marketing

This is an effective, if often underutilised, form of ecommerce marketing in Western markets. However, in China, it simply cannot be ignored.

Affiliate marketing is where a seller provides a fee to a 3rd party (typically a percentage of sales generated) based on performance.

There are several variations on this business model. However, and most importantly, it is great for driving sales in China. Because of the size of the market, and the way in which Chinese consumers shop (which tends to be more discovery-based rather than search led) affiliate marketing is the single biggest driver of sales for Unineed.

At Unineed, we work with thousands of different Chinese affiliates. Many of them have no presence outside of China. This makes finding and dealing with them complex. At Unineed we have long-standing relationships and we push a high volume of sales through affiliates. Our clients gain access to these channels without the costs involved in developing them.

Influencer marketing

Influencer marketing, or KOL (key opinion leader) marketing as it’s referred to in China, is one of the most powerful forms of marketing in the Chinese online landscape. Chinese consumers are simply far more accepting of being sold to on social media. There are many explanations proposed for this phenomenon, but whatever the reason, it works.

Influencer marketing is supported by a number of innovative technical innovations. An example would be WeChat mini-programs. These allow straightforward product selection and purchase directly from social media content. Influencer driven sales are an extremely familiar and established part of online consumer behaviour in China.

Influencers are keen to work with western brands and retailers (as it increases their perceived standing among fans). However, most Western companies are unable to establish and develop connections with influencers due to the language/cultural barrier. Unineed has fostered thousands of these relationships and as with affiliates. As such, we use our established channels to the benefit of our clients.

Social

The two major social platforms in China are Weibo and WeChat. Both channels offer organic and paid services to companies. These platforms can be thought of as combining some of the key features found in Facebook, Twitter, Instagram and WhatsApp along with a great deal of unique local functionality.

Engaging with customers organically is important for maintaining an ongoing dialogue. It also allows potential customers to ask questions (Chinese customers tend to ask far more questions). However, as with social media in the west, much of the discovery element has moved to paid advertising.

At Unineed, we set up Chinese social media accounts on behalf of our customers. We then run both paid and organic campaigns to drive sales as part of our service.

Search engine marketing

Baidu is China’s Google. It offers much the same suite of PPC and SEO advertising. Many of the same SEO and PPC rules and practices apply in China that do to the rest of the world. The major differences are in language and creative. This can prove difficult if your company does not have Chinese employees who know how to build and optimise online marketing campaigns.

This is another service that we extend to customers to provide a comprehensive package designed to maximise sales by utilising all aspects of ecommerce marketing.

What do you need to know about ecommerce distribution in China?

Can’t you just use domestic shipping providers to ship internationally to China?

Yes, but it is rarely a cost-effective way of doing it. Most domestic shipping providers will offer a service to China. However, this can cost 5x – 10x more than rates through specialist China shipping agents.

Obviously, this increased cost is unwelcome. It eats into profits and renders a number of cheaper and bulky items infeasible. Using a specialist provider when shipping to China will bring shipping costs to a point where it is possible to compete with domestic retailers, especially with goods imported into China. This is because large tariffs are imposed on most consumer goods brought into China via traditional import channels. Parcels sent via the international mail system are generally not subject to tax in the same way.

The difficulty with setting up a direct shipping channel to China is in accessing volume discounts. These companies often have high minimum amounts and minimum fees. Until you reach high volumes, shipping fees are likely to critically erode margins.

At Unineed, we have been shipping products to China for almost a decade. We have well-established relationships with a number of suppliers. The result of this is that our customers benefit from the advantageous rates we get from shipping millions of pounds worth of goods to China each year. As a result, they can be competitive even when developing Chinese sales from a standing start.

What are Chinese special economic zones, and how do you use them for ecommerce?

The Chinese government is seeking to encourage and regulate cross-border ecommerce sales into China. As part of this policy, they provide a number of special economic zones with bonded warehouses specifically set up to accommodate foreign goods. Goods sold this way are subject to a minimal (usually 11.2%) import tax payable on sale. This is significantly lower than traditional import channels and avoids incurring local VAT. Given the savings in logistics costs, even net of additional taxes, there is usually a lower total cost of delivery.

Do you need to translate your website into Chinese to make sales online in China?

It is entirely feasible to sell into China with an untranslated website. Consumers can use translation software and ‘buying-by-pictures’ to make purchases. However, a serious effort to enter the Chinese ecommerce market should include localised translation. A survey of international consumers found 75% prefer to make purchases in their native language. With 59% rarely or never buying from English-only websites^[6].

Having a translated site helps develop trust in the buying process amongst Chinese consumers. A Chinese version of a foreign ecommerce store is a strong signal that the vendor is experienced and able to fulfil orders to the Chinese market. It also provides confidence that any aftersales service will be available in the local language.

How does customer service affect Chinese ecommerce?

Localised customer service is very important in China. It is used to engender trust in the target customers and to ensure any interaction is a positive experience. In its simplest form, this means having Chinese-speaking customer service agents able to respond appropriately to customer queries and problems. Beyond that, good customer service in the Chinese market requires the use of local communication channels. For example, most Chinese online retailers will operate a branded WeChat channel. This allows consumers to talk to customer service agents via the dominant local communication platform. This is in addition to traditional contact points such as webform/email and telephone.

By contrast, if no localised customer service is offered, and Chinese consumers face difficulty in communicating with western retailers when things go wrong. This can quickly lead to reputational damage in the Chinese market. It can also severely hamper sales as consumers often research foreign stores before making purchases.

Why focusing on customer service increases ecommerce sales in China

Time difference

Customers want answers quickly, especially in China. Whether through live chat or social media, Chinese customers expect to get an almost instant response to questions and queries. If they don’t, they will go elsewhere.

The time difference between western countries and China can be many hours. Leaving consumers waiting means that you are losing sales. At Unineed, we provide customer service on behalf of our clients from both the UK and China which allows us to cover not only standard Chinese business hours but also through the Chinese evening.

Dealing with legal and compliance

International logistics, customs clearance processes, and customer protection regulations are all different in China. Making sure that your company is complying with these can be a difficult task if your customer service team is not Chinese speaking.

If for example, your Chinese consumer has had a problem with customs, resolving it when neither party speaks the same language can be complex.

Word of mouth is key

Word of mouth plays a huge role in Chinese ecommerce, as does trust. If you are known for having poor customer service, then getting and keeping customers will become increasingly difficult.

The language barrier

Perhaps the most obvious one. If you can’t understand what your customer is asking you, how do you help them? Even with tools like translation software, nothing can strike the right tone and give the right level of service better than a native speaker that understands the culture and language.

Crisis management

If something bad does happen, such as customer fraud, parcels hold in customs, import license requirements. It is a lot harder to deal with from another country in another language. This can cause delays and make customers unhappy.

Unineed Group takes care of Chinese customer services on behalf of all its partners. We make sure that we work closely with your own customer service department so that we can quickly provide answers and solutions to customers in the way they want them.