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China: B2C online retail surpasses the USA. A burgeoning opportunity for UK businesses

When it comes to online retail, no economy in the world beats China for consumer demand. By 2019, the Chinese e-commerce market is set to exceed $1 trillion, making it bigger than the UK, US, Germany and France combined. It’s estimated that over half of the population of China (currently at 1.3 billion) have made a purchase online. This clearly provides a huge opportunity for UK retailers, with around 55% of them already shipping to parts of China.

By 2018, 56.4% of the population will have regular access to internet, with over 90% of users preferring to use a smartphone to shop online.  UK businesses will therefore have to ensure a smooth mobile experience on their websites or wherever their products appear.

One of the key things to note about the Chinese market is that it attracts more exporters than anywhere else in the world.  However, many businesses fail to embrace Chinese trends and preferences, hampering their success in the region.

To be visible in China UK businesses will need to understand Baidu, the local search engine of choice which has over 80% market share by advertising revenues.

Accepting Yuan and payments from e-wallets may give an advantage

While many UK brands already export goods to China, only 26% of them display prices in Yuan or accept payments in the local currency.  This may seem surprising, but it’s extremely common for consumers in China to have to work out the cost of goods for themselves and pay in different currencies.

Thankfully, e-wallets like Alipay and Tenpay (as well as direct bank transfers) make this relatively easy. UK business looking to make a serious impression on the market, should ensure they are meeting payment expectations of Chinese consumers.

Marketplaces and joint ventures can help break barrier

With China having rather heavy regulation on foreign companies and websites it can often be difficult for brands to break through online. Marketplaces like Alibaba’s Tmall (very similar to eBay) can prove to be a useful vehicle for entering the market place for many fashion and luxury retailers. Working with a local Chinese business is another route – Thomas Cook has partnered with Chinese investment company, Fosun, to create ‘Thomas Cook China’ – now offering 90 packages to over 40 destinations. Amazon is also taking on China with the launch of Amazon.co.jp – a Chinese language version of its shopping site offering specialised shipping rates to mainland homes and businesses. Consumers are attracted by authentic quality products.

WeChat leads in the social media space

In China, WeChat is the dominant force in social media. Over 12 million official business accounts exist and it has over 800 million active monthly users. What started off as a simple messenger tool like WhatsApp has become a general every day tool for paying bills and purchasing products.

Brands that have adapted well to doing business in China

Business trends in China can vary from region to region. KFC, L’Oréal, VW and Adidas have all taken extra steps to employee local Chinese citizens wherever possible to learn about their target market and how business is carried out on a local level.  It’s important to stand out as an ‘authentic’ brand in China. The Chinese are, often happy to pay a premium for goods and services that have an established heritage and strong customer base.  Any brand story along these lines can be used to a business’ advantage when selling through established names like Tmall.  Burberry are often marketed by Tmall as their ‘biggest international luxury client’ – an excellent vote of confidence for the UK brand.

Here, people live in an internet world which integrates business into life, brand into customer, stranger into friend. If you want to understand the Chinese consumer you need to know how to navigate our online landscape.– Lei, Oban Local In-Market Expert (LIME), China.

Key takeaways before going to market:

  • Make it easy – optimising your website to suit local search engines and local payment methods will make it easy for Chinese consumers to purchase your products online
  • Experiment with marketplaces – Consider sites such as Tmall as a less regulated route to market.
  • Think mobile first – Over 90% of consumers prefer to shop with a smartphone.

 

Contact us today to see how we can help your business explore new markets like China.