Given China’s huge consumer base, the increasing spending power there and the strong control of Covid infections within the country, it was the only major world economy to have positive economic growth in 2020 and has staged a strong economic comeback. It’s no wonder that brands are keen to gain a foothold in the market.

But entering a new market is tough, especially one as competitive and challenging as China’s and it has defeated some very big, well-funded brands like Tesco, Uber, eBay and Home Depot. 

There’s the very practical matter of whether people in China want or need your product at all. There may be a local player that has overwhelming market dominance. China is also a market made up of lots of smaller markets with plenty of sociological and economic variation so, if people do want your product, you need to know who your customers are and where they live. And there’s much, much more. Let’s take a look. 

How do you know if you’re ready for China? Here are three key criteria:

A) Your company has more than $50 million US dollars in yearly sales revenue. 

Taking on a new market takes resources and this seems to be the amount needed before entering China. How much money will you have to spend on marketing in China in your first year? It all depends, but around RMB 4-10 million RMB (600,000- 1.5 million US dollars) is a good benchmark. It’s also doable, but more difficult, for companies that have revenues of over $30 million, if they have an abundance of the next two characteristics. 

B) Your brand is well-known among Chinese consumers.

You have a following at home and Chinese fans are on your trail. There might be lots of mentions of your brand on social media or people may be selling your products unofficially by sourcing them abroad in bulk and reselling them in China.

C) You’re agile and in it for the long haul. 

You have patience and you’re willing to iterate and adapt as you go along. It’s a market that changes rapidly and requires that companies engage with their customers very directly. You need to be responsive to your customers’ needs and demands, move quickly and stick to it over time. The speed of business, customer service interactions and deliveries in China’s top tier cities can be unbelievable for those experiencing it for the first time so you need to be ready.

If these statements aren’t true for your company, then China isn’t for you. Yet. Wait until you have your ducks in a row before checking out the next steps of the journey. 

If you’re ready for China, what’s next?

A) Is there demand or room for your brand?

Before going into the market, it’s important to determine if there are customers for your product or service. If it’s not something that Chinese people are interested in or if it’s a market where a Chinese competitor already has an extreme advantage, you should probably save your time and effort. 

If Uber had taken a cold hard look at the market, it could have saved itself some time and money. It entered a market where taxi hailing app Didi already had a near monopoly and a number of other key advantages that made it very hard to beat. Apart from the fact that Uber’s business model has gotten it into trouble in many markets, the company’s chances of success in China, given the circumstances, were very limited.

How can you tell if there’s a demand for your brand or your products in China? 

If you’re not in a sector that has one or two dominant players with overwhelming market advantages, check on Taobao and social media platforms. Are there mentions of your brand? Are people dissatisfied with the current offerings in the market? Are daigous already selling your products? A daigou is someone who buys a large number of your products while visiting other countries, brings them back to China and resells them. Although this has dropped off significantly because of Covid-related travel restrictions, you can check if daigous were selling your products before travel was curtailed.

Is your category branded?

For some product categories in China, people don’t mind what brand the product is. For others, the brand makes a big difference and people search out specific brands to purchase. People in China rarely search for products or brands on search engines like Baidu. They search for them on e-commerce sites and social media platforms like WeChat, Weibo, Red, Douyin, Kuaishou, Bilibili and others. This is partly because the search engines on these sites are highly developed and give them very relevant results and partly because the search will also turn up reviews, opinions, usage videos, instructions, tutorials, critiques and complaints.

For example, lipstick is a highly branded category. People are looking for a certain colour, shade, look and brand. On the other hand, facial cleansers aren’t. People are mostly looking for something that cleans their face well at a decent price.

Find out if your category is branded or not. If it is and your brand name isn’t being mentioned, you’ll have to do a lot more work to get noticed first.  

B) What is your trademark status in China?

Brands need to check if their trademark has been registered fraudulently or if unrelated local brands are already using similar trademarks. If so, decide what action to take. Trademark issues also affect local Chinese brands. Large and mid-range brands usually engage lawyers to regain control of their IP. How is this done?

Brands need to register their trademark and move to invalidate fraudulent claimants, especially online. They may also need to buy their trademark back from poachers. After that, they need to work with e-commerce sites, internet providers and social media in China to have listings and posts from fraudulent sources taken down. Then, they need to re-establish legitimate official social media accounts, websites and e-commerce listings and list reputable distributors and partners. When done well, this process can put a significant dent in the misrepresentation of a brand, but the right partners are needed to pull off this turnaround. This brings us to the next step.

A) Law firm

You will need a China-based law firm that is used to dealing with business issues and Western firms to help you secure your trademarks, licences, set up your local entities, make robust, China-compliant contracts, deal with tax issues and more. Finding a good law firm will cost you money in the beginning but will more than pay for itself in the long run and you’ll need them to secure your IP rights, accounts and sales channels.

B) TP partner

After you’ve secured your IP rights, you’ll need a good TP partner. TP partners are registered companies that act as extensions of the brand in China to onboard brands on major e-commerce platforms. They plan budgets, distribute products, run Taobao or Tmall stores, look after inventory, deal with logistics, organize and film live streams, do customer service and more. They typically look after everything on platforms that is related to transactions.  

Brands need to proceed with caution here as many people refer to themselves as TP partners but there are a limited number of companies that are qualified and registered to fulfill the roles and do the duties of a real TP partner. The registered TP partners for Tmall Global are listed here for example.  

C) Marketing agency

Once you’ve registered your trademarks, taken care of your legal paperwork and found reputable TP partners, then you’ll need a marketing agency to help you plan your marketing strategy, run your branding and communications, create content and execute campaigns

You may also need a research firm, a strategy consultant, an offline distributor and much, much more. It takes a village to succeed in China. It also takes focus, investment and time.

Chinese consumers need to be able to say and remember your brand name. It needs to sound nice in Chinese, be easy to remember and not have unpleasant, boring or unrelated meanings attached to it. Take some time and get good advice to get your Chinese name right.

A mediocre name won’t ruin you, but it won’t do you any favours either. In addition to all the other problems it faced in China, Google’s Chinese name was 谷歌. While it’s pronunciation, “goo guh”, sounds similar, it means “harvesting song” or “song of the valley”. Maybe they were thinking of Silicon Valley but its name made it sound like a traditional song rather than a tech company. 

Examples of good Chinese brand names

Coke is an example of a well-crafted Chinese name. Coca Cola is 可口可乐 – ke kou ke le. 可口 means “delicious” and 乐 means “fun” so the name carries lots of positive meanings, especially for a drink, and the pronunciation is also very similar to the brand’s English name. 

Uniqlo’s Chinese name is 优衣库 – yo yi ku. Although it’s a Japanese brand, it started out as the Unique Clothing Warehouse. It then shortened its name and the C was changed to a Q. It’s Chinese name mirrors its original name and means “good clothing warehouse”. It’s easy to say, sounds like its English name, has lots of positive associations and describes the brand well.

BMW is 宝马 – bao ma. BMW is an acronym for Bayerische Motoren Werke (Bavarian Motor Works). The company’s Chinese name captures some of its acronym sounds and means “precious horse”, expressing dignity and class.

The nickname that it’s been given by Chinese people is 别摸我 – bie mo wo, meaning “Don’t touch me,” – shows how much it would be valued and protected as a possession. Which brings us to nicknames.

Beauty brands in particular need to be aware of Chinese nicknames

For many beauty products, no matter what your product’s English name or official name is, if it’s a hot product or unique in some way, consumers in China will give it a nickname that’s much easier to remember. They’ll use that name to search for the product on e-commerce sites and on social media and to talk about it in posts and videos. 

Smart brands pick up on these names quickly and start to feature them in their product listings and their marketing. Brands also seed cute, memorable names in their early marketing to gain traction and get attention.

In this Tmall listing, the English on the package reads “L’Oréal Revitalift Filler [HA] Eye Cream”. In Chinese, however, it’s called “L’Oreal Purple Iron Eye Cream”.

In this JD.com listing, SK-II’s Facial Treatment Clear Lotion Pitera becomes SK-II Fairy Water Essence in Chinese. 

What’s in a name? Quite a lot as it turns out. Take the time to think about good names for your brand and your products and then keep your ears open to find out what nicknames people are using and embrace them.

Before coming to the market, you’ll need to plan how you’ll deliver your products or services within China. Given disrupted global logistics as a result of the pandemic, this is more important than ever. 

Do you intend to set up physical stores? Do you want to be stocked in duty free stores in special economic zones like Hainan? Do you intend to focus on e-commerce giants like TMall, Taobao and JD.com? Lots of questions need to be researched and answered.

People have a very oversimplified view of the Chinese market. They think, “I’ll just set up a WeChat mini program and sell my brand in China through that.” It’s tougher than this. 

Chinese e-commerce platforms are a necessity

If your brand is already known and there’s demand for it right now, you may be able to launch initially through a WeChat mini program. However, to really get into China, you must be on Tmall, Taobao or JD.com and a physical presence will eventually be necessary, even if it starts with pop-up stores.

While a sales channel through your brand’s own website is not a bad idea, in China, it won’t garner the same sales as the market’s top e-commerce sites. This applies to big international brands as well.

China’s big e-commerce platforms have built trust with China’s consumers. They were among the first platforms to institute reliable payment systems and other forms of consumer protection. They’re also known in the market for their strong customer service and speedy deliveries. The strong customer service developed because sellers rely on good reviews to maintain their reputation and bad reviews can devastate a brand. Customers can also see other crucial data, like how many of each item has been sold. Customers can contact sales assistants easily on e-commerce sites or through social media channels and get very fast responses and they rely on this level of service. 

A brand could build a reputation over time for similar levels of service but it would take some time and would be less convenient for shoppers than finding the brand easily on a large, well-known e-commerce platform like Tmall, Taobao or JD.com. 

Choosing the right platforms

So, how do you choose the right platforms?

It depends what your products or services are and who your customers are. 

If you’re in apparel, shoes, beauty and personal care, Tmall, Taobao and VIP.com are the best platforms for you. For appliances or electronic products, a presence on JD.com or the Suning and Gome sites are a good idea. 

It takes 3 months or longer to open on a big Chinese e-commerce site and you need to prepare even before that

Lots of brand owners think they can go from zero to selling on Tmall in a month or two. 

No.

It takes at least 3 months from store application to soft launch and there’s plenty to do before that can happen. The trademark issues mentioned above take time to deal with and they must be dealt with before officially entering big online retailing sites. Application processes need to be completed. Business licenses and registered capital must be verified. Certificates must be provided and some products must go through testing procedures or be specially registered. Supply chain issues need to be resolved. 

What are your marketing and pricing strategies? What’s your localization approach? Where’s your inventory and how much of it will you need? Do you have all your content, Chinese language copywriting and visuals ready? 

Many companies think that they have all the assets they need to set up their Tmall store, but often, they aren’t right for the platform and there aren’t enough of them. For one product page on Tmall, brands need photos with models, usage guide videos, 360 degree videos, multiple thumbnails from various angles and more.

Being a top international brand is no guarantee of success

Some big brands think that once they open a store on Tmall, they’ll have immediate success because they’re a global leader. But a brand’s global standing is no performance guarantee. 

You may be unknown to Chinese shoppers or may have to fight to regain trust in a market flooded with counterfeits.

And even when that’s not the case, just being an international brand is not enough to be a selling point. International brands need local relevance, outstanding content, an intriguing narrative, money to boost content and advertise, great partners and a top notch supply chain team.

Shopping events and special occasions you can’t miss

China has plenty of key days that account for a huge portion of the year’s sales and prime opportunities for consumers to get to know new brands. A brand entering the market can’t skip the Double 11 (Global Online) Shopping Festival on November 11th. Also called Singles Day or 11.11, it’s China’s biggest shopping day of the year and dwarfs most big consumer days in the West. In 2020, Alibaba and JD.com made around $115 billion in sales during 11.11. Chinese New Year is also not to be missed and is similar to Christmas in terms of celebration and gifting level. 

What about marketing on different channels?

A typical marketing budget breakdown is to spend 40-60% in marketplaces like Tmall and 40-60% outside of them on social media and other places. 

For marketplaces, 30-40% of your marketing budget will be for Double 11. 20-30% will be for 618, Lunar New Year, Super Brand Day etc. and 40% will be for ongoing ads.

Outside of marketplaces, content creation should take up 30% of your budget, ads and collaborations should take up about 40% of your budget, campaigns should take up about 25% of your budget and educating your team should take up about 5% of your budget. 

Once these foundational issues are taken care of, you need to craft a tailored marketing strategy. Your marketing matrix should be based on your consumers’ digital journey and match them in terms of platforms, social media, influencers/KOLs/KOCs, content marketing, live streaming and more. 

Brands should also start developing groups and communities on social media for their customers. This is called private traffic or a private pool in China. In the West, these are usually built with email databases where brands can directly contact consumers. In China, this contact is made through groups for customers and fans and through personal social media accounts on large platforms like WeChat instead. Social media is also where brands build their customer relationship management systems to communicate with customers and fans. 

How much will it cost? How long will it take?

Every brand enters the market with different circumstances so the costs, timeframe and marketing mix will be different depending on each brand’s situation.  

If you’re a leader in your niche with a good reputation, have few competitors and have a dedicated fan base in China, you could launch on a relatively modest budget and get to profit in a shorter time than many other brands.

However, if your brand is unknown or has plenty of competitors, you’ll have to work harder and longer and use a greater variety of techniques to get the traction that you need.

So bigger, stronger brands often have an advantage and determining your brand’s standing in terms of awareness, positioning, price, platform support, channel exclusivity and the nature of your product

What is China’s marketing matrix?

There’s no Google in China and the country’s biggest search engine Baidu doesn’t play the same role in marketing. Some Western companies think that if they can figure out how to optimize results for their company or products on Baidu, they can bootstrap their way to popularity in China. This isn’t how it works. 

Chinese consumers usually search for particular brands and products and they usually use e-commerce sites and social media as their search engines. 

If they’re unsure, they look for opinions and recommendations from friends, family, co-workers, and influencers that they trust. They’re looking for a pattern of opinions from different sources and generally won’t make purchases based on one person’s suggestion alone.

The mix needs to include a profound understanding of the consumer journey, great content, excellent campaigns, trusted, effective KOLs, short videos, live streaming and more. What is done, when and how depends on the brand, the products and the customers they are trying to reach.

But all brands need to spend time building layers of trust and reliability. They need to know a lot about their consumer’s journey and insert themselves into it at the right places. Brands that analyze this accurately have a huge advantage.

To announce your arrival, a launch event is important. Of course, not everyone can afford the kind of showstopper that Hyundai pulled off for its luxury brand Genesis, with a record breaking drone show in the sky over Shanghai, but even a well-designed pop-up store, a great, small local event or a well-coordinated online launch that fits your brand can get the kind of attention that your brand needs. 

The bar has been raised in China so making a big impression, especially in top tier cities, now means using drones, huge LED screens that create 3D illusions, holograms and full-building or multi-building light shows.

All offline spaces in China today, be it book stores, banks, shopping malls, supermarkets, restaurants, hair salons or gyms need a wow factor and a focus on both experience and OMO (online merge offline) features. 

Make sure that it matches local tastes. Mattel failed with its huge Barbie store in Shanghai in 2009 for many reasons. Among them were trying to communicate with customers in English, mispricing items, marketing the dolls as sexy instead of cute and selling dolls in a market where educational toys are a strong parental preference.

Get it right! Then it’s time to do some campaigns. 

Build a solid foundation with great content, then run regular campaigns to boost awareness

A) Decide which type of campaign you need.

Do you want to do a sales, awareness or CRM campaign? It’s important to focus on one objective as the three are set up and executed differently and target different groups. 

An example of a successful sales campaign was Uniqlo’s collaboration with American artist KAWS was hugely successful in 2019. A statement by the artist that this collaboration would be his last with Uniqlo led to a strong fear of missing out which resulted in epic demand. 6 million units sold out (source in Chinese) on launch day.

B) Localize your offerings in China

Two good examples of brands that successfully catered to local demands are sportswear and outdoor equipment retailer Decathlon and makeup brand Maybelline.

Decathlon noticed that the tents it was selling in China were not the sturdy, waterproof tents for overnight outdoor camping that were top sellers in most of its other markets. They were pop up tents for sun protection during a day at the park with family or friends, so it adjusted its marketing accordingly. If it hadn’t paid attention and reacted to meet the need, it would have lost out in a big way.

In 2019, Maybelline developed a lipstick range that it packaged with a customized mahjong set. It sent out the sets to lots of beauty bloggers all over China who loved it and it created a huge stir on Chinese social media.

C) When your campaign is over, evaluate it and build from there

Based on your goals for the campaign, how did it do? Did your awareness campaign gain your brand greater awareness? Did your CRM campaign increase the number of people using your membership platform or your private WeChat group? Did your sales campaign result in higher sales? Analyze what went right and what went wrong and move ahead with lessons learned. 

What not to do

What Josh Gardner from Kung Fu Data calls “Headquarters Knows Best Syndrome” is a common pitfall. Companies that can’t move without approval from a far away, slow moving headquarters that is out of touch with China will falter badly. 

China moves fast and people who are waiting around for approval will end up doing everything slow and late and miss multiple opportunities along the way.

Using stock photos that feature no Chinese faces also won’t cut it. Consumers in China want to see products from every angle, want to see high quality product videos and want to see endorsements from key opinion leaders (KOLs, influencers), friends and family.

Hire competent local teams and partners, empower them and remain flexible, even if things seem to be working in reverse of your usual processes at times.

Speed is the key in China. In China’s top tier cities, it can be unbelievable for those experiencing it for the first time. Fresh food deliveries arrive in 30-40 minutes. As far back as 2016, it was normal for packages ordered on Tmall to arrive within 15 minutes. Things are even faster now. Delivery people often install or assemble the ordered items quickly at no extra cost. These super fast deliveries are enabled by automation and logistics planning based on years of data with a system of small local fulfillment centres and an army of delivery people throughout the city.

And customer service is no different. People expect fast deliveries, quick replies to queries and complaints and rapid action when there are problems. Replies in under 30 seconds are considered the norm in many places and people want a human to deal with them in a personalized way.

A brand’s private pools of social media communities allow for these kinds of instant communications and they also expect to be the first to know and the first to have access to the latest news and discounts.

The instant access to many apps and communication channels all within one platform, all on one’s mobile phone and the fast reactions on the part of e-commerce giants like Tmall, Taobao and JD.com have created this expectation.

Very often, the communication in China is now manufacturer to consumer. People are in direct contact with factories that can customize orders in minutes.

It seems that some very old ideas still persist when companies contemplate their budgets for China. They think it’s a cheap, easy market to enter. The truth is that entering China and setting up in the Chinese market is expensive.

Brands can’t expect to have a few people set them up on e-commerce and that’s it. A social media presence is required, but it’s such a huge, incredibly competitive market that without a lot of resources and hard work, brands will sink to the bottom unless they already have some exceptional circumstances and advantages working in their favor, such as brand size, brand awareness, exclusive access or market dominance in a niche area.

Simply being an international brand is not a major selling point in China. You need to have local relevance, an interesting story, outstanding content, money to boost that content and great marketing, e-commerce and supply chain team and partners. 

As mentioned earlier, companies with US$ 50 million in global revenue have the best chance followed by those with US$ 30 million global revenue. And expect to spend 4-10 million RMB (600,000- 1.5 million US dollars) just for marketing in your first year.