China Market Entry guide

China Market Entry Strategy: Marketer’s Step-by-Step Guide

From its high spending power to its massive consumer base, the Chinese market has proven time and time again how strong its foundation is. While other countries struggled during the pandemic, China is the only major global economy to record positive growth in 2020.

The fertile ground of the Chinese business landscape has made many foreign companies include China in their international expansion plans.

However, establishing a local presence isn’t as easy as you’d think. Read along as we discuss the best China market entry strategy to help you navigate this process more effectively.

 

Is China a difficult market to enter?

China has its own unique customs, consumer behavior, cultural nuances, and digital ecosystem. Because of this, entering the Chinese market can present distinct challenges, particularly for Western companies.

It’s a highly segmented target market, with over 1.05 billion Chinese consumers ready to spend their money online. The sheer size of the country’s digital population meant that its needs and trends were not restricted to one region or demographic. It also varies across many industries and local tastes.

 

Photo by Javier Quiroga in Unsplash

 

On top of that, this large and complex market thrives in a competitive environment. As of Statista’s 2022 records, there are 52.83 million officially registered businesses in the Chinese market. This number includes a mix of foreign enterprises and local Chinese companies.

Competing with domestic brands meant they had an edge on local knowledge and business practices over Western businesses.
Considering the rapid growth of the Chinese economy, marketers must also keep an eye out for the latest regulations related to digital marketing, online advertising, data privacy, and e-commerce.

Complying with these distinct regulatory frameworks implemented by the Chinese government can be challenging, especially for global companies with limited knowledge of China’s key industries.

 

9 Steps To A Successful China Market Entry Strategy

Step #1: Determine if you’re ready to enter the Chinese Market

Taking advantage of China’s sustainable growth is a business move that not all foreign brands are ready to execute. Entering the Chinese market will require not only time and effort on your part but also your available resources.

If a foreign company has annual income levels ranging around $50 million, it has enough financial backing to sustain market entry procedures in China. This estimation may vary depending on your initial digital marketing strategies and the industry you intend to enter.

Depending on the scale of your business, your marketing budget alone could range from $25,000 to over $1 million. However, the timeframe for reaching this level of investment can vary based on your company objectives and the aggressiveness of your marketing approach.While foreign companies with below $50 million in revenue can thrive in China, they must excel in local brand recognition and long-term strategy.

You should also weigh consumer preferences when it comes to your China market entry strategy. Try to gauge if your target audience is already interested in your products and services by checking Chinese social media platforms for any mention of your brand or scrolling through e-commerce platforms to see if your offerings are being resold unofficially.

Foreign businesses must also remember that the Chinese market moves at lightning speed, and they must match its pace. It’s about patience and swiftly adapting to customer needs and market shifts.

 

Step #2: Conduct thorough Market Research & do the leg work

A deeper understanding of local consumer behavior is crucial if you want to enter the Chinese market successfully. Before finding local partners or selecting distribution channels, you must conduct thorough due diligence to see if Chinese people are interested in what you have to offer.

Your market research should also determine if a widely known domestic competitor already dominates your target market.

Take Amazon’s joint venture with Joyo.com in 2017 as an example. The company struggled to compete with popular marketplaces like Tmall and JD.com, causing it to exit the local online retail market in 2019.

 

Position your brand for China

 

If your market research led you to conclude that your target market is not dominated by competitors with a strong local presence, that’s a good start. If there is, scan social platforms to determine if Chinese consumers are dissatisfied with existing options.

Another indicator of a strong presence in the Chinese market is when you see a Daigou selling your products. These individuals often buy products abroad in bulk to resell back in China.

Unlike Western consumers, Chinese shoppers typically don’t use search engines like Baidu to look for products or brands. So, when doing your market research, it’s best to turn to e-commerce and social media platforms like WeChat, Weibo, Red, Douyin, Kuaishou, and Bilibili.

 

Step #3: Find reliable domestic partners & collaborate with local experts

One of the problems many foreign companies face in the Chinese market is the lack of local knowledge to maintain sustainable growth. If you’re in it for the long haul, partnering with a China-savvy law firm is highly suggested.

While a top-tier law firm may seem like a hefty initial expense, it’s an investment that pays off in the long run by steering you clear of legal pitfalls as you continue operating in China.

From securing trademarks and licenses to setting up local entities and ensuring your business contracts are up to date, a law firm is an indispensable partner that’ll eventually save you money when utilized correctly.

Next, a foreign enterprise should find a trading partner or TP. These locally registered companies will act as your bridge to major e-commerce platforms. They can handle your distribution channels, manage your online stores (like Taobao or Tmall), oversee inventory, and coordinate logistics.

With your legalities in order and a solid TP partner in place, the next item in your China market entry strategy is finding experts to tell your brand story. A skilled marketing agency will be your creative force. They help you craft your marketing strategy, manage branding and communications, create compelling content, and execute impactful campaigns.

 

Step #4: Localize your brand for the Chinese Market

With enough market research, you’d know you’ll have more control over your business in China with a localized brand. Remember that your trading name matters a lot if you want to resonate with Chinese consumers.

It should roll off the tongue in Mandarin, carry positive connotations, and be memorable. Investing in a good Chinese name is about more than just translation. It’s about making a cultural connection.

Many brands successfully managed to adapt their brand to the local language with a closely related Chinese name. The perfect example is Coca-Cola, when the company decided to do business in China. They decided to introduce the brand as 可口可乐 (Kěkǒu Kělè), which translates to ‘delicious happiness.’

Your brand content on the company’s website, social media profiles, and e-commerce platforms should also be in the local language and speak directly to Chinese consumers.

 

localize your website for China

 

Speaking of brand localization, intellectual property rights are another primary concern in your China market entry strategy. To safeguard your brand, you must develop a comprehensive IPR strategy.

You may not know, but patents and trademarks operate on a ‘first-to-file’ basis in China. This system can be tricky, as local companies can register before the original foreign business does. Therefore, the best solution is to register and do the process across various categories as soon as possible.

 

Step #5: Decide which marketing and sales channel suits your brand

A deep understanding of China’s business landscape is needed if a foreign company plans to expand in the Chinese market. You have to decide whether your brand should have a brick-and-mortar store or if your strategy leans towards e-commerce marketplaces like Tmall and JD.com.

While it’s true that these online platforms are important when doing business in China, having physical stores or pop-ups can boost your China market entry strategy differently.

 

Sell on TMALL and JD.COM

 

If you decide to conduct market entry through online sales channels, don’t underestimate the time and preparation needed to launch your brand on these platforms. The process can easily take three months or more, from handling trademark issues to preparing all necessary documentation and resolving supply chain matters.

Choosing the right social media app to promote your brand is also vital when entering the Chinese market.

Typically, it’ll depend on your product type and target demographic. For example, fashion and beauty brands might find their audience on platforms like Weibo and Little Red Book. Meanwhile, tech products could gain more traction on platforms like Bilibili or Douyin.

 

Valentino Double 11 campaign China 2023

 

You can also capitalize on major e-commerce events like Singles’ Day or Spring Festival. They’re prime times for sales and brand exposure because it’s when consumer spending is at its highest. In 2023, the 11/11 shopping festival generated approximately $156 billion for local giants Alibaba and JD.com.

 

Step #6: Create a long-term business strategy

Your market strategy should mirror the digital habits of your target consumers. It means knowing which platforms they frequent, engaging with influencers, leveraging content marketing, and exploring opportunities in live streaming.

Chinese consumers often prefer one-on-one communication over a generic brand message. Because of this, social media apps like WeChat, with solid customer relationship management systems, are more prominent in the country.

 

Be visible on WeChat

 

There’s no one-size-fits-all strategy in your brand’s market entry timeline. If you’re already a niche leader with minimal competition and a budding fan base in China, you might see a quicker path to profit on a modest budget.

In contrast, lesser-known brands or those in competitive fields might need a broader approach, more time, and more financial investment.

 

Step #7: Launch a marketing event or campaign

The climax of your market entry strategy in China should be an event or campaign meant to make a noise in your industry. It should effectively represent your brand image and capture the attention of your target audience.

If you’re targeting first-tier cities, it’s worth noting that this demographic is more enticed by technological advancements. They like to engage in immersive marketing experiences that blend offline and online resources like O2O events.

It’s also best to steer clear of language barriers when launching events for your brand. You can consider hiring local employees as they have a more nuanced understanding of the market, like pricing sensitivities and cultural preferences.

 

Maybelline’s 2019 Chinese New Year Brand Launch

Maybelline’s 2019 Chinese New Year Brand Launch (Source: shout.sg)

 

Never underestimate the power of cultural resonance when trying to enter the Chinese market. Maybelline was able to nail this strategy in its Chinese New Year event by tailoring its product features according to local preferences.

The mahjong-themed lipstick set they launched in 2019 was an astounding success, creating a buzz not only for regular consumers but also among beauty bloggers in China.

 

Step #8: Adapt to consumer needs & market changes rapidly

Chinese consumers don’t just expect fast deliveries. These savvy shoppers also demand swift responses to their queries and concerns about your products.

The rapid business environment of major cities in China often overwhelms new brands entering the market, but it’s important to remember that this demand for efficiency results from the advanced logistics prevalent in the country.

The expectation of speedy responses is also why social media communities are popular in the Chinese market. These platforms offer instant communication, allowing customers to be the first to hear about news and access exclusive discounts from the brands they patronize.

On top of that, the ease of accessing multiple apps and communication channels on a single platform shapes these expectations. So, to thrive in China, brands must adapt quickly to these needs and the evolving market trends.

 

Step #9: Set a realistic budget before entering the Chinese market

Forget the notion that China is an inexpensive market to break into. In reality, establishing a presence in the Chinese market requires significant investment.

From the get-go, your budget allocations must include legal fees for setting up your business, additional expenses for continued market research, brand localization, trademark applications, and establishing supply chain logistics.

 

Image by whatwolf on Freepik

 

As discussed earlier, foreign marketers must set aside substantial financial investments for social media marketing. These strategies could include KOL partnerships, content creation, and advertising on platforms like WeChat, Weibo, Tmall, and JD.com.

If you plan to sell online, consider the costs of setting up a virtual storefront on e-commerce platforms, including brand account creation fees and ongoing management expenses.

When budgeting for market entry in China, long-term investment is to be expected. Finding success for your brand often requires sustained effort and resources over several years.

 

Quick Q&A

Why is China the best place to start a business?

China is an attractive option for starting a business mainly because of its massive consumer market, rapid technological advancements, and growing middle class. The country also has government initiatives and a solid manufacturing and supply chain ecosystem, making it a lucrative destination for foreign brands in various industries.

What is the most profitable business in China?

Currently, the most profitable businesses in China belong in the technology sector, e-commerce, and consumer goods, especially those catering to health, lifestyle, and luxury segments. The profitability of these industries is driven not only by the country’s large consumer base but also by the rapid advancement of its technological sector.

 

Ready To Dominate The Chinese Market? Get In Touch With Us Today!

The Chinese market is an enticing business landscape to include in any brand’s global expansion strategy. However, it’s worth noting that success in this industry requires a well-thought-out strategy and a deep understanding of local nuances.

At Sekkei Digital Group, our team understands the specific complexities of the consumer market in China and the evolving trends that shape it. With our extensive industry experience, we offer the avenue to unlock your brand’s potential and become a leading entity in your target niche.

 

Sekkei Digital Group Services

 

Whether it’s crafting compelling advertising campaigns, utilizing social platforms, or collaborating with relevant KOLs, we have all the digital solutions you need. Contact us today, and let us help you navigate the intricacies of China’s business scene.

 

contact us SDG

 

References:

China Market Entry Strategy: How To Enter The Chinese Market
CHINA ENTRY GUIDE
5 Actionable Tips To Level Up Your China Market Entry Strategies

Leave a Comment

Your email address will not be published. Required fields are marked *

Get our latest news

Scroll to Top