Cross-border commerce is a great way to break into the Chinese market, as millennials increasingly look abroad for quality products. But it’s not enough to flaunt the foreignness of your brand – you’ll need to engage with customers on a personal level.
Cross-border eCommerce is a growing phenomenon in China. In 2016, over $85 billion was spent on cross-border purchases in China (source: eMarketer), and it is predicted that by 2020, it will make up 15% of China’s total eCommerce (source: World Economic Forum). However, transitioning into the Chinese market requires careful consideration and planning. China’s online shoppers are not the same as their counterparts in the West, and if you want to win them over, it’s important to know who they are and what they want.
THE MILLENNIAL MONEY-SPENDERS
70% of China’s online shoppers are under 35 years old (source: East West Bank). They are highly educated (nearly 9/10 hold a Bachelor’s degree), with many having studied abroad. This gives them a more international and technologically focused outlook than their parents and grandparents, and a pre-existing awareness of overseas brands and standards.
Unhindered by student loans or housing expenses, and financially well-off, they are able to spend their money online. This trend is expected to continue, as millennials’ income is predicted to grow by $3 trillion in the next decade (source: Forbes). The growth of zhai (homebody) culture has channelled this disposable income toward online spending. As more and more millennials spend their leisure time at home, they are increasingly capitalizing on high-speed internet and mobile access to have products delivered to their homes. As a result, in the coming years, increasing numbers of people will expand their online shopping habits from clothes and food to include financial services and home appliances.
All in all, then, it seems like the Chinese millennial is primed and ready to buy your products. However, just because they have cash to burn doesn’t mean they will part ways with their money that easily. In fact, they are very choosy about what they spend their money on, and if you want to win their trust, you’ll have to meet their requirements.
1) The Foreign Factor
Due to fears over safety incidents, counterfeit goods and low levels of regulation, Chinese shoppers have developed distrust for domestic products. Instead, as their awareness of foreign brands and products has grown, they have increasingly looked overseas for quality. So if your product is made in the United States, say it loud and proud, but don’t skimp on the detail. To capitalize on the exoticism of your brand, you’ll need to make your product information easily accessible. 90% of Chinese shoppers do their research before buying a product (source: World Economic Forum), so if you’re claiming superior quality because of your product’s foreignness, you’d better have the stats to back it up.
2) Boutique Brands
Ten years ago, simply slapping a “Made in the USA” label on your product might have been enough to get you a sale. Not anymore. Shoppers identify with brands that fit their personalities. They want to buy things that will help them stand out from the crowd, and so will engage with companies who dare to do their own thing. There is a growing focus on brands’ history and values. If you want to connect with shoppers, you’ll need to embrace your heritage, selling your story in a personal, authentic way to engage would-be shoppers. Videos, interactive content, and even virtual reality can all be used to encourage shoppers to invest in your brand vision and values. Moreover, companies that tap into Chinese millennials’ desire to travel and experience new cultures will rise to the top in years to come. A good example is the mobile shopping app Xiaohongshu, which enables women to discover, share and purchase global fashion and beauty products.
Customer service is extremely important to shoppers. They want personal, direct communication with companies at any time and the opportunity to build real relationships with sellers, so if you want to be a success, you’ll need to make yourself available. Platforms like Aliwangwang, Qzone and WeChat let customers get in touch with you directly, and this personal step will work wonders for your image.
Because of their focus on personal engagement, shoppers put great stock in word-of-mouth endorsements. Analyzing the social media profiles of your followers can help you identify which celebrities to recruit for maximum impact. One thing to look out for is the rise of “wang hong,” or online celebrities whose brand of authenticity and integrity has gained them large followings that could reap huge rewards if you can get them on-board.
If you prefer more personal endorsements, WeChat allows users to share vouchers with their friends, while Qzone allows users to share interesting blogs with their friends. If your customers are engaged and invested, you can turn them into effective marketers.
3) The Technological Revolution
The majority of China’s internet users skipped PCs and went straight for smartphones. 95.1% use the internet through their phones (source: We Are Social). This means that if you want to engage with shoppers, you’ll need to make your content mobile-friendly. Xiomi, for instance, sells 70% of its products directly to consumers online, cultivating fans and customers on social media platforms.
This doesn’t just mean optimizing your website for smartphones. Social media is hugely popular in China, to the extent that many shoppers skip search engines and head straight to online marketplaces and platforms to find their products. If you want to connect with them, you’ll need to open virtual shopfronts and be active on social media platforms like WeChat.
The logistical difficulty of buying overseas products is a big turn-off for Chinese shoppers. 19.3% say they don’t buy overseas products because they are afraid of online payment safety (source: Azoya Group). WeChat allows users to pay for products directly on the app, and overseas companies are able to make use of this. By integrating a payment option into your social media, you could allay fears and build your customers’ confidence in the safety of your brand.
Lastly, in a world where technology has made things faster and faster, Chinese shoppers want to be able to order online from overseas vendors with no extra cost or delay. It is expected that overseas sellers can match Chinese carriers in providing delivery within a week, so to succeed in China, you’ll need to make sure you have the logistical capacity to meet their expectations.
Beijing is making every effort to boost domestic consumption. Earlier this year, ‘China Brand Day’ was launched on May 10. The pressure on international brands to differentiate will only continue to intensify.
On the bright side, Chinese millennials continue to look for high subjective value and spend big when they find it. Investing now to build a distinguished brand image with a focus on social engagement to lock in repeat business will carve your stake in a market that will become more and more impenetrable in the future.