Routes to the Chinese markets
There are different trading methods for Chinese business (B2B) and Chinese consumers (B2C) within mainland China and in your local market as Chinese internet purchase or visitors from China.
Before you start please look at your business and product / service branding in China. If your business banding is not registered in China we recommended you correct this ASAP. All your Chinese marketing can be undermined by another company; Chinese or overseas, registering your business band(s) in China and reproducing your products /services locally.
In addition if you are selling goods inside China your product(s) may require local certification, e.g. power supplier need CCC certification. While it the responsibility of the Chinese importer to check and apply for any required certification. It may be appropriate for your business to be part of the certification process so that you have ownership of certification.
Generally this does not apply to products purchased from outside China and posted to a consumer in China. The major acceptation to this rule is power rating; China voltage is 220V/50HZ. This is different to the UK, EU, USA, etc
Your local market; Chinese internet sales and visitors
There are many Chinese citizens visiting and been educational world-wide. This is normally where an interest in your locally marketed products starts.
People visiting your local market can see your products in the context of use, look and feel, etc. Often this will be shared on Chinese social media and interest can grow.
Chinese people like purchasing from overseas suppliers. As they feel the quality is better and the branding is genuine.
Developing business relationships with Chinese social media users with large followers will greatly help with sales in your local market. Engage with your local Chinese interest, customers and supplier them with your internet contents links. Allow pictures etc. to be taken. If your have your band registered in China you are protected long term.
Travel industry and some products a view / demonstration helps understanding; an internet media present is criteria e.g. video, on line brochure, CGI (computer-generated imagery), etc. hosted where the Chinese market can see it in China.
This is why Access to China is developing Wit ravel and B2B66 in mainland China. Taking your business information into the heart of China.
Your local market; direct sales
Chinese visitor to your local market can be supported by;
- Internet present locally and accessibility presents in mainland China with few words in Chinese introducing your business and key products / services.
- Meetings at trade shows
- Local trade organisations
The big advantage in this approach is you are looking for the Chinese market connections in your local market / country.
This is very costs effective method of doing business and is often support successfully by local government and national trade organisation.
Direct selling to the Chinese market
Proactivity marketing / selling to the Chinese market in China. You still not need to visit China at this stage. The internet enables you to do much of the early stage work without leaving your office.
- Chinese B2B marketing e.g. Alibaba
- Chinese B2C distribution channels. i.e. e-Malls
- Chinese social media e.g. WeChat
- New overseas channels: b2b66 project.
This is the simple method of trading with Chinese market as it’s is the importers responsibility to make sure all the Chinese rules and regulations are followed.
Appoint a local Chinese agents
A Chinese agent becomes your local agent in Chinese markets.
Often if you have services or products that maybe of increase to the Chinese market a local Chinese agents will approach your business.
A few important points to consider
- Agents looking to make large returns on a few simple transaction normally only have a few contacts within the Chinese market.
- Successful marketing and selling to the Chinese market is networking based. Fine out as much as can about their network;
- Person to person
- Business to business
- Social media
- Chinese government contacts
- Should you appoint of an agent for the whole of China or a region / market.
- Termination / cancellation agreement if the targets where not achieved. This agreement should be performance based over an agreed period of time.
- Make sure that agent agreement allows, where appropriate, for B2C selling to continue in the Chinese e-Malls.
- Agreement should allow Chinese customers to still approach directly your business. Many Chinese business will not do business with a Chinese local agent. This will also apply to overseas companies wishing to use your product / services in China. While this will need agreeing with the Chinese agent. You do want to close any distribution channels at the outset.
Appointment of a Chinese distributor
While all the above points Chinese agent apply, a Chinese distributor is handling your goods.
This will included importing, storage, local shipping, returns, servicing and repair, bookkeeping, payment etc.
Are recommendation is that all goods sent to China must to paid for before they arrive in China. If this is not the case, your business, as it is your stock, at best, will be indirectly for running the distribution channel, i.e. if distribution channel is not successful you will not be paid.
Chinese businesses generally do not hold stock. Most goods are made and shipped to order. The exception for this is a wholesaler. This is where there is ongoing demand for your products.
Space parts and consumables maybe an exception to holding stock locally in China. We recommend as an ongoing shipping relationship could include spare parts and consumables as part of the overall purchase and therefore not making your business responsible these items in China.
To help in your relationship with potential Chinese distributors investigate the use of faster shipping methods to China; flying, train, etc. By reducing the leads time to China will help all parties manage order stock levels.
Chinese representative Office
A local Chinese office where a potential Chinese customer can make contact.
The local office must have a good knowledge of your products / services or at best an understanding of your market.
This is good place to start if you are not planning your own business presents in China.
It’s suppliers a local contact for business in the local time zone, local language support, etc.
A local office can also run local market campaigns, help desk, first line sales support, etc.
It is normally costs effective to start a present in China.
Many of the country trade organisations support local office representation as well as local trade organisations.
Chinese local licensing
Licensing your products or services to a Chinese business can be a cost effective way into the Chinese market.
Many business over man years have been very success with this approach.
The key to success in protecting your business interest: Banding, patent, software, etc.
When protecting your business interest please make sure it is your company name on any Chinese banding certification, etc. and not the Chinese business you are working with.
The same points apply to local licensing. Make sure you and an agreement that is performance related.
Chinese joint ventures (JV)
In China normally a JV involves creating a Chinese business which has all parties funding and running the business.
This was very popular way for Chinese business to establish an overseas company in China.
Today, given that setting an overseas company (WFORE) in China is a lot more straight forward, there are lot less reason for doing this today.
The exception would be;
- A JV applying for Chinese government funding. The local / national government can supports Chinese business and JV in funding needs.
- Local licensing and trading agreements that are not issues to overseas companies e.g. internet ISP agreement.
- Large Chinese and overseas businesses where both businesses have a track record of success.
Like with many of these trading structures where your business is interesting in China the controls of business and management of funding in very hand to achieve.
We would recommend that the agreement between businesses has clear responsibilities and should be run as a project until JV is making a return.
Wholly foreign owned enterprise (WFORE)
Creating your own business in China is a lot more straight forward then in past.
It creating a Chinese business you are making an investment in China.
This, along with JV, is the most costly both in funding and business executive time.
We do not recommend not doing this until your business has looked and tried some of the other options above.
If wish look at setting up your own business please see the section on Creating a Chinese Business.