A Layman’s Guide To Starting A Business In China’s E-Commerce Market
Starting a business can be a daunting task, but starting a business in another country can be even more. With around a population of 1.43 billion people, China can be considered as an ultimate business destination for almost every businessman.
However, breaking into China’s market has its own set of difficulties mostly because of the cultural differences with several western countries, different business guidelines, and of course, fierce competition in almost every industry.
To start an e-commerce business in China, you need a lot of preparations, planning, a proper understanding of the market, the right tools to assist you in the process and of course you need to know some basic Chinese rules and regulations.
Great Firewall of China
You might have heard about the ‘Great Firewall of China’ as well as internet censorship. It is the combination of legislative actions and technologies enforced by China’s government for blocking access to a selected number of websites.
The implementation of these rules is basically for promoting Chinese sites over the global ones. However, this will affect your e-commerce business only if it thrives on sharing any controversial news.
Still, want to enter China’s e-commerce market? If yes, then come along, I have created a sumo-sized guide on how to start an e-commerce business in China.
A Layman’s Guide To Starting A Business In China’s e-commerce Market
So now that you still want to enter the Chinese market, here’s how to get started.
When setting up an e-commerce business in China, there are two options. The first one is either you have an already established business is some other country, or you’re going to launch a brand new company in China.
Whatever category you belong to, you need to make sure that there’s a market need for your product in the Chinese market.
It’s not necessary that if the western countries have demand for your products, the Chinese market will have it too.
You need to carefully examine as well as evaluate the Chinese market and your idea to check if it fits the market or not.
Chinese people have different needs as well as purchasing patterns. You can’t mix their needs with some other countries.
So before you deep dive into China’s market, you need to verify your vision with your prospective market.
Here’s how you can assess whether your product is a fit for the Chinese market or not-
- What do my potential customers need?
- How can my product fulfill their needs?
- Is there any market gap?
Although there are many ways to research like using the internet and social media websites, nothing can beat testing the waters by visiting the Chinese market yourself.
In this way, you’ll be able to interview real potential clients and understand their needs in a better way. This, in turn, will allow you to create products that could thrive in the Chinese market.
Also, if you’re unable to visit China for this, you may even hire an agency over there to conduct market research on your behalf.
Now that you’ve done the necessary research of the Chinese market and have also acquired knowledge about your niche over there. It’s time for you to do in-depth market research and understand-
- User personas like age, gender, annual income, marital status, etc.)
- How big is your target industry over there?
- Who are your competitors?
Determining user personas will allow you to understand what kind of audience should you be targeting over there. Plus it will also help you to develop or modify your product as per the needs of your targeted audience.
The second question is crucial to answering because the size of your targeted industry will allow you to understand whether launching a product in that industry will get your profits or not.
Last but not least, your competition can be your most relevant information. They will help you to analyze what kind of products and marketing tactics work in the Chinese market.
All this information together can help you strategically launch your business in China and then join the list of successful e-commerce businesses over there.
The Legal Stuff
Unlike most of the other countries in the world, the Chinese government has its own set of rules that one needs to follow while setting up an e-commerce business over there.
In China, if you wish to start an e-commerce store, you need to take permission from the authorities. This can be a difficult task mainly because you belong to another country and don’t have enough knowledge about it.
The entire process revolves around a document called ICP license that is issued by the Chinese Ministry of Industry and Information Technology (MIIT). The grant is mandatory because it’s the only way to start an e-commerce business in China.
To get an ICP license and individual requirements may differ from place to place in China. Outsiders (foreign entities) can get the ICP license, but the process is far more difficult for them than it is for Chinese nationalities.
However, in some cases, it is possible to start an e-commerce business in China without an ICP license, but you should know that if in case your business gets banned by the government of China, the process is irreversible.
Hosting Your E-Commerce Website
To start an e-commerce business in any part of the world, you need a hosting provider for your website. And that’s why you need to pre-plan it as well. While choosing a host is an easy thing to decide, it’s a critical decision when you need to start a website in China.
After all, every different site needs to go through the ‘Great Firewall of China.’ And because of this internet censorship system, your e-commerce website will work slower than the other websites that are hosted inside China itself. This slow performance may profoundly affect the user experience as well as revenue.
A good alternative for this is to host your website outside China. This will help you to avoid the complicated procedure set by the Chinese government.
However, if you’re planning to hit just the Chinese market, it’s advisable to have a host inside the country for serving your visitors with an enhanced experience and establish trust.
Please note that to host your e-commerce websites on a Chinese hosting provider, having an ICP license is mandatory. You can try searching for the best Chinese hosting providers here.
Choosing The Right E-Commerce Platform
Another step towards starting an e-commerce business in China is to choose the right e-commerce platform.
The option that can help you to do the job is by hiring a local web development company to help you create a highly customized e-commerce website just according to the Chinese market.
In this way, you’ll be able to create a platform that will be following the Chinese market and will give your rig an appealing presence.
However, it may cost you a lot and will also take more time to develop. The second option for this is to use an e-commerce platform like Drupal, Magento, or PrestaShop.
The open-source platforms provide users with professional solutions and can be customized as per the brand’s industry and needs. Here the cost is lower than the first option for both developments as well as maintenance.
However, it’s highly advisable to hire a local web development agency over there because they are more familiar with the Chinese guidelines.
Plus they also know what kind of websites work best for the Chinese people. This might need more investment, but it will help you to step up your game in the Chinese market.
Creating The Marketing Strategy For China
Be it in China or any other country, having a marketing strategy is essential to build a successful e-commerce business. And that’s why you need a marketing strategy.
Here are a few things that a marketing strategy needs-
- Key USPs
- Marketing (Content and Social Media)
If you’re launching your e-commerce business in China, then the first step towards marketing to have a brand name as well as a brand logo.
Remember, your target audience is the Chinese people and so to build trust and develop relationships, you need a name and logo that people can relate to.
Here are a few things to consider while choosing a name and creating a logo for your brand-
- Choose a name that is easy to remember.
- Create an appealing logo that resonates with the interest of your target audience.
- Make sure that you have a unique name so that people don’t get confused.
Now, if you have an established business and you’re just expanding it in China, that means you already own a name and logo.
This makes the entire process more comfortable because now you don’t need to think about choosing a name and creating a logo. However, it’s still essential to growing your popularity in the Chinese market for achieving success.
Your Unique Selling Proposition
In a nutshell, USP is a specific feature or a characteristic of your product that distinguishes your product from all the related products available.
- What need is your product fulfilling?
- What are the other products serving the same cause?
- And of course, how your product is different from the rest?
By answering this question, you’ll get clarity regarding what is the USP of your product. Having a USP will get you an upper hand.
Although there are many marketing methodologies available but content and social media marketing ace the list.
The priority here should be producing engaging content on your website for explaining your product to your audience and building a relationship with them.
Now that you’ve content, the next step should be promoting it to reach your audience. And the best way is to leverage social media.
However, as China has distinctive ruling social media platforms, a social media marketing strategy can differ from what you use in other countries.
In China, WeChat is the leading social media platform with over a billion users.
Search Engine Optimisation is not something that can be ignored even in China.
Baidu is the Google of China, and to rank higher in SERP; you need to have a well-optimized website plus SEO content.
Here also it will be better if you hire an SEO agency or a freelancer to help you in the process.
Whatever you’re doing, you’re doing to make profits.
Here even China has its payment receiving platforms. Unlike other countries, PayPal isn’t the ruling platform, but rather WeChatPay and Alipay rule the market there.
So, for receiving payments in China, you need to integrate these two platforms on your website.
How will you determine whether your business is successful in the Chinese market or not?
Of course, by tracking the results!
Keep checking as well as analyzing your results for understanding whether your business is bringing the desired results or not.
Shipping to China from America
Previous regulations and ongoing trade wars make shipping to mainland China more complicated and costly than necessary, especially for American businesses. A better way to go about shipping to China, is shipping through Hong Kong.
Floship is one of Asia’s leading e-commerce order fulfillment providers. Shipping through Hong Kong has many benefits, such as no-tax and avoiding USA-China trade wars tariffs. We specialize in shipping B2C e-commerce orders cross-border into China, delivering them to the doorsteps of your customers.
Want more information? Reach out by filling out our custom solution form.
Setting up an e-commerce business has its perks as well as perils. Be it China or any other country; it’s your planning, hard work, and determination that will help your e-commerce business to thrive. All the best!
Harikrishna Kundariya, a marketer, developer, IoT, ChatBot & Blockchain savvy, designer, co-founder, Director of eSparkBiz Technologies, a Mobile Application Development Company USA. His 8+ experience enables him to provide digital solutions to new start-ups based on IoT and ChatBot.