China is a vast, competitive landscape, but British retailers willing to put in the time and effort can tame the dragon.
Disney opened its first store in China last week, marking the world’s second-largest media company’s first foray into the world’s second-largest retail market.
China has established itself as a world player in retail, opening its market to foreign owners and even flexing its private equity muscles with rumours of a potential bid for more Western retailers.
This confidence is not without cause – PwC forecasts China will overtake the US as the world’s largest retail market by 2018.
So what does this mean for British retail? As management consulting firm AT Kearney recently found, the UK has the third-largest ecommerce market globally, and many in China express a fondness for “Brand Britain”.
Chinese citizens watch Downton Abbey, send their children to British universities, and looked on approvingly when London 2012 picked up the torch from Beijing 2008.
This popularity helps retailers when entering a market forecast to be worth $540bn (£351bn) by 2020 – more than the retail markets of Britain, Japan, Germany and France combined.
Below are our tips for UK retailers looking to break into the Chinese market.
The first thing retailers must grasp before entering China is the cultural difference. Chinese culture developed largely in isolation from the rest of the world and some aspects of it can appear bewildering for many new entrants.
Working with a local expert is essential, helping retailers focus on their growth strategy and avoid obstacles that otherwise require unnecessary attention.
Understanding and catering to market nuances are necessary steps of international expansion, but avoiding easy mistakes is what accelerates successful market entry.
Websites targeting Chinese customers should function as the market would expect – at a minimum, they should be translated into the local language.
Chinese websites have a different look and feel, including how products are photographed, with less of the Western emphasis on lifestyle imagery.
Investing in both website design and content optimisation, and in appearing on the correct platforms, will ensure a retailer’s site appears prominently in local search engines such as Baidu, because popular marketplaces such as Tmall do not always feature.
Optimise for mobile
The market favours mobile, and research shows that Chinese customers are almost three times more likely to shop on mobile devices than Europeans. Enable payments from local providers – a massive 50% of mobile transactions use a local payment provider.
PayPal research found that Chinese customers are more security-conscious than westerners; it is important to cater to their payment preferences.
Build a presence
China is an exciting market with enormous potential. Still, it is no place to chase a quick profit. Chinese consumers put greater emphasis on trust in brands, respond to different marketing techniques, and use different social media channels to those in the West, such as Qzone, which boasts more than 650 million active users.
And until January this year foreign companies were legally restricted from owning retail operations in China.
While this restriction has now been lifted, we still recommend partnering with a local expert to navigate the bureaucracy and accelerate speed to market.
Retailers shouldn’t be blinded by big numbers – the market is tough, and it is unrealistic to expect massive profits immediately. China is a vast, competitive landscape, but British retailers willing to put in the time and effort can tame the dragon.
- Tobias Hartmann is VP and GM Enterprise Services and International at eBay Enterprise