Why is Taobao successful

9 Tips: How To Sell Successfully Online Retailers In China

China is a global e-commerce market: According to official calculations, the number of Chinese Internet users recently rose to 731 million consumers. This mass - combined with a growing interest in western products - also makes China extremely interesting for German retailers. But anyone who acts as a dealer there must take into account the basic needs of Chinese consumers:

  1. Marketing:
    Even if your own brand has a large target group, you have to plan a sufficient budget for advertising. China has an excess of media agencies who know the market well. Providers without a physical presence in China are well advised to dovetail with them.
  2. Design:
    A Chinese version of the shop is mandatory. To do this, the site must be able to recognize and process Chinese characters, for example when entering an address. If this is not guaranteed, purchases will inevitably be abandoned. In the worst case, such initial difficulties result in bad reviews on portals or your own web shop.
  3. Payment method:
    Chinese online payment tools like Alipay, Unionpay and WeChat Pay are very popular and account for over 70 percent of all online transactions. Conservative German payment methods such as direct debit or invoice are rarely used in China.
  4. Service:
    All communication with the customer must be in Chinese. Ideally, customer service is located locally or communicates in the appropriate time zone. By the way: Chinese customers appreciate their instant messengers such as WeChat and Wang Wang, Alibaba's in-house communication tool for Tmall and the more C2C-oriented Taobao.
  5. Logistics:
    Providers must not underestimate how fundamental a solid parcel tracking system is in the current international delivery process. No updates or few updates lead to panicked customer inquiries and subjectively perceived longer delivery times.
  6. Licenses:
    Dealers need a Chinese business license and tax registration to cover liability cases to sell in China. Theoretically, business registration in China also requires a physical presence like a Chinese subsidiary, but most of the time the business license can be acquired through a logistics partner.
  7. Whitelist:
    German products must be on the so-called whitelist (also known as the “positive list”) - a basic requirement for B2C e-commerce imports. The list was published in 2016 (miit.gov.cn) and is continuously expanded. The whitelist already allows the export of most prepackaged foods, as well as wines, baby food and cosmetics.
  8. Registration:
    Products to be sold in the Chinese market for the first time require product and brand registration. You can check which products have already been approved online (sfda.gov.cn). Apart from that, the product must be declared to the Chinese customs. For this purpose, a detailed description should be made available to the respective importer before the first package is exported. This is followed by a six-month process, in which a Chinese product test is also planned.
  9. Import tax:
    Most products have an import tax of 11.9 percent. This makes the calculation easy, since taxes and duties can be factored into the product price. The potential in B2C business also lies in the fact that no German VAT is incurred on export business. So if you sell products in China at the German price, you get a margin of 7.1 percent - as the difference between German VAT and import tax.

Finally, a personal note based on experience: German suppliers should definitely label their goods with the label “Made in Germany”. Due to their market culture, the Chinese have a natural fear of plagiarism and trust products that have been manufactured according to German quality standards. But let's not kid ourselves - the Chinese market is not waiting for German products, there are tons of alternatives available at any time with a click of the mouse.

About the author: Victoria Lojek (see photo) is Operations Manager at BorderGuru, a subsidiary of the Hermes Group. Since 2015 the Otto subsidiary has offered both e-commerce retailers and brand manufacturers the opportunity to market their range of goods globally.

The offer includes all the important components for cross-border trade, from logistics to payment systems and customs clearance. The start-up is active as an official partner of the Alibaba Group in China.

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