We have discussed ad nauseum in this space about the boom in cross-border ecommerce for foreign brands marketing to the Chinese consumer. In an attempt to grab a piece of the pie, global organizations are using any means necessary to expand into China’s market, and most are losing not only the battle, but millions of dollars doing it. Further muddying the waters is China’s weak enforcement of IP protection and rampant copy/counterfeiting issues in the country. We can assure you that there is a large local mistrust of local Chinese brands that is creating a large appetite for foreign products, but this window of opportunity won’t last forever as it is only a matter of time until Chinese design and manufacturing prowess catch up to the West as well as its more established neighbours.
Joseph Cooke, Co-Founder & President of Web Presence In China noted “Global retailers can easily reach Chinese online shoppers through ecommerce platforms regardless whether or not a company has operations in China.”
If your company is already active in China or scoping out the potential to be, it is crucial to choose the right platform off the mark. Here are some of the options that a company can choose from:
Online marketplaces. The online marketplace is a great place for foreign companies to connect to the Chinese customers directly. A platform such as Tmall Global offers the opportunity to sell products without having any physical presence in China at all. The downside is retailers run the risk of losing control of their brand, may miss up selling / cross-selling opportunities, and potentially profit margin erosion.
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Distributor Partnership – From a strictly legal perspective, distribution (and reseller) relationships between foreign and Chinese companies are fairly straightforward. Unlike the West, Chinese law has no special protections for distributors. China also has no requirement for payment of any special compensation to a distributor whose distributorship is terminated. It is usually important to put into China distributor agreements what is called a “no registration” provision to further protect a brand’s China trademarks and other intellectual property. And if you will be licensing any of your IP to your China distributor, you should register that licensing agreement with the appropriate Chinese government office.
Overseas platforms – Attempting to market your overseas-hosted platform in China is not a recommended alternative for brands looking to get in front of the Chinese consumer. Some of the downsides are long web loading times, invisibility in the Internet space and more. To improve the situation, it is best to localize and host your website in China.
Stand-alone eComm platform – By far and away our recommended plan of attack, as it offers full autonomy over the platform and full control of the brand. The main challenge is that it takes more time and effort invested compared to the other options; however, it will bring you the largest ROI if properly and professionally done.
Beijing-based Web Presence In China (WPIC) is an independent, full service digital marketing and IT development agency. WPIC helps businesses with eCommerce platforms set up and management. Having over 13 years of on the ground experience in the China digital sector, the firm has worked with over 300 global companies and leads a team of 120 people between their global offices. WPIC supports China and the greater APAC region in digital and IT solutions.