China is the most populated country in the world. With a society which increasingly gains wealth, the domestic market is growing rapidly and still has a huge growth potential. Nowadays China has the world’s biggest car market, the biggest E-commerce market and nowhere else in the world were more smartphones sold. A growing part of China’s 1.4 billion people is part of the middle class, or even higher income class, which likes to purchase foreign products particularly. BCG forecasted that by 2020 there will be 280 million affluent consumers, with a disposable income between 20 thousand and one million US Dollars. This prediction also implies that the average income will then be tripled compared to 2015.
Foreign Brands in China
Western products and brands are already very common in China and also in general perceived as better quality and with a higher degree of prestige. In some categories is the preference for foreign products especially high. This includes for example luxury goods, baby products and food & beverages.
What we do: Distribution
We have a vast distribution network in the whole of China, with of over 200 wholesalers across many provinces of the country. Besides, we are a market leader in e-commerce distribution with a young team of professionals, which know the fast-changing E-commerce landscape in China, as well as new M-commerce channels. While this is our main focus, we are also distributing products via Teleshopping and institutional channels, as air lines and banks.
Important considerations for the distribution in China
- Guanxi This is a Chinese word describing relationships on every level. Especially in China personal networks and relationships are an important aspect of a successful distribution strategy. Chinese networks are often restricted and not quickly to build, but they are essential to develop distribution channels.
- Distribution partners Companies must analyze their potential distribution partners, their abilities and structures. It is important that distribution partners can match the expectations and handle the required scale. Poor inventory positioning and stock-outs for example could harm brand reputation.
- Fast changing conditions To stay up to date and avoid loosing market share, it is important to always follow trends and changes on the fats moving markets in China. The fast development of e-commerce markets has shown that consumers in China are adapting fast.
- Logistics This is a very important process in the supply chain of your distribution. China has a multitude of challenges: Firstly, China has huge structural differences between big cities and rural areas, which you should be aware of. This includes restricted access for large trucks to big cities in certain times, but also the poor logistical coverage of rural areas. Secondly, many distribution platforms rate distributors on their logistical capabilities. Thirdly, logistics in China is a highly fragmented industry – With more than 730,000 registered logistics operators the market is highly competitive.
- Efficiency In most cases, responsibility for distribution operations is initially handed over to the distributor without identifying clear procedures and targets. This might become a problem since the size of China can lead to unfocused decision making, and therefore a loss of efficiency. It is especially important to develop a strong distribution strategy with clear targets before entering the Chinese market.
In less than a decade, China has emerged as the world leader in e-commerce. China is home to 730 million Internet users, and has now more online shoppers than any other nation. It accounts for 40% of global retail e-commerce, and its mobile payment market is a whopping 11 times the size of the U.S. market.
We distribute not only on the big e-commerce platforms as Taobao or JD, but also on many niche platforms.
M-commerce, referring to mobile commerce, is a new trend in China which was pushed forward by many big mobile applications as WeChat. Chinese internet users mostly use their smart phone and other mobile devices to purchase online which makes it highly attractive to use social media platforms and other mobile applications as sales channels.
We can help you to build WeChat stores and place your product on other m-commerce platforms which are growing fast.
We do not only cover online channels, but also many offline channels. With our network of retailers and sales agents, we are able to bring your products in physical stores all over China.
Even though e-commerce and m-commerce are growing fast, there is still a great potential in teleshopping. With our network of teleshops we can promote your products also on TV.
Institutional channels include companies and other institutions which offer products in their customer loyalty programs, or as gifts to their clients and employees. We are partner of many banks and airlines in China.
Find out what we can do for you
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