China is the world’s largest e-commerce market, with a huge customer base driven by an appetite for foreign brands. As international trade experts, we’ve put together some key market insights and things you should know to do business in China.

It’s no secret that China is a thriving hotspot of global trade. Data from the DHL Trade Growth Atlas found that between 2016 and 2021, the country generated one-quarter of global trade growth. While the West has long thought of China as the world’s manufacturing capital, the country’s massive population, fueled by digitalization and growing purchasing power, provides plenty of import opportunities as well.

The penetration rate of online shopping in China has grown rapidly over the last ten years, from 42.9% in 2002 to 79.2% in 2021, making it a key target market for international brands.

Here are the regions where goods being purchased and imported by China’s e-commerce market are coming from:

Source: Statista² (as of January 2021)

For nearby countries producing quality exports such as Japan and Korea, China has proven to be a lucrative cross-border e-commerce target.

What are Chinese buyers importing from Japan? Research has shown that popular Japanese brands in China offer baby care, cosmetics and personal care products that demand trust in safety and quality.

In 2021, China took top spot buying up Japan’s food exports, including whisky, Japanese sake, scallops, beef and produce. Other Japanese consumer products like electronic devices continue to see high demand from the neighboring market as well. Read on for more.

To successfully sell to a new international market, you need to understand local buyers’ behaviors and preferences. Sales and marketing strategies in China revolve greatly around consumers who are digital natives.

Japanese businesses need to closely follow online trends that attract China’s most avid shoppers, many of whom are in their late teens to early 30s.

These figures show what Chinese online shoppers are buying from cross-border brands:

Source: Ministry of Commerce of the People’s Republic of China³

Mobile commerce

China is a mobile-first country, thanks to the government’s prioritization of 5G wireless technology development. 64% of all e-commerce transactions in China are completed on a mobile device⁴, predominantly through ‘super-apps’ such as Taobao and WeChat, where buyers and sellers can interact and transact on a single platform.

International brands targeting mobile buyers should invest in developing a Chinese language smartphone app or build up their presence on China’s popular e-commerce marketplaces.

Online marketplaces

Chinese consumers prefer shopping on online marketplaces, which allow them to browse and compare products. The leading marketplaces in China today are Alibaba, Taobao, Tmall and JD.com.

In order to sell on these platforms, sellers have to be registered in mainland China. Still, there are ways in. For example, Tmall has a sister site for foreign brands, called Tmall Global. Foreign businesses don’t need a physical entity in China, nor a Chinese business license to sell on the platform, which can also accept payment in other currencies.

Discover the full pros and cons of online marketplaces here.

Customer service

“Guanxi” is a long-standing Chinese business custom which describes building relationships on trust. To build loyalty, Chinese consumers expect exceptional customer service – with personalization, fast and reliable shipping, and a stress-free shopping experience cited as the top priorities. Customer reviews play an important part in Chinese buyers’ decision-making, so be sure to focus on a great customer experience.

Value and quality

Chinese consumers are price sensitive and tend to look out for deals, coupons and discounts. Cross-border brands often struggle to compete with domestic brands’ pricing and product range.

Yet, businesses, especially Japanese brands targeting China, can win over local buyers through product quality. Counterfeit products have created distrust amongst Chinese shoppers, who instead turn to overseas retailers for more trustworthy purchases. Position yourself as a trusted brand with authentic products, and consumers will respond well.

Social commerce

Social media and e-commerce go hand in hand in China. Popular video platform Douyin (the country’s local version of TikTok) allows users to buy products from live streamers, with just a few simple taps. However, foreign businesses need a base in mainland China to set up a Douyin account.

An easier route to the Chinese market is through WeChat, the country’s most popular messaging app – with a whopping 1.24 billion monthly active users^5a who spend an average of 2 hours per day on it^5b. With WeChat for Business, you can set up an e-commerce store on the platform to sell directly to Chinese consumers. The app has an in-built payment service, WeChat Pay, making payments seamless and convenient.

Live streaming

China is the world’s livestreaming capital, where the feature has been a mainstream part of e-commerce for years. There are countless livestream platforms for key opinion leaders (KOLs) or Wanghong (网红, meaning “internet celebrity”) which are local terms for influencers and online marketers. Both professionals and unpaid influencers offering honest opinions, these influencers display and interact with products online, as they inform and influence their viewers.

The personal touch of this engagement makes promotional activities more convincing and boosts sales. If you want to tap into the Chinese market, you should seriously consider marketing through this trending, and growing, economy.

Shopping holidays

Much like the West’s Amazon Prime Day, China has several of its own major shopping festivals when record numbers of consumers head online in search of bargains. Two of the most popular are Singles’ Day (11 November), and the 618 Festival (June 18th). Do your research and plan your marketing strategy weeks in advance to cash in on every opportunity.

Major shopping dates for your calendar

Digital wallets

Unsurprisingly in a mobile-first market, digital wallets are the leading payment method for Chinese consumers – with Alipay and WeChat Pay taking the biggest market share of transactions⁶. Online shoppers are 70% more likely to finalize a purchase if their preferred payment method is displayed as an option at checkout⁷, so always do your research into local buyers’ preferences!

Selling to China does not come without challenges. Already, Japan and China have both signed the Regional Comprehensive Economic Partnership (RCEP) to enhance trade between the countries.

Still, DHL's experts on China exports and shipping have listed some key strategies to help you create actionable plans to export to China.

1. Navigating customs & import clearance

• The country has strict customs procedures which require shippers to provide detailed documentation and comply with specific regulations. Any incorrect or missing paperwork can cause shipments to be held up.

• Certain products, including food, electronics and medical devices will have extra regulations to comply with to avoid delays, fines, or even seizure of the shipment.

The solution

To save time and resources, work with a logistics provider with experience and expertise in customs processes, so that shipments can be cleared quickly and efficiently.

Partnering with international logistics leader DHL gives businesses support in navigating China’s customs regulations. This includes guidance on how to complete the process of customs clearance, to prevent shipment delays. For DHL account holders, this is offered as a dedicated service.

2. The cost of shipping to China

China imposes import taxes and duties on many products. This, added to the cost of shipping and customs fees, will quickly add up. This could make it difficult for you to compete on price with domestic sellers.

The solution

DHL offers competitive shipping rates – get a quote with this estimated cost calculator. You can then factor this cost into your pricing strategy and how you charge your customers for shipping.

DHL’s Duties & Taxes Paid (DTP) service charges import duties, taxes and other shipping fees back to your business, rather than your customers. This makes transactions more convenient and seamless for your customers, building up customer satisfaction and loyalty.

3. Setting up a Chinese-facing website

Unfortunately, selling to Chinese consumers as a cross-border brand involves more than just changing the language of your website. To show up on Chinese search engines’ result pages, you need a site hosted in China. This involves several complex steps, including registering with the Chinese Ministry of Industry and Information Technology, and obtaining relevant commercial licenses – all of which can take several months.

The solution: sell via an online marketplace

As previously mentioned, some of China’s leading marketplaces have dedicated “sister” sites for international brands to sell on – without the need for a legal entity or bank account in the country. These include Tmall Global and JD Worldwide. Take your time researching your options, factoring in fees, the type of products you sell (e.g. some platforms are more suited for luxury goods), and how long you may have to wait for approval.

4. Fast shipping

Chinese consumers expect fast delivery – even from overseas brands. The sheer size and scale of the country – plus poor infrastructure in rural areas – can make this a challenge for cross-border businesses.

The solution: partner with DHL

DHL has the global network and know-how to help your business reach customers in China quickly. DHL Express will deliver your shipment to China with full delivery tracking so that you – and your customers – can check the delivery status of the shipment in real-time. Peace of mind for you, excellent service for your customers.

1. Conduct market research

In 2021, total cross-border e-commerce sales from Japan to China was valued at about 2.1 trillion yen (US$16 billion at current rates), up about 10% from 2020, according to the Japanese Ministry of Economy, Trade and Industry⁸. And in 2022, Japan accounted for just over 20% of China’s total cross-border e-commerce imports⁹.

However, China’s 1.4 billion consumers may not all be prospects for your business. You should have a clear idea of the demographic of your target audience – including age, budget, which online marketplaces they buy from the most, which social media platforms they engage with, their preferred payment method(s), and more. These insights will help you personalize your marketing segmentation strategy.

2. Localize your brand

Choosing a Chinese name for your business may help you appeal to consumers there. And of course, it’s important that your product listings, social media content and customer service are in the local language, too. Just be sure to use Chinese experts for this though – relying on online translators risks misinterpretations. Finally, ensure your business accepts payment in the local currency.

3. Select a suitable entry strategy

For many international small businesses and e-commerce startups, selling on a Chinese marketplace is the best entry strategy. You will benefit from these platforms’ vast customer base, local knowledge, and existing fulfilment services. Of course, there are some fees involved, but the time you save in dealing with administration will more than make up for it.

4. Know your Unique Selling Point

Before adapting all your products for Chinese buyers, remember that many Chinese customers are also looking for something different, especially when buying luxury goods.

Knowing why customers want your products – whether it’s the quality or price, for example – will help you market them effectively. This is most probably something you will learn over time, using analytics data and customer feedback.

5. Plan logistics and shipping

China’s government has recently implemented more policies for smoother logistics inflows to China3. Particularly to encourage consumption since the Covid-19 pandemic, these schemes have been rolled out nationwide, making it an opportune time for Japan’s sellers to enter the market.

Interestingly, in response to the demand for Japanese goods, Chinese e-commerce startup Dalian Wanzhongyuncang is also opening a huge physical store in 2023. Japanese and Korean products alone take up 40% of its capacity, with roughly 800 types of Japanese products on offer.

For efficient logistics, there is no better solution than partnering with an international logistics leader. With a presence in over 220 countries and territories, no carrier understands international shipping like DHL – and can help your business grow in China with ease.

Feeling inspired and ready to sell to China? First stop – open a DHL Express Business Account for expert international shipping advice and competitive rates.

This story was adapted from this original DHL Discover article: https://www.dhl.com/discover/en-global/e-commerce-advice/shipping-guides-by-country/country-guide-china

References

1 – Statista, April 2023

2 – Statista, July 2022

3 – Mitsui & Co., November 2021

4 – J.P. Morgan, 2021

5a & 5b – Shopify, December 2022

6 – Statista, July 2022

7 – Verifone, June 2020

8 - Nikkei Asia

9 - iChongQing