E-business in China: a phenomenal growth but also a big challenge
The development of e-business in China
We had the chance, at the beginning of this last year of studying at Grenoble Ecole de Management, to meet Arnaud de Terline, SEM expert at Google.
During the courses on the 10th of October, he taughed us about “the new customer journey”. Those course included some information about the highest connected countries to internet in the world and the consumers’ trends in e-business.
Among these information, we learned that the online shopper’s penetration is getting bigger across the world. For example, in China: 42% of the internet users made a purchase on Internet in 2015, according to the Emarketer.com website. The question coming now could be: how this country, one of the biggest of the world, still considered as “developing country”, is doing e-business ? What should do a stranger e-business company to be successful in China?
The online shopper’s penetration rate can be considered as low, compared to the 74% of the United States, which is also a powerful and big country. But the daily time spent by Chinese population on internet is phenomenal: more than 7 hours per day! An element that gets us to think about the important potential of the country in term of opportunities.
According to atkearney.com, more than 300 million Chinese people are online shoppers. They are concentrated in the biggest cities of the country, like Beijing, Shanghai and Guangzhou. However, it’s in the remotest part of the Chinese countryside that the growth of shoppers is rising.
What they buy and how?
Most of the shoppers are BtoC consumers, according to atkearney.com. They represent 64% of market in 2013. They buy on huge platforms like Taobao and Alibaba, both of them part of the Alibaba Group. Meaning “network, find treasures” and founded in 1999, Taobao was classified 8 on the Alexa rank in 2014. It currently owns 80% of the market shares in CtoC and 50% of the market shares in BtoC, according to theblogdumarketeur.fr. Similar to Amazon is France, Alibaba.com is a public e-business website, a search engine for the on-line shopping and a platform of sale and payment retail. Its helps the exchanges between companies in china and companies established in other countries. Moreover, on Alibaba, actions of cloud Computing are also possible.
60 % of the on-line buyers spent more than 3,000 yuans in 2013. According to chinainternetwatch.com, “45% Chinese purchased most of their luxury goods online”. Indeed, they are the third post of online expenses of Chinese. The first one is the ready-made clothes and the second one is about the cosmetic products. Then come the daily products and the imported products of food industry, according to journaldunet.com website. As we can see, China has a big potential for e-business companies which are ready to invest. Chinese are connected and very open to the new way to consume.
The real explosion of the number of Chinese mobile applications is another example of that. Wechat (most direct competitor of Whatsapp) and QQ to chat online, Weibo (the Chinses Twitter) to share information, Momo (equivalent of Meetic), Youkoo (equivalent of YouTube)… Chinese have their own application and own communities.
What keys or tools are you use to be successful on e-market?
Potential investor interested in China have key to use if they want to be successful in e-business.
Have a good referencing on Baidu
First of all, if you want to attract Chinese in your e-business website, you have to be well reference on Baidu. Baidu, that we could call the “Chinese Google” is the Chinese search engine. Very used by all the population, it is part of the Alibaba Group and redirect around 30% of its traffic to websites Baidu Zhidao, Baidu Baike (very similar to Wikipedia), Baidu Tieba. So a good advice would be to be present there: its increases chances to be on the first pages of the famous Chinese search engine. Another key of a good strategy would be to host your website in China or Honk-Kong not to have a malus. Moreover, if your website is written in Chinese language, it’s also better. Indeed, censorship of government is still very present. By the way, numerous links with Chinese Government is appreciated. Baidu also gives advantages to website which have a lot of pages: in e-business, quantity is before quality.
Be present on Taobao and Tmall
According to the digital marketing consultant Luna Vega and as we saw previously, Taobao is the equivalent of EBay in France. Tmall.com, another website of Alibaba Group introduced in 2008, is a big marketplace for Chinese consumers as well. you can find both local and international products. Selling your product on those websites will give you opportunities to develop your business. So it is crucial, for a brand, to be present there.
Control communication and offer promotion
Then, why Chinese purchase luxury products online? For a simple reason: prices are much lower! No shops is equal to less expenses. Negotiation, specific to the China’s culture, has also an influence in e-business: indeed, people need to have the impression to drive a bargain. Common promotion are very important. Of course, to communicate, you also need to use the power of the different social media. As we saw previously, you have to adapt your communication to the Chinese culture: communicate and promote your products on Weibo, Ozone, Renren and so on. Those social media have mobile applications that Chinese use very often.
To create an Alipay account
This online payment platform is the most used in China with 300 million users, similar to PayPal. Simple to use, you will create confidence proposing this payment solution to Chinese consumers.
So you wish to increase sales of your e-business? China offers you a lot of opportunities, if you know how to deal with it. You just need to be adaptable and open-minded to the specificities of this culture… very different from the occidental one.