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Is Online Export the New Black?

China’s growth rate, an evolving middle class and an increased purchasing power has led to a much more conscious consumer. A shift from bricks and mortar retail to e-commerce is also playing an even bigger role in the Chinese economy today. It is also a market that is increasingly more mature for online shopping.

By Ann Christin Mahrt, Marketing Manager at Ehubnordic

Great potential in China
Today almost everything is happening “Online”: product search, shopping, recommendations, gaining trust, customer and shopping experiences. There is a zest for international brands and a desire for Nordic and Scandinavian lifestyle and design products among the Chinese middle class. This group is not only interested in international and original brands, but also products that are clean, healthy, organic, has a high level of quality as well as design and lifestyle products. Nordic brands can greatly benefit from that demand.

Good to know
As a brand interested in entering the Chinese market you have to be aware of trademark registration of your brand and have ambitious plans for marketing. Be prepared to invest in branding, as this will be highly relevant when doing business in China where you will be competing with international brands. A strong storytelling of your brand will help you stand out among all the other brands. The social media landscape is unlike ours – all in Chinese language, and therefore becomes essential when entering the market. Get familiar with the types of social media or find a partner with the expertise.

When Chinese consumers shop online - seeking trust in a product is everything. To get certainty of a product’s trustworthiness, they chat on Aliwangwang with their personal connections as well as the customer service operation of a product to get certainty of a product’s trustworthiness.

Alibaba, TMall and TMall Global
Most people have heard about Alibaba. It is the largest e-commerce platform in China having brand platforms such as TMall and TMall Global. These two platforms differ and it is important to know the difference before engaging in e-commerce business in China. They are both B2C platforms where you will find international brands. The TMall platform is much more diverse. Here you will find international brands alongside Chinese brands as well as counterfeit goods. In addition, to do business on TMall an invitation by Alibaba is needed and you must have product approval by Chinese authorities which is a process that can take up to 12-24 months.

This engagement can be associated with import. Whereas the platform TMall Global only sells international brands that are original and shipped from outside of China, and thereby  much more targeted to a specific target group. This engagement is overseas trading with no need for a physical presence or product registration in China.  Alibaba is also providing companies and consumers with secure payment. Alipay is the payment service of Alibaba and guarantees that no money changes hands unless both parties are happy. Alipay is payment security for online export to China.

Why is Online Export of Nordic brands interesting to China? 
For several years, the Nordic way of living, our values and design tradition has been hyped and promoted by many. That is e.g. Kinfolk Magazine and famous chefs e.g. at restaurant Noma. The attention has made Nordic products desirable for consumers around the world. Particularly in the case of the growing Chinese middle class who are demanding products within mother and baby, personal care and cosmetics, health and food, as well as fashion and interior design. Alibaba saw this as a business opportunity and contacted PostNord to encourage them to develop a Nordic web shop on their platform TMall Global. In 2016, this resulted in the foundation of the consultancy Ehubnordic which is specialized in online B2C sales to China through its Nordic web shop. Ehubnordic seeks to bridge the gap between the Nordic businesses and the Chinese consumer, for example through the web shop which is on TMall Global. 

Other articles part of Newsletter vol. 3, 2016