Bolstered by a burgeoning middle class with a growing appetite for high-end merchandise, China is quickly shedding its reputation as solely an export hub.
While local e-commerce giants such as Alibaba, JD.com and VIP.com have been reaping dividends from the Chinese consumer revolution for several years — Alibaba’s 2016 Singles Day raked in $18 billion, and JD.com made $11 billion in the last quarter alone — experts suggest it’s high time for more U.S. brands to cash in. (JD.com this month launched a luxury-focused online platform, Toplife.)
What’s more, with the Chinese government placing significant effort behind expanding its cross-border e-commerce channel, Tony Shan, business development and merchandising lead for VIP.com’s North American arm, said selling U.S. goods in China is becoming markedly less complicated.
“The Chinese government set up the [cross-border e-commerce] channel specifically for online sales, and to use it, you don’t need to have a company in China or joint venture — as had been previously necessary with direct importing of goods into the country,” Shan explained. “Also, the goods you are selling in China via cross-border ecommerce don’t need Chinese testing or labeling — so it’s a very easy and quicker way for [companies] to get into the market.”
To date, VIP.com has helped several international brands — including Tory Burch, Guess, Armani and Tod’s — take advantage of the channel and sell their wares to its more than 300 million registered customers. With business booming, Shan said the site’s VIP International division now sells predominantly full-price branded products.
Here, Shan breaks down four major tips for companies looking reap similar rewards.
Get a Head Start on Brand Protection
“[Intellectual property] protection has been a hotly contested issue in China, but it is getting better. The Chinese government wants to encourage working with international brands and make sure that [those brands] are protected. The No. 1 thing we tell brands is to make sure they register their trademarks in China whether or not they’re ready to enter China right now. The China trademark system is different than the U.S. in that it’s first to register [the trademark] and not first to use it. It’s also a lengthy process and can take a year or two.”
Nail Down Your Supply Chain
“Where is your inventory? If your inventory is in the U.S., you need to think about how you will get [your merchandise] to China. There are a lot of freight forwarders — a company like ours will facilitate that process and help you get your goods to China and take ownership of that inventory. But if your goods are already made in China, you have to think about whether [it makes sense] to ship the goods back to U.S. just to ship them back to Chinese [consumers]. There are solutions such as having a 3PL warehouse — where the goods can go from the factory to that warehouse and be distributed from there. You should also think about capacity: When something takes off in China, it really takes off. [You must consider] whether you have the capacity to keep up with that demand.”
Send the Right Message
“[In the U.S.], we do a lot of search and affiliate marketing on Google and AdWords to get brands out there and in front of customers. In China, this is not the case. We don’t have Google, so there’s not a lot of search going on. A lot of customers will go onto the platforms that they’re familiar with — [such as] We Chat, which is wildly popular in China — and search for the brands there.”
Choose the Best Platform
“When you think about sending the right message, you should think about what’s the right channel. In China, when we say e-commerce, we really mean mobile commerce: The [mobile channel] is huge in China [compared with] the United States. More people in China are shopping on their phone rather than their laptops. So you should plan for how you can approach people [via mobile] — whether it’s by text message or apps.”