Are you looking to sell your products in China?
While many will advocate eCommerce as a channel to sell your products in China, it is certainly not the only channel and in some cases, not even the best channel.
With China’s rapid development and growth. Government rules, regulation, and laws have open new and easy ways for market entry for foreign companies. Today, China accounts for more than half of all global shopping center development, and it is considered to be one of the top market fo retail space constructions.
As as result, it is important for foreign brands and retailers to understand and learn about all the channels to distrubte your products in China.
In this article, we’re going to share with you the 7 channels to sell your products in China.
1 Department Stores
Think of a department store as a mega-retailer store with distinct and separated “departments” with separate checkout. These departments can be individual brands or a category of product with multiple brands.
In US and Canada, there are many extremely popular department stores such as Sears, Nordstrom, Macy’s, Holt Renfrew, and Hudson’s Bay. Stores such as Walmart and Costco may appear to be similar to department stores, but they’re not as there are no departments in these large discount stores.
In China, department stores differ than that of the West. Unlike Western department stores where merchandises sold in the entire department store are usually purchased and managed by a Corporate head office. Department stores in China do not hold any inventory, and each space in the department store is owned by a landlord which then rent the space out to various brands of their choice.
Department Stores in China are usually several floors high, with each of its floor dedicated to a specific category of merchandise. For example, Women’s wear will take up the entire first floor, men’s wear the second floor, Cosmetics and body care the third, so on and so forth.
The downside of selling your products through this channel is that often on top of the rent, you’ll still have to pay the landlord a percentage of your overall sales. The upside, of course, is the share amount of food traffic, and the ability to not only sell your product but also increase your brand exposure in China.
If you’ve been following our blog for a while now, you would know that we will almost always advocate eCommerce over any other channel to sell your products in China. This is because eCommerce in China is huge.
Nearly 40% of all global eCommerce spending in 2015 came from China and it accounts for 15.5% of total retail sales in the entire country. On top, if you’re a foreign brand looking to test out your product in China, then eCommerce is by far the easiest and safest way to do that.
However, there is a catch…
eCommerce in China is different, unlike the West, specifically North America, where platforms such as Shopify, Big Commerce, and Stripe. Made it easy for literally anyone to get setup up their own online store in just hours, in China eCommerce is dominated by a few gigantic brands.
The biggest of them all, of course, is Alibaba Group founded by Jack Ma in 1999. While it is possible to sell through your own online shop, it is highly recommended that you start off by selling on popular platforms such as Taobao, TMall, or JD.
Malls in China are very similar to the malls you’re familiar with in the West. A real estate developer will construct and operate the mall, and then rent out store spaces to brands and retails. These brands and retails are free to renovate and operate their store, however, they want as long as it complies with the mall’s standards.
While malls in China operates in a similar fashion as malls in the West, there are however some key differences.
- Often malls in China are usually 5 to 6 floors compare to malls in the United States where single or two-story affairs are more common.
- In the major tier one cities such as Shanghai and Beijing, it is not surprising to have 5 to 10 Mega Malls each with 5 to 6 floors of shopping spaces spread out across the city.
- Because China malls will usually high have a volume of foot traffic, especially on weekends, there are often multiple food cards and even multiple floors dedicated for restaurants, snacks, drinks, and dessert venues.
- Many Chinese malls will have various of entertainments ranging from toddlers to even teenagers. These may include board games, arcades, DIY craft shops, and some may even include short period daycare center to allow for parents to shop in peace.
- Depending on the location, some larger malls in first-tier cities will often have a base mall floor for restaurants, fast food, and even grocery chains.
4 Street Level Stores
If you’re in a city like Shanghai and depending on which street you’re walking down. Most of the street-level stores you’ll see are large single brand flagship stores such as Coach, H&M, Uniqlo, Zara, Zegna, Sephora, and Lane Crawford.
But most street level stores in China aren’t brands, nor large retailer’s brands like H&M, Zara, or Forever 21. Most street level stores are either going to be a tiny mom and pop shops, small restaurants, or small stores own by individuals selling usually apparels, daily consumer, kitchen wares, and other arts & crafts.
Street level stores as an entry method to China is probably not going to be an ideal strategy for most foreign business looking to market to China. It can be expensive and hard to manage. However, street level stores in China definitely has its advantages such as brand exposure, and brand positioning.
If you’re a large and well-established brand and are willing to invest in your venture to market to China, then having at least one flagship store in China will definitely help you to position your brand in Chinese consumers mind.
Supercenters are large stores typically range anywhere from 140,000 square feet to 250,000 square feet that carry a huge selection of SKU, sells groceries, have pharmacies, and offers automotive serving.
If the above sounds familiar to you… well, that’s because supercenters or superstores are what you would know as Walmart, Kmart, Target, and Costco.
Just like in the West, In China supercenters are actually pretty rare in tier one cities such as Shanghai. I mean imagine a Walmart or Costco in the center of Manhattan, New York City, it is not likely ever going to happen.
On the flip side, in suburbs and smaller cities, supercenters are becoming more and more popular as just like the west they usually serve as a one-stop shop for nearby residents. Most Supercenters in China will source all their products directly from factories as well as local farmers, and grocery supply chains.
The challenge with selling your product through supercenters or superstores in China is the same challenge you’ll face when you try to sell through the Walmart and Costco. Low margin, and no opportunity to disguise and position your brand against your competitors.
6 Lifestyle Stores
The concept of “Lifestyle Store’ is really about trends, and that idea of individualism in China right now. As the average disposable income increases in China, more and more Chinese consumers, especially affluent consumers are no longer satisfy with purchasing products purely based on brands.
Instead, they’re looking for products or brand that will help them express their individual personalities, and enhance them self-express. This is very much the same as the idea of “style” in the western fashion industry. For example, you like hip-hop then you’ll most likely have a hit pop fashion and lifestyle.
Lifestyle stores in China are stores that will carry a single brand such as Vans, or multi brands that specifically geared towards certain lifestyle or trend.
Although this is technically not a channel as it is not really legal in China, it is never the less a very popular way for the Chinese consumer to buy foreign products right now. DaiGou which means “buy for me” are just individual Chinese who are living abroad that uses WeChat to take purchase requests from Chinese buyers in China for certain products, go buy the products, and then ships them back to China without paying import tax.
They profit by charging adding a profit margin on each profit, but since they’re not paying the same import taxes that foreign brand will have to pay when importing their products into China on top of all the overhead. Purchasing the same product from DaiGou will usually be cheaper than purchasing it at retail price in China.
This is actually the safest, and the best way to sell your products to China, as it literally requires nothing. The only challenge, of course, is finding the right DaiGou to sell your products. The other downside being the volume will generally be much smaller as well.
Here we’ve share 7 channels that you as a foreign brand can distrubte your products in China. Now it’s your turn to tell us your experience on selling to China.