1. 1
Steven Hope Senior Digital Trade Adviser
Edinburgh 16th September 2015
Meet your Customers Online
• The world is shrinking by the day – borders are no longer a
hindrance to shopping – smart phones are the great enabler
• Online cross-border trade has passed a tipping point – it is a
natural part of consumer buying
• China's cross-border e-commerce industry has entered a high
speed growth period as the market continues to expand. It
opens up vast opportunities for foreign retailers and brands
that wish to sell products to China.
Authentic- Good-quality - Foreign products
2
2. 2
The e-Exporting Programme
To encourage and empower companies to
expand international online sales.
• Own Websites
• B2C e-marketplaces. Newegg, Xiu.com, LASO,
Tmall (Global), Vip.com, Mercado Libre,
Spree, La Redoute, Amazon Japan and more.
• B2B e-marketplaces
• Flash/Private sale sites
3
Short Stat Attack
• 630m people in China have access to the internet (48% of the population).
More than 315 million Chinese shop on the Internet. That is 5 times the
population of the UK.
• In 2013, 7% of Chinese online shoppers made cross-border purchases
($12.3bn in 2013) UK had 6% of those purchases
• Global B2C cross-border e-commerce market will balloon in size to $1 trillion
in 2020 from $235 billion in 2014. China will become the largest cross-border
B2C market by 2020, with the transaction volume of imported goods
purchased online reaching $245 billion, according to Accenture-Ali
Research*.
* http://www.alizila.com/report-cross-border-e-commerce-reach-1-trillion-2020-charts#sthash.gEgswf8n.dpuf
4
3. 3
Are you right for China?
Do you know what
type of Chinese
consumers you’ll be
targeting and how to
reach them?
Is there a
demand for
products like
yours which
you can fill?
Are you
prepared for
all the
associated
costs and
logistics?
5
Potential
• According to a recent Alibaba report*, China is expected to drive the growth
of cross-border e-commerce in coming years.
• China’s middle class today is equal in size to the entire U.S. population and
is expected to reach 630 million by 2022 according to management
consultancy McKinsey**
* http://www.alizila.com/report-cross-border-e-commerce-reach-1-trillion-2020-charts#sthash.gEgswf8n.dpuf
** http://www.mckinsey.com/insights/consumer_and_retail/mapping_chinas_middle_class
6
4. 4
What is Your USP
• Chinese cross border shoppers have a strong desire for foreign, luxury
items, which are currently only available in big cities. Hence, the turn to
ecommerce. There’s a big focus on authenticity too, which drives the
demand.
7
Low prices are low in China.
Even Wal-Mart struggles to
compete on price, so it might
be best to consider other
selling tactics, focusing
instead on quality, authenticity
and building loyalty and trust.
Why Emarketplaces
• They make up a 90% share of the e-commerce sector in China, with
TMall & Taobao (both divisions of Alibaba) accounting for 80% of all
online transactions.
• Selling through emarketplaces is a cost effective way to export to
China.
• Given the high barriers to enter the country, Alibaba created TMall
Global as a way for international retailers to sell products in China
from a business based outside the mainland.
• You can focus on just a few of your best selling products.
• You can ship directly from the UK (or you can ship in bulk to a
bonded warehouse, from which orders will then be fulfilled).
8
5. 5
Why eMartketplaces ( general)
• Access to customers in a trusted environment
• You keep control of the brand and brand image
• Fully integrated IT and stock control management systems
with full reporting already set up
• You keep control of pricing
• Full retail price less listing and transaction fees (which vary
eM to eM).
• Excellent way to test the local demand for your products
• Build valuable research into customer behaviour
9
Choices
10
6. 6
What are the Chinese Shopping Online
Online sales in 2014 were $354bn
11
Beauty
25%
Babycare
32%
Healthy
products/fo
od
24%
Apparel
13%
Others
6%
Sales
Source: Tmall Global 2014
China’s Pilot Free Trade Zones
12
7. 7
Pilot Free Trade Zones
Shanghai
kuajingtong.com
YHD.com
Ningbo
ccigmall.com
kjb2c.com
Zhengzhou
wgyp.com
zhingdamen.com
emaoe.com
Hangzhou
tmall.com.hk
Chongqing
osell.com
cqkjs.com
Guangzhou
wtdex.com
ggtdc.com
Shenzhen
13
Also pilot cities Changsha, Shenzhen, Suzhou, Qingdao, Guangzhou, Pingtan,
Yinchuan, Mudanjiang, Harbin, Yantai, Xi'an and Changchun
Some Operating Models
• Tmall Global
• JD.com Global
• VIP.com
• CCIGMall
• YHD
• XIU.com
• YDX
• HiChao
• Wechat commerce
14
8. 8
15
Sell to China with XIU Fashion and Lifestyle site
Marketplace
detail
Logistics
Legal
Costs
Sales metrics
Pricing
Next Steps
XIU has 5m registered users and gets 10m unique visitors per month. Brands can
utilise different sales methods including Flash sale, Daily sale and Brand shop
XIU.com sells luxury to mid-to-high range fashion products focusing on Apparel
(30%), Shoes (20%) , Bags (20%), Beauty (10%), Accessories (10%)
Brands agree Retail price (similar to UK) and wholesale price with XIU who then
cover marketing, translation, imports, duty, delivery, handling cost and returns
UK brands despatch orders to XIU’s UK logistic hub and XIU fulfil to the end
customer. Despatch must occur within 24 hours. API integration required with XIU
Recommended that companies have at least started the Trademark registration
process with the SAIC
No upfront costs - XIU translate, list and market product lines. Additional
marketing (email, search, banner) is available at additional rates
To register interest please email Melissa Li, Director of UK Business Development
based in London, melissa.li@xiu.com
UKTI Terms
UKTI have negotiated i.) No upfront costs to list for brands on-boarded and ii.)
Improved margin (either wholesale price model (preferred) or commission based)
Cust Service /
Returns
Handled by XIU in local language - XIU hold returns for re-sale except faulty
goods which are charged back to the brand
16
Sell to 100m VIP.com Flash Sale Site Users China
Marketplace
detail
Logistics
Legal
Costs
Sales metrics
Pricing
Next Steps
VIP.com has >100m registered users and gets 12m+ unique visitors per day. In
2013 they fulfilled 107m orders with revenues of $3.8Bn (Listed on NYSE)
VIP.com is the largest flash sale site in the world focusing on Apparel (42%),
Shoes & Bags (14%), Household (12%), Cosmetics (9%), Baby(8%)
Brands agree retail & wholesale price and virtual consignment of stock that will
form the sale. VIP plan and execute a 3-5 day campaign using search, email, etc
On completion of the 3 day campaign all sold stock is either 1. Sent to VIP freight
agent in the UK and fulfilled to China or 2. VIP can pick up from UK Warehouse
Recommended that companies have at least started the Trademark registration
process with the SAIC
No upfront costs. Brands are paid the wholesale price on goods sold and then
only need to pay for shipping goods to the VIP UK warehouse
To register interest please email Lu Han, Merchandising Director UK who is based
in London, lu03.han@vipshop.com
UKTI Terms
UKTI have negotiated improved payment terms. Standard is 20 days after
collection. Offer is 60% at 7 days and 40% at 20 days in either $ or £
Cust Service /
Returns
Handled by VIP in local language. VIP.com covers cost of returns due to NON-
product quality issue, brands need to cover cost for return due to product quality
9. 9
Pricing Models
Ranges of e-
commerce platform
fees
Refundable deposit
$25,000 - $40,000
Annual rental fee
$5,000 - $10,000
Commission fee
0.5% - 5% based on
product categories
Logistic/warehouse
charge 5–20%
depends on product
Banking fee 1% -
1.5%
17
A Strategy Check List
Trademark
registration
in China
Define your
China
strategy
including
Social Media
Payment/
logistics/
customs
Cost
Structure and
competition
Marketing
and Customer
Service
Management
Cultural
considerations
18
10. 10
China’s e-Commerce
Over the past ten years, the Chinese government has actively promoted and
guided the development of e-commerce and continues to encourage and
support the development of Internet transactions for goods and related
services. On 19 June 2015, China's Ministry of Industry and Information
Technology ("MIIT") announced that it was lifting its foreign participation
restriction in e-commerce companies. As a result, foreign investors can now
wholly own an e-commerce company in China.
These changes represent an exciting opportunity for foreign e-commerce
companies, even if the sector is currently dominated by home-grown giants
such as Alibaba, JD.com and others. Foreign retailers or brands now have
more choice on e-commerce platforms when selling their products to Chinese
consumers. To facilitate entry into this ever-growing marketplace, it is vital to
keep up to date with the intricacies of the Chinese legal system and, more
specifically, the recently-enacted E-commerce regulations.
19
Your Prize Awaits You
If the UK can move from 6% to 10% of Chinese B2C cross border purchases of
the predicted $235bn, that represents about £15.5bn.To put that is context.
Total exports of all goods to China in 2014 was £15.9bn , up from £11.9bn in
2013
In 2014, 21 million Chinese purchased goods through cross-border e-
commerce platforms, and overseas shopping spending was up to 350 billion
Yuan. Recent forecasts for 2018, estimate that this number will increase to over
1 trillion Yuan. (Source: PayPal)
20
11. 11
They could be your next customer
21
Get in Touch
Steven.Hope@ukti.gsi.gov.uk
Adriana.Lyon-Shaw@ukti.gsi.gov.uk
22
16. 18/09/2015
4
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Digital Demographics (Age)
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Digital Demographics (Gender)
17. 18/09/2015
5
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Income Structure of Internet Users
£200 ‐ £400
<£100
>£800
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Online Spending Behaviour
Alipay data indicates that in 2014 the national average spent online
exceeds £1,000 per annum
With average annual incomes for internet users much less than £4,000 per
annum, this represents as much as 1/4th of income being spent
online
KPMG survey found that average amount spent on their last online
transaction was approximately £140 per transaction
Chinese consumers’ online shopping frequency is 4 times that of
European consumers at 8.4 items per month (compared to 4.3 in
the UK)
18. 18/09/2015
6
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Regional Trends in Online Spending
Guangdong
Zhejiang
Shanghai
Jiangsu
Beijing
Inner Mongolia
Tibet
Qinghai
Henan
Guangxi
Highest level of online spending
Fastest growth of online spending
Sources: Alipay Annual Spending Report & KPMG (2014)
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Online Purchasing Trends
22
34
18
19
25
18
7
25
4
1
23
32
2
1
24
Average # of
purchases per year
19. 18/09/2015
7
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Online Shopper Types/Segments
Types of Online Shopper (% of total) Total % of spending
Source: Nielsen
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Insights / Market Intelligence
• Free reports
• CBBC/UKTI Etc.
• KPMG, MckInsey, iresearch Etc.
• Partner data/insights
• In‐house research
• Bespoke research (OMIS )
• Off‐the‐shelf reports
• Survey /Focus groups
• Taobao Cube
• Baidu Tongji
Free / Open
Source
Paid
Research
Analytics
20. 18/09/2015
8
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Final thoughts…
• Market extremely competitive. Thousands of platforms,
vendors, websites, stores.
• Increasingly sophisticated consumer that research
purchases in considerable detail
• Define your target segment as early as possible
• Don’t assume your offering has universal appeal across
regional and demographic sub‐segments
• Localization of product/messaging may be necessary
• Perceived reliability, quality (incl. safety) and value for
money may be more impactful for a Chinese audience
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Thank You!
Mark Hedley
China‐Britain Business Council
E: mark.hedley@cbbc.org
T: (0) 20 7802 2018
22. Leading B2B platform in the world
with more than 120 M registered users
operating in a diversity of 49 main categories
and a total of 1709 sub-categories
1688.com
23. 1688.com has been maintaining the B2B’s leader
position in China for 14 years
43.1%
7.9%
4.2%3.5%2.7%
1.3%
1.0% 0.8%
35.5% 1688 Global Sources
Hc360 DH Gate
Made in CHN GMC
My Steel Toocle
Others
* Data as of 2014.
26. Leading China’s International Trade
and E-Commerce Development
￥3.75 Trillion
(approx. US$ 604 B)
Transaction Volume of China’s
E-Commerce Import-Export in 2014* 20.2
23.6 24.3
25.8 27.1
29.5
32
34.6
1.3 1.8 2.3 3.1 4 5.2 6.5
8
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014** 2015** 2016** 2017**
Total Import-Export Volume (Trillion RMB) Cross-border E-commerce Volume (Trillion RMB)
* Source: http://www.100ec.cn/detail--6253574.html
** Projected data.
￥476 Billion
(approx. US$ 76 B)
Transaction Volume of China’s
E-Commerce Imports in 2014* (B2B + B2C)
27. + 100 Million
Number of Chinese Travelers
to Overseas in 2014
+ ¥1 Trillion
(approx. US$161 B)
Total amount spent overseas in 2014
by Chinese consumers
China’s Consumption of
Foreign Products in the
Overseas markets
+£1,450
In the UK, the average spend for Chinese
travellers per trip is £1,450, according to Global
Blue
28. Most selling UK Product Categories in China
China offers huge opportunities for British companies, particularly in
sectors such as food and drink, renewable energy and financial services.
*Data from Export Britain, British Chambers of Commerce
30. Made in UK
“Brands which leverage
British heritage work the
best”
Industry we highly required and
recommend:
1. Food beverage
2. Wine
3. Beauty and personal care
31.
32. Exporting to China is Great
Join us before 23rd October
From 23rd October, there will be a 7
days large online marketing
campaigns and promotions to
provide more visibility in the
platform and highlight imported
products
40. 20
ALIBABA.COM
Platform features and value-added services for facilitating a holistic sourcing experience
Inspection
Trade AssuranceSearch & Match
ABC
Logistics
Financing
43. 23
ALIBABA.COM
E-credit Line: Buy Now, Pay Later
e-Credit Line is a line of credit from regulated financial service
providers in certain countries. It is designed to help finance
your purchases on Alibaba.com with Chinese suppliers.
47. 18/09/2015
1
Social Media in China
• How can brands use social media for their benefit.
• Why is social media is important when trying to
sell to Chinese customers.
• What makes Chinese social media unique.
48. 18/09/2015
2
Source: China Internet Network Information Centre (2015)
CHINA AT A GLANCE.
• 668 Million Internet Users
• 594 Smartphone Users
• 88.9% access Internet
via Smartphone
• Influences – Ads are not as
trustworthy in China, they need word
of mouth
• Large demographic so Social Media
is the fastest and easiest way to
reach audience
• As Chinese consumers spend more
time online, foreign companies
should deepen their knowledge of
domestic social media platform.
Why is Social Media Important?
49. 18/09/2015
3
1
Access services /
products and make
purchases
2
Interpersonal
connection
3
Self-expression
The key motivations for Asian consumers to be
continuously connected are:
69.5%
HOT TOPIC
70.1%
SHARE
MESSAGES
64.6%
SEND POSTS
50. 18/09/2015
4
Weibo users from 190+ countries worldwide
176Million+
Monthly Active Users
aaaaaa
Officially
launched in
Q3 2009
Open platform
launched in
Q3 2010
Started
monetization in
Q2 2012
Promoted feeds
launched in
Q2 2013
Alibaba strategic
alliance in
Q2 2013
Weibo IPO
Apr 2014
Source: Weibo 2014 Earnings
65.566.4
76.4
120.5
172.6
381.6
Millionsofusers
China has the World’s largest population of social media users…
…and Sina Weibo is China’s most popular micro-blogging platform.
SINA WEIBO 2015
Stat Sheet for Digital Marketing
Source: Weibo Data Centre
167 Million 63 Million
Weibo Active
Monthly Users
Population of
United Kingdom
53. 18/09/2015
7
5 Reasons Why WeChat Makes
A Good Marketing Tool
1. Power of Social Marketing
2. Function
3. Online Sales
4. O2O business model friendly
5. Games
56. 18/09/2015
2
3Introduction / China Market Overview
54,03%
29,24%
14,71%
0,34% 0,95% 0,73%
Baidu
Haosou
Sougou
Google
Bing
Other
China – Overview
Market Size: 618 mln internet users (45% internet
penetration), largest internet audience in APAC
markets
Language: Simplified Chinese
Engines: Baidu, HaoSou, Sogou, Google
Social: Sina Weibo, Tecent WeChat
Our Learnings
⁄ Google market share is very low, but effective at targeting
international Chinese users, and those using VPNs
⁄ PPC products differ, brandzone and other ad formats are
key
⁄ Social is a key channel with significant reach (Organic &
Biddable)
4Introduction / SERP Landscape / Baidu
Mobile SERPDesktop SERP
Up to 10 ads
Up to 8
ads
Up to 3
ads
Up to 4 ads
57. 18/09/2015
3
5Introduction / SERP Landscape / Haosou
Mobile SERPDesktop SERP
Up to 8 ads
Up to 8
ads
Up to 3
ads
Up to 3 ads
PPC Ad Formats
58. 18/09/2015
4
7Basic PPC Ad Formats
⁄ Cover brand & generic keywords
⁄ Allows for more control than organic sections
⁄ Grow brand awareness via generics
⁄ Perform A/B testing & keyword research
⁄ Tailored content for each keyword theme
Why ?
⁄ Any brand that wants to test and grow the
Chinese market
Who For ?
What ?
⁄ User-driven search marketing, paid per click
Baidu
Haosou
Google
8Shantou PPC Ad Formats & RLSA
⁄ Much more ad space, occupying more SERP
real estate and pushing down competitors
⁄ Build your brand presence
⁄ Support customer navigation before they hit
the site, ensuring they access relevant content
in as few clicks as possible
Why ?
Who For ?
What ?
Shantou image ad (图片凤巢)
Shantou list ad (闪投列表)
Listing ad (闪投导航)
Shantou Toutiao ad (凤巢头条)
⁄ PPC ads showing logos, images, videos and
links to specific pages
⁄ Increase CTR on generics
⁄ Wide variety of formats means this can be
useful for all brands/ sectors
⁄ Lots of options for brands with strong creative
assets
⁄ Works well for ecommerce
⁄ Improve ad relevancy to refine existing traffic
and maximise returning customer engagement
⁄ Helps push customers along the notoriously
long and complex Chinese purchase journey
⁄ Focuses investment on users who have
already indicated interest or purchasing
intention
⁄ Grows generic keyword base with new
keywords
Why ?
Who For ?
What ?
⁄ Cookie users who have been on your site, tailor
ads and adjust bidding strategies when they are
searching on Baidu (similar to Google RLSA)
⁄ Brands already operating in China
⁄ Brands looking to increase conversion
Why ?
59. 18/09/2015
5
Mobile PPC Formats
Mobile Golden Display ad (无线黄金展位)
App promotion ad (APP推广)
⁄ Push down competitors
⁄ Demonstrate brand ownership and engage
with rich media and deep links
⁄ Promote official app
Why ?
Who For ?
What ?
⁄ Large scale ad format for position 1 on mobile,
brought through a CPC model
⁄ Brands looking to increase brand awareness
⁄ Brands wanting to drive app downloads
New Formats in Beta
Desktop Multi-image ad(凤巢巨幕)
Mobile Multi-image ad(凤巢巨幕)
⁄ Push down competitors
⁄ Drive engagement with eye-catching visuals
Why ?
Who For ?
What ?
⁄ Multi-image and text-based ads, brought
through a CPC model
⁄ Currently in beta
⁄ Offered to certain accounts chosen by Baidu
60. 18/09/2015
6
Fixed Cost Ad Formats
Brand Zone 百度品牌专区
⁄ High recognition as an official website with
premium display to show superiority
⁄ CTR enhanced significantly – covers 70%+
of the visitors
⁄ Blocks unwanted SEM results
Why ?
⁄ Brands seeking to ensure ownership of
their brand in China
⁄ Any brand with at least 1000 brand
impressions per month
Who For ?
What ?
⁄ Display Search Product for brand only
keywords with images, links & text
⁄ Fixed costs, bought as a package amount
⁄ Can be updated monthly
61. 18/09/2015
7
Mini Brand Zone 百度品牌专区
⁄ Similar benefits to full Brandzone
⁄ More cost-effective
⁄ Highly controllable: weekly updates available
Why ?
⁄ Brands seeking to ensure ownership of
their brand in China, grow awareness and
conversions, but not wanting to spend as
much
⁄ Any brand with at least 1000 brand
impressions per month
Who For ?
What ?
⁄ Display Search Product for brand only
keywords with images, links & text
⁄ Can be updated monthly
14Landmark (品牌华表)
⁄ Supports brand awareness through generic
keywords
⁄ Helps build funnel and lists for RLSA
⁄ Fixed cost per week allows for tighter budget
management
Why ?
⁄ Brands looking to drive awareness, with
less of a focus on conversions
⁄ Brands with lots of visual assets
Who For ?
What ?
⁄ Large desktop-only format supporting
multiple images and text
⁄ Guarantees top right-hand position, but
relatively low CTR
⁄ Auction model: highest bidder displayed
62. 18/09/2015
8
Agile Market Entry
16China / Digital Market Entry Strategy
Approach: China Market Scoping Test
Stage 1: Set up originated PPC (including mobile) to establish brand authority and
gauge awareness
Stage 2: Expand keyword base (use RLSA)
Stage 3: Analyse performance & define optimisation strategy
Stage 4: Expand into Brandzone other channels (e.g. Social, Display, SEO)
Run Market Scoping Tests
63. 18/09/2015
9
Thank You.
For more information or
if you have any questions,
please contact us.
Contact
Lindsay.hong@forward3d.com @forward3d
65. 18/09/2015
2
• UK is an aspirational market to the Chinese consumer
• Chinese visitors to the UK in 2014 was almost 200,000* looking to grow
with simplified visa entry process
• Total spend whilst in the UK was £497 million*
• Change in profile of visitors from tours to FIT…they are branching
out…whisky tours, Gretna Green, Cambridge punting
Chinese interest in UK market
* VisitBritain
• Approximately 90% of visitors know to research online
• Extensive use of social media gets friends and family at home interested
• Referrals are vitally important
• Brands are shared via social media
• Will drive e‐commerce interest from visitors who ‘want more’…
• Will drive e‐commerce interest from others who ‘want some’…
Chinese interest in UK market cont’d
68. 18/09/2015
5
Payment options: cards
• UnionPay is China’s only bankcard network with over 5
billion cardholders
• No limits on spend*
• 100% brand recognition in China
• High level technological security e.g.. SMS code
* Subject to conditions
Comparison
• Alipay and Tenpay considered less secure and more expensive for merchants.
However, used more widely than cards and popular with the younger generation
• Government controls online spend via eWallets compared with cards due to
security concerns. 5,000 RMB spend limit if consumer pays via 3rd party payment
companies
• UnionPay, more secure, no limits on consumer spending, trusted and recognised
throughout China and more cost effective for the merchant with lower transaction
costs and faster settlement
