Growing Your Business in China in the Year of the Ox
While eCommerce in China has long been one of the most developed globally, the last year has resulted in a sea change in how Chinese consumers shop online. Amidst the lockdowns and other pandemic-related restrictions, the number of online shoppers in China shot up to 710 million in 2020. This has led to a spike in eCommerce penetration, with the total amount of retail sales made online increasing to 25%, up from 21% in 2019.
As we mark the Lunar New Year, the Year of the Ox, let’s dive into how you can “grab the ox by the horns” this year and expand your business into the booming Chinese eCommerce market. The events of the last year have reshaped consumer habits, while new marketing trends have influenced how and what people shop for. Now’s the time to learn how to take advantage of these trends.
New Spending Habits, Product Quality and Lifestyle Changes: Lessons Learned from Last Year
Over the last year, Chinese consumers have become more discerning in how they spend their money and what they shop for. For sellers looking to expand their business in China, it’s important to take these trends into account as you plan your product lines and sales strategies.
Smart Shoppers
The economic downturn brought on by the pandemic has resulted in Chinese consumers, particularly young shoppers, becoming much more careful in how they spend their discretionary income. This was evidenced in a recent survey, in which 42 percent of young consumers said they would like to save more than before the pandemic, and 60 percent saying they want to plan how they consume and spend less on impulse purchases.
Seller tip: Just because consumers are planning their spending more than before the pandemic, it doesn’t mean they aren’t spending. Focus your product offerings on anything that could be deemed essential, including health and fitness products (more on that below), to better appeal to the Chinese market.
Quality Counts
In addition to having developed a more frugal lifestyle over the last year, Chinese consumers are opting to purchase more high-quality, long-lasting products. A recent survey indicated that 36 percent of Chinese respondents are willing to spend more for better quality products. Furthermore, according to Sean Shen, Greater China Customer and Strategy Competence Leader at EY, “a different group of customers want high-quality products in the premium segment because of the travel ban this year, so they’re willing to spend more on the goods and products they used to buy overseas.”
Seller tip: Over the last year, it’s become clear that with Chinese consumer purchases, quality matters more than quantity. Make sure your product lines are made to last to better ensure customer satisfaction, which can lead to positive word of mouth and increased sales.
Staying Health Conscious
While spending on health products in China has been on the rise for several years, particularly with regard to food choices, last year saw an accelerated shift to purchases related to health and physical fitness. A recent consumer survey found that “around 75 percent of consumers demonstrated strong preference to exercise more and eat healthily post crisis”. This was clearly seen in the sporting goods industry, which after a rough start to the year, has bounced back, recording a 300% increase in sales year over year according to Liu Fumin, director of the Department of Sports Economics of China General Administration of Sport.
Seller tip: Health-conscious consumers can provide you with a clear path to tapping into the Chinese market. With discretionary spending still down amongst Chinese consumers, now is the perfect time to focus on the products that matter most to your potential customer base.
Targeting Your Customers Using Omnichannel Marketing
To successfully reach your Chinese consumers, it’s critical to utilize an omnichannel marketing strategy, meaning you need to advertise on a variety of different platforms to reach your desired audience. Let’s look at a few of the most popular channels to analyze their impact on Chinese eCommerce.
Social eCommerce
Over the last several years, social eCommerce, notably through platforms like Douyin, Pinduoduo and Kuaishou, have grown into a $300 billion industry. When marketing on these platforms, note that they differ from their western counterparts in a number of ways, namely in that they’ve integrated the sales process. For example, Douyin has its own integrated store, allowing users to shop directly from the platform. For sellers, this enables you to easily track which sales channels are working best, giving you a better idea of where to focus your marketing budget.
WeChat Mini Programs
WeChat generated $250 billion in eCommerce revenues in 2020 through their Mini Programs app, which according to WeChat “has helped brands and businesses to easily embrace digitalization and enable direct access to hundreds of millions of stay-at-home consumers during the pandemic. With more than 1.2 billion users worldwide, WeChat can provide unparalleled access to your target audience and is a necessity when marketing your store in China.
Livestreaming eCommerce
The livestreaming industry has soared in popularity in China in recent years, as more and more influencers have begun promoting and selling goods to the approximately 560 million people who viewed livestreams in 2020. The result has been in explosive industry, generating $60 billion in annual eCommerce revenues. What’s more, Chinese marketplaces, including Alibaba, Baidu and JD.com, have integrated livestreaming directly into their platforms, making it a must use medium for sellers targeting the Chinese market.
Learn more about the state of livestreaming in our exclusive eBook!
eCommerce in China is Set to Reach New Heights
Looking at the rest of the year, and beyond, it’s clear that eCommerce in China is only going to grow. With sales expected to increase by 21% in 2021, now’s the time to take advantage of the market trends outlined above to successfully grow your business. Whether you’re a new or experienced cross-border seller, know that Payoneer will be with you every step of the way to help ensure your business expansion is a successful one.