Going to the China Ecommerce Market

Image(image source: flatclassroomproject.org)

Internet connects everyone in the world. When Gangnam Style hit the world in 2012, people in the world laughed at the same music video and did the Gangnam Style dances in clubs. I believed that the Internet combines the world together and what we are sharing is getting similar in terms of content. 

My shopping experiences in South Korea and in the U.S. aren’t different. What I expect from Internet shopping did not change when I came to the U.S: quality of catalog image, fast shipping, recommendations, filtering product lists by price, color, size and brand. I thought that what I am looking for e-commerce would be applied to world-wide. However, I was wrong. 

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I had another guest speaker, David Panitz from Bleum Commerce, for my e-commerce marketing class. Mr. Panitz helps western brands to go into the Chinese market by providing a complete managed commerce solution. He talked about how interesting and unique is the Chinese e-commerce.

He pointed out why the Chinese market is attractive:

  • China will become the biggest retail buyer in the world (Chinese people’s disposable income will double in 2016 from 2012)
  • Rapidly rising consumer wealth (mainstream consumers will make up half the Chinese population by 2020)
  • Chinese e-commerce is growing faster than all major e-commerce markets (average annual growth of Chinese e-commerce is 30%)
  • 3/4 consumers prefer to shop online, based on 511 million internet users in China
  • GDP growth outpaces western countries at 7.3%, whereas Japan at 1.0%, US at 2.1% and UK at 1.1%

World’s largest population, increasing internet users, increasing purchase power, positive attitude toward shopping online. All these opportunities are attractive, but big western brands such as Ralph Lauren and LL Beans failed once because they lacked understanding about the Chinese consumers: why they buy from them, what they expect from brands and what value they are seek from them.

Bath and Body Works

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When I go back to Korea for holidays, I bring some hand soaps and sanitizers for souvenir. Like my Korean friends and family, my Chinese friends love this brand, so I saw a possibility of the brand going to China. 

  • Competitor: The UK brand, the Body Shop, already entered the Chinese market. (Hong Kong in 1984, Macau in 1993) The categories that the Body Shop covers are bath and body, skin care, men’s, home fragrance, fragrance and hair care. These categories are similar to Bath and Body Works’ offerings, but Bath and Body Works carries anti-bacterial lines.
  • Sanitation and Hygiene in China: Due to its large population and the vast land size, Chinese government has tried to improve people’s health, for example the Patriotic Health Campaign is the ongoing campaign since 1950s that focuses on improving sanitation and hygiene and  attacking diseases.
  • Global effort to increase sanitation and Hygiene: there is another global campaign that Bath and Body Works can be benefited. It is called, Global Handwashing Day. The objective of this campaign is to motivate people in the world to wash their hands with soap.  It takes place on October 15 of each year. In china, On Global Handwashing Day, education activities on proper handwashing methods take place, involving 8 million students, supported by National Patriotic Health Campaign Committee, Health Education Institute of China CDC and UNICEF. This campaign targets not only kids but also adults proper emphasizing the fact that handwashing can prevent disease.
  • Things to consider: before entering to the Chinese market, government regulation is one of things to be carefully reviewed because the Chinese government has strict regulations on skin product. Also, companies should keep following updates on regulations. For example, animal test has been mandatory in China, but the government announced possibility of canceling the animal test regulation in November 15, 2013. 

Sources:

Global Handwashing Day (http://globalhandwashing.org/ghw-day)

 

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