China

58
Country starter pack
Sales & marketing in China
Alibaba.com is the largest e-commerce company in
China. It dominates the B2B (business to business)
market and its Tmall and Taobao websites also enjoy the
biggest market share of the B2C (business to consumer)
and C2C (consumer to consumer) markets respectively.
Tmall Global allows foreign businesses without a
presence in China and a Chinese business licence to
create an online store and sell online in China. Australia
Post recently signed an agreement with Tmall Global,
specifically aimed at supporting Australian SMEs selling in
China. For more information on the agreement, contact
Australia Post. Other e-commerce companies in China
include Jingdong, Dandang and Yihaodian.
Chinese consumers usually use local search engines, such
as Baidu, rather than Google. This is due to censorship
and sometimes blocking of Google content by the
Chinese government firewall. Many other websites
familiar to Australians are not available at all in China.
These include Facebook, YouTube and Twitter. There are,
however, Chinese equivalents that are effective channels
for engaging Chinese consumers.
Online sales payment
Chinese consumers rarely use credit and debit cards to
pay for online purchases, with cash on delivery and third
party payments the most popular options. This is because
of Chinese consumer concerns around credit card fraud
and being sent bogus goods.
• Cash on delivery is cash, a cheque or money order
payment made directly to the shipping company’s
representatives when goods are delivered. This is
popular in China as it allows consumers to check
the quality and authenticity of products before they
pay for them. Higher costs and longer wait times for
payment are negatives for sellers.
• Third party payments are made through independent
companies such as Alipay, Tenpay and 99Bill, which
are similar to PayPal in Australia. Payment is made to
the licensed third party and when both the buyer and
seller are satisfied, the funds are released to the seller.
3.3 DIRECT SELLING
Making direct contact with buyers and end users
is another option for selling your product in China.
Although low cost and relatively low risk, direct selling is
not an easy route to market because of strict regulations
that constantly change. Until recently, direct selling was
illegal in China due to widespread pyramid schemes.
Under the relevant laws that now permit the practice,
only certain types of products can be sold directly. These
include cosmetics, cleaning supplies, health and exercise
equipment and small kitchen products. Seek professional
advice if you are considering direct selling in China which
can also assist you to understand Chinese tax and import
duties requirements.
How to set up a Tmall
Global online store
1. Submit a company and product
information form (about 17 working days
for verification).
2. Receive an invitation from
Tmall Global.
3. Register an Alipay overseas account (around
7 to 10 working days).
4. Sign the agreement with Tmall and pay
security deposit and service fee (7 to 10
working days).
5. Register a Tmall platform international
account. Fill in company and product
information.
6. Launch online store.
Note: your online content may need to be
translated into Mandarin.
The benefits of doing it yourself include eliminating
middlemen and gaining a better understanding of buyers’
or end users’ technical needs and an ability to customise
accordingly. However, not having a physical presence
in the market can make it difficult to conduct direct
sales in China. Some Chinese clients will not always be
prepared to do business with a company that has no local
presence or representation. Companies in China that
have successful direct selling strategies tend to employ
a high number of direct sales agents who cover diverse
geographical areas. Be aware that selling directly to end
users involves being responsible for all market research
and marketing, distribution, shipment, warehousing and
delivery, customer and after-sales services and the sales
order, billing and collection processes from Australia.
Australian exporters may sell directly to Chinese retailers
or retail chains when consumer products are involved.
To do business this way, Australian exporters must travel
to China and make contact with retailers. This should
be supported by direct mail material such as letters,
brochures and catalogues. There should also be follow-up
contact with retailers to ensure they know your products
well and can sell them effectively. The retailer may have
input on the development of products, pricing and
marketing. Selling directly to retailers generally reduces
commissions, reduces travel and reaches the market
more effectively. You can also use an agent or distributor
to get your products to a retailer.