This document discusses opportunities for international e-commerce companies focusing on the Chinese market. It notes that China's economic growth and developing middle class have increased consumer demand and spending power. While Western assumptions about Internet usage do not always apply in China, opportunities exist in e-commerce marketplaces, social media, and working with local partners to understand preferences and build trust with Chinese consumers. Success requires a strategic approach and understanding key differences compared to other markets.

1. Richard Unwin
Backbone IT

2. May 2014
D14 Digital Summit
INTERNATIONAL E-COMMERCE:
FOCUS OF CHINA

3. Chinese economic growth
and a fast-maturing
ecommerce sector has
created opportunity for
Western retailers.
Chinese consumers now
have the will and means
to buy Western goods
online in significant
numbers.
May 2014
D14 Digital Summit
INTERNATIONAL E-COMMERCE:
FOCUS OF CHINA

4. Wage inflation running at
20% per year is fuelling
increased consumer
demand.
Expanding middle class
will account for 61% of
luxury consumers by
2015.
GROWTH AREAS
THE CHANGING CHINESE MARKET

5. Growth is not confined to
Shanghai and Beijing.
Cities outside the largest
36 will capture 22% of the
luxury market by 2015.
GROWTH AREAS
GEOGRAPHIC SPREAD

6. GROWTH AREAS
EMERGING MIDDLE CLASS

7. GROWTH AREAS

8. [There are] certain misperceptions and false
assumptions in the Western world regarding Chinese
Internet usage.
For example, people in the United States and Europe
assume that going online involves using search engines,
checking email and purchasing items online. This is not
the case in China.
There is a general false assumption that the whole world
uses the Internet in the same way.
“
”
KAI-FU LEE
FOUNDING PRESIDENT OF GOOGLE CHINA

9. Baidu 63.1%
Qihoo 22.5%
Sogou 11.4%
Google 1.6%
Others 1.4%
(January 2014)
CHINESE INTERNET USAGE
SEARCH ENGINE MARKET SHARE

10. CHINESE INTERNET USAGE
EYE TRACKING
WESTERN CHINESE

11. Excess minimalism is
usually best avoided.
Chinese users typically
express a preference for
more on-page information
than Western
counterparts.
CHINESE INTERNET USAGE
DESIGN PREFERENCES

12. Face remains important in
Chinese culture.
Online trust factors are
key to success.
After care is highly prized
in China – consider
covering it prominently
on your site.
CHINESE INTERNET USAGE
ECOMMERCE - CONSUMER TRUST

13. Brand equity is
particularly important in
the Chinese market.
Marketing products in the
correct channels is
crucial – e.g. a luxury
brand may be unsuited to
promotion via a site like
Etao.
CHINESE INTERNET USAGE
BRAND EQUITY

14. Consider repatriation of
funds and Chinese
character compatibility.
Local shopping portals
tend to be more trusted
by consumers.
Trust, marketing and
logistics are the biggest
challenges.
CHINESE INTERNET USAGE
ECOMMERCE - CHALLENGES

15. Your model will influence
how you get your
products to consumers,
e.g. bonded warehouse or
item-by-item.
Who will pay customs
charges? You or the
buyer?
CHINESE INTERNET USAGE
ECOMMERCE - LOGISTICS

16. Trademark protection is
not difficult.
First to file system.
Be prepared to enforce
your trademark rights.
CHINESE INTERNET USAGE
TRADEMARK PROTECTION

17. Internationally-known branding and superior
craftsmanship are now among the top three
luxury buying factors.
RESEARCH
McKINSEY INSIGHTS CHINA 2011
“
”

18. 21% said a luxury brand
should be niche.
40% said a brand needs
to be well-known to be
considered successful.
64% would be prepared to
pay more money for a
brand’s products if the
brand were popular.
RESEARCH
KPMG CONSUMER STUDY

19. Analytics suites such as
Baidu Tongji are similar
to Google Analytics and
can give you excellent
insight into user traffic.
Baidu Tongji still provides
keyword data; something
that has been stripped
from Google Analytics.
RESEARCH
ANALYTICS

20. Discover user
requirements with high
quality, actionable market
research and
benchmarking.
Organisations such as
Comratings, the CBBC or
UKTI may provide
assistance.
RESEARCH
KNOW YOUR MARKET

21. Popular Chinese retail
sites include Tmall,
Taobao, VIPStore, 360Buy
and others.
ECOMMERCE
SHOPPING PORTALS

22. Most of the popular retail
sites offer optimisation
tools and services,
allowing users to reach
more customers, more
effectively.
ECOMMERCE
SHOPPING PORTALS

23. Decision-making process
is the same in China.
Direct engagement,
generation and sharing of
content (funny /
interesting / useful) that
has value.
SOCIAL MEDIA
PLATFORMS AND STRATEGY

24. Is your target market
using social media?
Which specific platforms?
E.g. Weibo, Renren,
WeChat.
SOCIAL MEDIA
PLATFORMS AND STRATEGY

25. Many leading Western
brands engage effectively
with Chinese users via
social media.
Dior has 960k followers
on Weibo, posting
product updates and
videos.
SOCIAL MEDIA
ENGAGEMENT

26. The most popular social
activities for brands in
China are:
• Polling / voting
• Coupons / discount
codes
• Brand discussion /
sharing
SOCIAL MEDIA
ENGAGEMENT

27. Have a clear strategy –
know the goals of your
campaign and how they
will be achieved before
starting.
RESEARCH
KNOW YOUR MARKET

28. Specialists in Chinese
market consultancy, web
development, eCommerce
and digital marketing.
Richard Unwin (Director)
richard@backboneitgroup.com
Tel: +44 (0)1524 65533
Twitter: @BackboneIT
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