When entrepreneurs look for practical business advice, they often turn to Melinda Emerson, a Philadelphia-based writer and consultant and the author of Become Your Own Boss in 12 Months: A Month-by-Month Guide to a Business that Works.
For three years, Emerson has been the host of weekly chats on Twitter about small business. Using the hashtag #SmallBizChat, she brings together a subject-matter expert and an eager audience full of specific questions.
Export Now CEO and founder Frank Lavin was the #SmallBizChat guest this week. Answering questions about exporting to China, Lavin addressed the benefits of e-commerce:
“E-commerce is a simple and efficient way to reach customers in new markets. The smaller the company, the less practical it is to learn a new language, deal with new tax codes and currencies and to take a huge global risk. E-commerce reduces those barriers and lowers the costs of entering a new market.”
Let us know what you think. Every day we provide more fresh information in our own Twitter feed: @Export_Now. Please join us on Twitter, on Facebook or write to our export advisors to have your questions answered.
Is your company ready for new sales to Chinese consumers? Is your company among those best suited for the e-commerce services offered by Export Now?
Consumer product companies that want a new sales channel to China are companies that will benefit.
Companies that manufacture or distribute specialty consumer products that stand out by virtue of quality brand attributes will benefit.
The products will be sold on the largest e-commerce site in the world, Taobao, which has 150 million active users.
China has an ambitious, hard-working middle class with a strong appreciation for American consumer products. Chinese consumers aspire to the world-class quality they associate with top brands. Urbanization has pushed the population into cities and now more than half of Chinese live in urban areas. Five cities — Chongqing, Shanghai, Beijing, Guanzhou and Tianjin — each have populations of more than 10 million and another 150 Chinese cities each have populations of more than 1 million.
The American lifestyle and its association with American brands attracts Chinese consumers. Small and mid-size businesses do best with premium and novelty products, items that Chinese consumers will associate with quality attributes.
Some of the first products presented in the Export Now storefront on Tmall include these:
* Top-quality backpacks from Osprey.
* High-performance sunglasses, goggles and helmets from Smith Optics.
* Competition-level skateboard wheels and other skateboard equipment from Bones.
Some categories that draw particular interest are baby items that speak to the Chinese focus on education and safety, automotive items that appeal to car aficionados, and luxury home and beauty items.
Companies that are ideal partners for Export Now are companies that attract consumers with quality goods and not by focusing on bargain pricing. Companies that are the suited for entering the Chinese e-commerce market are companies that emphasize a brand or product attribute that is well respected by consumers.
Have a question? Click to contact one of our Export Now advisors.
On the heels of the successful ‘Empty Cities’ ad campaign, Taobao Mall is hoping to increase its share of the Chinese B2C (business to consumer) market with a new marketing strategy.
The ‘Empty Cities’ advertisements imagined a world where shoppers have fled from the busy shopping streets of major cities like Beijing and Shanghai to the convenience of their personal computers. The campaign’s motto “没人上街，不一定没人逛街” – roughly translated to, “no one on the streets, doesn’t mean no one is shopping” – expressed the ease of shopping online and its increasing popularity among Chinese shoppers.
Below is the original advertisement:
Similar campaigns were used in Europe and the United States during the 90’s, but unlike China, it would be almost impossible to imagine the luxury shopping streets of London and New York City completely abandoned. The lack of a dominant physical shopping infrastructure in China makes it a little more believable that Chinese consumers would retreat to their computers in search of better deals and more options. Because Chinese consumer culture is relatively new, the idea of “going out shopping” isn’t as big a draw, and companies are investing less in setting up large luxury stores and more in establishing a strong presence online. This has led to the incredible growth of e-commerce in China, and makes the ‘Empty Cities’ campaign particularly relevant.
TaoBao Mall has recently released its new ad campaign that emphasizes the luxury brands that can be purchased at the online mall.
Here is the new advertisement:
Taobao Mall hopes both campaigns will help solidify its dominance in the online shopping market. By effectively emphasizing convenience and the availability of premium brands, TMall will continue to lure Chinese shoppers off the streets and online.
With an explosion of growth in China’s e-commerce world, the Chinese consumer is as accessible as ever. Taobao, with a 30% share of the e-commerce B2C platform market in China, has proven that TMall is as appetizing to businesses interested in exporting as it is to Chinese entrepreneurs.
Gap Inc. has recently shown its intentions for expansion in China by tripling the number of stores it operates in mainland China. But the prospect of new Chinese customers is not the only driving force behind this decision. Gap has experienced a decrease in sales in North America over the last couple years and is looking to make up lost territory in the much more reliable Chinese consumer market. Starting with its lowest priced brand, Old Navy, Gap hopes to edge its way into the Chinese economy and establish the trade mark as common addition to the Chinese wardrobe.
The double edge of the B2C platform and e-commerce accessibility has taken its toll on Apple. Xiaomi, a cheap cellular alternative to Apple’s iPhone has grown in its Chinese popularity and been dubbed the “iPhone killer.” On TMall, the new Xiaomi reached its 300,000 preorder limit in just 34 hours. One can only speculate what the numbers will be once the phone is released, with preorder numbers being resold on Taobao and other e-commerce websites at higher prices. If the Chinese market is going to be accessed by foreign business, companies can’t sit on their hands and expect their international reputation to bring the sales to them. The initiative of Gap and the troubles faced by Apple are great lessons to take into consideration for any business looking to export to China. Selling a product internationality does not simply happen, it is the result of precise planning and even more nuanced execution.
Baidu is China’s leading search engine with a nearly 80% market share of online search engines in the country. Alibaba is looking to loosen Baidu’s foothold with ETao.com, which will provide Chinese “netizens” with a vertical e-commerce search engine while simultaneously boosting sales for the already successful Taobao B2C platform, which along with other Alibaba subsidiaries accounts for a 90% share of the e-commerce market in China.
Alibaba has already seen results. Baidu recently retracted its proposed launch of “Youa,” an e-commerce site that would have directly challenged Taobao.
While Taobao secures it position as the most successful B2C platform, other e-commerce sites wage a different war. As Dangdang, 360buy and Amazon all claw for the top position in Chinese e-commerce, a “price-slashing” battle has begun. Dangdang recently congratulated itself on “Beheading operation” that cut prices on the site to a level that undercuts many competitors. Others have followed this very same path, with 360buy attacking Dangdang by selling books online (an important product for Dangdang) at a price that almost ensures little to no profit.
If profit is not the motivating factor in this battle, what is? The answer is clear: the larger the market share an e-commerce platform can garner will result in exponentially greater future profits. So, while e-commerce sites compete now, it is the consumer that wins out. Let it be noted that despite this struggle, Taobao still maintains an estimated 20% lead in market share for e-commerce. Alibaba couldn’t be happier.
According to Forrester Research, China’s total web sales are expected to hit a peak of $160 billion in 2015, a promising prospect for U.S. exporters. Currently, Alibaba’s Taobao.com and B2C platform TMall.com are the biggest players in Chinese e-commerce. As a response to pressure from TMall.com, many Chinese e-commerce companies are planning to garner large US IPOs to help them compete in the market.
360buy.com, with its B2C platform Jingdong Mall, is trying to raise $4-5 billion with its IPO to U.S. investors. This ambitious goal would set a new standard for IPOs by Chinese e-commerce businesses. 360buy.com is not the only company hoping for a large IPO. Vancl.com, China’s largest online clothes retailer, is rumored to have an IPO of $1 billion to be backed by investors including IDG Capital Partners, SAIF Partners and Qiming Venture Partners. Xiu.com, the e-commerce luxury goods B2C platform, also plans to list a 2012 U.S. IPO and already raised $100 million from Warburg Pincus and venture capital firm KPCB China just last August.
IPOs are essential to these companies because of the competition they face. The Chinese e-commerce market has exploded in recent years, facilitating growth and entrepreneurial diversity. But the unquestionable top dog in the Chinese e-commerce world is Taobao, which has dominated Chinese e-commerce with its incredibly successful B2C platform TMall.com. Taobao is expecting to handle over $150 billion in online transactions in 2012 and has a 31% hold on the B2C market. After incorporating the new Alipay system, weaning itself off of Ebay’s Paypal, TMall seems set to continue its reign as the most successful e-commerce B2C platform in China. Regardless of ambitious IPOs and even more ambitious companies, such as 360buy.com, the simple truth remains that Taobao is the most effective way for a US exporter to reach the massive e-commerce consumer base in China.
AmCham Shanghai hosts representatives from Export Now and Taobao to Share Experiences on E-commerce and Exporting
So, you’re an American company and you want to export to China.
Well, desire is a good start, but with such a competitive e-market and a challenging logistics environment, desire is not enough. To export to China, a business needs not only to be able to understand the Chinese consumer, but also needs to navigate the bureaucracy of the Chinese government, confront the challenge of getting a product to Chinese consumers effectively and quickly, and most of all needs to find a market niche which can facilitate growth. Obviously this is a complex affair that most American small and medium businesses have difficulty with, to put it lightly.
However, there is help available to small and medium businesses with such aspirations. Frank Lavin is the founder and chairman of Export Now, a company that helps U.S. firms sell directly on TMall, one of the most popular B2C trading platforms in China. Previously known as “Salesmen-in-Chief” during his time as Undersecretary at the U.S. Department of Commerce, Frank and Export Now can provide small and medium businesses with the guidance and information necessary for successful expansion into the Chinese market. Frank Lavin and Justine Chao (Senior Manager of International Business at TMall) will be hosted by the American Chamber of Commerce in Shanghai to share their experiences on how to take advantage of the most powerful e-commerce platform in the world with the help of Export Now. Any small and medium business with a longing glance cast on the potential of the Chinese consumer market should take heed of this.
For more information, visit: American Chamber of Commerce in Shanghai