Factors to consider when selling to China

The Chinese economy has been growing fast since the last couple of years which creates many opportunities either offline or online. Many entrepreneurs with online businesses are therefore pushing their products or services to China. However, understanding the Chinese mentality is vital. Languages, prices, quality, quantity, payment methods and regulations are factors entrepreneurs must consider before they set up selling strategies to China.

Chinese have hundreds of languages and dialects. The most common spoken language in mainland China and Taiwan is Mandarin, while in Hong Kong it is Cantonese. However, the written language for mainland China is simplified Chinese fonts and for Hong Kong and Taiwan are Traditional Chinese fonts. Below are the official languages in each of the 3 regions:

• Mainland China: Mandarin in simplified Chinese fonts
• Taiwan: Mandarin in traditional Chinese fonts
• Hong Kong: Cantonese in traditional Chinese fonts

Slangs and localized terminologies also make communications trickier. For example in recent years, Cantonese fonts and localized terminologies as written language have been implemented into traditional magazines and newspapers of Hong Kong. In mainland China, people tend to browse web sites in their own language. Therefore, creating a language-specific website with localized designs is absolutely necessary before entering the market.

In Hong Kong, 80% of 7 million populations are fully connected to the Internet. It seems sensible to especially develop a Cantonese (in Traditional fonts) website to serve Hong Kong consumers. However, the truth is that the online populations in Hong Kong that are interested in your products are mostly well-equipped in understanding English. Comparing to the 130 million online populations in mainland China, 7 million is in fact really small. In this case, entrepreneurs could have well-spent their time and effort on either improving other qualities of their products or targeting other potential consumers.

The low margin with high volume strategy works especially well in mainland China. The majority of the online populations have limited purchasing power due to the much lower average income comparing to their Western counterparts. It makes no sense if the average price value of the items on your Ecommerce web site is over US$1000 for instance.

Chinese people can be very sensitive when it comes to spending. Prices do matter a lot to them and they are not willing to pay an extra cent if it is not absolutely necessary! Also, due to local competitions and availabilities of virtual anything, they are highly likely to buy from whoever wins the ultimate price war. Sometimes even prices from the largest online Ecommerce sites such as Amazon or eBay are not competitive enough.

A lower average item price value which can target a wider range and larger number of customers is important.

In a country that cash or debit cards still form the majority of transactions in retail purchase, China’s largest B2B site Alibaba introduced an online purchase mechanism Alipay especially for the use of Chinese online consumers.

In countries that have different cultures to the Western countries, following local regulations is important. One must accept that there are always certain products or services in which entrepreneurs are forbidden to actively promote. For example, Google also has to comply to the local censorship by filtering some of its search results.

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