Overseas expansion is an exhilarating prospect for many businesses — and a pressing, sometimes daunting reality for others. Utilizing partners and distributors is a tried and tested method of expanding a company, both internationally and domestically. However, counterfeiters can create serious problems for authentic businesses and compromise relationships with distributors, retailers, and other partners.
- How to successfully and safely expand into Asia
- Pre and post-expansion measures to consider before taking your business to China
- Core cultural differences between the Western and Asian markets
China is the fastest-growing and largest ecommerce market in the world and represents a huge opportunity for many businesses. French jewelry house and Red Points’ client, Les Néréides also seized the opportunity to enter this huge market to expand their target audience.
“We found our first counterfeit in China even before we opened our first store”
Head of ecommerce / China & Japan Sales Manager chez Les Néréides & N2
However, before even entering the market, Les Néréides was already confronted with existing counterfeits online. Overwhelmed by the different regulations the renowned jewelry house was looking for an effective solution to fight bad actors.
“We tried a few other solutions to fight counterfeits, but until Red Points, most of them didn’t bring any concrete results. With the Red Points team, for the first time, I had someone in front of me who had answers to all my questions”
Head of ecommerce / China & Japan Sales Manager chez Les Néréides & N2
In order to launch your business successfully overseas like Les Néréides, when expanding into China and other East-Asian countries there are many nuances and considerations to have in mind.
Have a look at our top 7 insights by Lilla Berdi, Platforms and Policy Operations Specialist APAC and China in Operations at Red Points.
7 THINGS TO CONSIDER WHEN EXPANDING INTO CHINA
1. Not registering your IP rights early on
Without registration in China, there is little that can be done to protect your IP
When registering your trademark name and logo in your respective country, you should also consider already registering it in China. Even though you can do the registration through the Madrid Protocol, it’s probably not going to be enough in China. There’s a huge importance of the so-called “red stamp” and it is recommended to register straight in the Chinese Trademark Office, this way you can also protect yourself from trademark-squatters.
If you decide to register, you should not only register your trademark in your own language, but also consider finding the Chinese translation and the phonetic equivalent of your brand.
2. Undermining the importance of document localization
All business licenses need to be translated in either English or Chinese
Due to the strict bureaucracy in China, many ecommerce platforms will reject your supplementary documents, like Business License, Letter of Authorization, if they are not available in English or Chinese. Furthermore there are differences in IP rights categorization in China, for example they separate Design, Invention and Utility patents. For design and utility patents you need a Patent Evaluation Report (or PER) without it you won’t be able to move forward with online enforcements of your rights. Acquiring these takes time so take these actions in a timely manner to be able to attack the Chinese market with full power.
3. Failing to establish a strong online presence
Bank cards are a thing of the past for online shopping in China
If you are a foreign brand and want to enter the Chinese market the traditional Western way: setting up your own website with your products, with bank card and PayPal paying options and try to solve customer service through that platform, you’re likely to fail because that is not how Chinese people connect with brands. Say hello to WeChat. People don’t use individual platforms anymore, they want to find all products and brands within their social media and ecommerce apps, so opening your own store on sites like JD Worldwide, Kaola, Tmall Global where consumers can pay with WeChat pay or Alipay is the key to success.
4. Overlooking the power of social media
Social media is even more powerful in China than in the West
Some might say if you don’t have WeChat, you don’t exist. Everybody has it, from elderly people to children, if you have a phone, you have WeChat. It is best to register your brand there as a so-called mini-program so you can send daily messages to your followers, keep them up to date and make your shop available within the app. There are many other versatile social media platforms,like Xiǎohóngshū (RED or Little Red Book for us westerneers) that started off as a social media/blogging platform and ended up also being an eCommerce site. Like in the rest of the world, the commercialization of Influencer marketing is huge in China. bloggers talk to their audience through video-sharing social media apps like Tik Tok or Kuaishou.
5. Glazing over the cultural differences
80% of online sales happen through mobile phones
Do not underestimate the power of mobile phones, they are crucial for all age groups in China. As cities are unimaginably big, a high number of the population commutes daily and to pass the time on the subway, they look for products and services they can purchase.
There are new platforms surfacing from one day to the other, generic and very specialized ones, for only sneakers or only baby products, and they are becoming popular overnight; China is a very dynamic economy.
Another cultural difference is the paying behaviour. Chinese consumers use Wechat pay or Alipay. For this, you need to register your brand in advance to have access to these online payment methods.
6. Not keeping up with industry trends
Keywords change everyday
Despite having in mind those five previous points you still cannot lay back and enjoy your company's growth in China. You have to consider that counterfeiters are very quick to be creative when it comes to up and coming brands. Keep an eye out for the new trends of online infringing, because keywords change every day so people who want to buy fakes can get away with it easily. Make sure to keep reading social media posts and reviews, keep actively communicating with your consumers, as they can also flag things to you.
7. Not considering local partners
Having local contact points is crucial
As we have mentioned in our first point, the help of local lawyers and consultants is very important pre-expansion, but post-expansion you should also think about partnering up with local companies or individuals to help you with potential offline investigation or to assist you with test purchases, as many eCommerce platforms require test purchase to be able to take infringements down.
Entering the Chinese market can feel overwhelming for many businesses so it is critical to understand the complexity of the market, the cultural differences, legal requirements, marketing channels and the consumers’ buying behaviour.
Even though there are many challenges to be faced, the increased consumer spending power and market opportunities makes it worthwhile for many businesses to make the move.
To find out more about Les Néréides’ success story entering the Chinese market watch our Webinar.