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Strategy Centre

IRP Commerce Trade Mission to China

  
20 December 2017
  
IRP Commerce Trade Mission to China

At the end of October 2017, the IRP Commerce and Export Technologies teams undertook a joint ten-day exploratory trip to China and Hong Kong to better understand the opportunities in the Asian ecommerce market.

This article shares our experience and some of the key findings and contacts made from the trip.

Why so far, why China, why IRP?

Good question. Why was it necessary to travel halfway round the world just for a bit of research? Why bother?

To answer this question, as is more often than not the case when we're asked why we do things in IRP Commerce, our reasoning always comes back to SALES for the IRP customer base.

As a company, and given our tight business alignment with our client base, we're always keen to invest in research and development where we see it can have a significant impact on the final sales and profits of our client websites. China and HK is as excellent example of this. Over the course of 2017 we've seen the gradual rise of sales on IRP client websites directly into Asian markets. This trend has only got stronger as the year has gone on and confirmed to us here in IRP Commerce the enormous potential of these markets.

We believe that the IRP is the most internationalised ecommerce platform available for the mid market — as demonstrated by sales to over 180 countries for IRP clients in the last 12 months. With the rise of direct ecommerce sales to China on IRP technology — and with Brexit firmly on the horizon — this trip to China became a vital part of IRP Commerce's strategy for 2017.

As evidenced by IRP client growth rates, there is still plenty of expansion to be found in ecommerce in the West. However, the ability to completely disrupt a market in ecommerce — as IRP technology did in the bike industry — is much more difficult than it was ten years ago.

As Western ecommerce becomes established and mainstream, major opportunities to disrupt and create rapid and sustained growth are to be found in understanding the concise mechanics and dynamics of the Asian market. The aim of this trip was therefore to establish the contacts and knowhow for the 'IRP Ecommerce Pivot to Asia' project.

Trade Mission Goals

As stated, the aim of the Trade Mission was twofold: to establish contacts and knowhow.

Contacts

Understanding the technical requirements for market entry and localising websites is a key part of the ecommerce equation, but it's not extremely useful if you're not then able to drive additional traffic to your websites from the counties you have optimised for.

As such, you need marketing. And the best way to be successful is to work with localised partners and experts in these fields. The IRP network currently comprises many service providers, and many experts in digital marketing, but at this stage we don't yet have any in our network that are focused on the Asian markets. One of the keys to this mission was making the local partner connections that can help our IRP clients expand their traffic and customer base these areas.

Over the course of our ten-day mission we visited three cities, had twelve face-to-face meetings, two networking dinners, one trade show and a whole lot of rice!

Our meetings can be divided into two main groups: Technical Solution Providers and Digital Marketing Agencies.

We've summarised each company we met below. Where possible and appropriate, all companies are in the process of signing up to the IRP World. Please get in touch with your Account Manager for more detailed analysis and insight into how each company could help your business expand sales in China and Hong Kong.

Technical Solution Providers

1. WalktheChat, Beijing

https://walkthechat.com/

  • What do they do?
    • China focussed Digital Marketing – WeChat page setup and social and organic brand building.
    • China-focussed ecommerce platform.
  • Key Areas that work well
    • Homeware, Mother & Baby, Fashion.
  • IRP Summary
    • Potential IRP Commerce Partner for WeChat payment and marketing.

2. Valoot, Hong Kong

http://www.valoot.com/

  • What do they do?
    • WeChat payment systems, including WeChat website payment, WeChat page payment and in-store QRs.
    • WeChat page setup.
  • IRP Summary
    • Potential IRP Commerce Partner for WeChat payment.

3. TMO Group, Shanghai

https://www.tmogroup.asia/

  • What do they do?
    • China Ecommerce Consultancy.
    • 'Shop Now' – proprietary ecommerce platform.
  • IRP Summary
    • Potential IRP Commerce Consulting and Technology Partner for China-specific sales development.

Digital Marketing Agencies/Networks

1. Gridsum, Beijing & Shanghai

http://www.gridsum.com/en/

  • What do they do?
    • Baidu, Sogou and Shenma SEM/Display Advertising.
    • Proprietary Cross Network Analytics and SEM management tools.
  • IRP Summary
    • Excellent option once a company has proven itself in China and wants to expand via Baidu.

2. RebatesMe, Shanghai

http://www.rebatesme.com/

  • What do they do?
    • Cashback Affiliate site.
    • Portal Display Advertising.
  • IRP Summary
    • Could be a great and risk-free intro into Chinese (and USA) market through current Affiliate Networks, e.g. Affiliate Window.

3. Higou Accel Ecommerce, Shanghai

http://www.higou360.com/en/index.html

  • What do they do?
    • Digital Marketing for UK sites in China.
    • Affiliates – they work with partners who will target customers by behaviour. Generally work off a CPM or CPC model.
    • Create Tmall Global Websites for International brands looking to sell into China.
  • IRP Summary
    • Specialists in creating local shop fronts and driving traffic to them. Good option for experienced Chinese sellers looking to expand operations.

4. Qihoo 360, Hong Kong

Search Engine and AntiVirus giant — https://www.qs-search.com/

  • What do they do?
    • Quihoo
      • Anti-Virus – Free Browser.
      • App Store.
      • Search Engine and Portal.
    • Hong Kong Branch — SEM Advertising
      • Search Insights.
      • Direct Campaign Assistance, set up and management of Chinese campaigns on qihoo360.
  • IRP Summary
    • For a first trial on China SEM, this is a direct link with the Search Engine and could be an excellent place to start.

5. BMG (Beyond Media Global), Hong Kong, Shanghai

https://www.bmgww.com/pages/work-ppc/

  • What do they do?
    • PPC (core specialism).
    • Branding, SEO, Social Media.
    • Content creation and localisation.
    • Community management.
    • Run PPC campaigns in HK and USA. Can do UK, FR and ES.
  • IRP Summary
    • International Agency with European offices (Barcelona). Potential as an excellent all-round service for entry into HK.

6. I-Click Interactive

http://www.i-click.com/solutions/

  • What do they do?
    • Display Ads.
    • Facebook Ads.
    • PPC.
    • Can provide translation and localisation services.
    • China and HK.
    • Massive DATA gathering and market intelligence for enhanced targeted campaign audiences and improved ROI.
  • IRP Summary
    • Pure Multichannel HK and China Digital Marketing Solution. Excellent choice for larger budgets.

7. HttpPool

http://www.httpool.hk/about/

  • What do they do?
    • Cross Channel Ad network – Display, video, Social Media, PPC + multichannel.
    • Localisation and translation services.
    • WeChat Ads
  • IRP Summary
    • Good all round HK and China proposition. Offices in Europe (East) too.

Please get in touch with your IRP Account Manager for more detailed analysis and insight into how each company could help your business expand sales in China and Hong Kong.


Knowhow and Key Takeaways

The IRP already allows for easy country customisation, localisation and translation for quick access into markets and we've been able to take advantage of these features over the past months to improve conversion rates for client sites with growing followings in Asia. However, for us it's still vital to understand first-hand the specific local habits of consumers and ecommerce.

Over the course of our meetings in China and Hong Kong and many discussions around ecommerce habits and requirements, we were able to distil down our findings into a number of key points. These are outlined below.

Tech and Logistics

Direct Shipping

This is an excellent first stage solution for testing the Hong Kong and China markets. It's important to partner with the correct logistics company that will provide an end-to-end solution for customs declarations and that will ensure local couriers and local parcel tracking codes for the final leg of delivery.

It's important here that your provider uses 'Postal Clearance' as opposed to 'Commercial Clearance' to enter China. This will ensure that 99% reach their final destination without additional tax charges to the end customer. They should also receive a 'Departed UK' stamp.

The leading UK company providing this service is P2P: www.p2pmailing.co.uk.

Cross Border Commerce

This is a phase 2 approach to the Chinese Market, only recommended once you have built up significant sales volumes via Direct Shipping.

Warehousing and Logistics solutions are required if you are to fully engage in cross-border ecommerce selling in to China.

This generally means Bonded Warehouses. Once this solution is set up correctly, it will ensure that consumers make significant tax savings — e.g. 11.9% on cosmetics.

Payment

AliPay and WeChat cover 95% of the market. At least one, and ideally two of these methods is essential to do business in China. With the latest release of the WorldPay Integration and Alternative Payment Methods on the IRP, Alipay will be released in Q1 2018 as option on IRP sites. Contact your IRP Account Manager for more info.

IRP Commerce are now studying the options for WeChat payment integration using partners met on this Trade Mission.

UnionPay — Core provider of credit cards — this Credit Card option is a must for Credit Card payments in Asia and should be activated on your WorldPay account if you're looking to do business in Asia.

Hosting

Servers located in China (even the region within China) make a big difference to performance. Foreign servers will have slower load times and in some cases will be blocked by the 'Great Firewall of China'.

This is a significant operational move, again only to be researched once serious sales numbers and bonded warehouses are being set up in China. In the short term, the option of adding a CDN (for local content delivery from the Asia region) to your IRP hosting license can be discussed with your Account Manager or your SI sales team.

Business Regulations in China

An ICP License is required to host a website in China. This is to be considered only if cross-border and Chinese hosting is required.

Strategy

Hong King – Gateway to the East

There are so many mainland Chinese visitors to HK, that when they see a brand in HK it adds a 'Western' validation to the brand credentials. This will enhance trust and lead to Chinese mainland demand generation.

Hong Kong is also accessible through western advertising channels and in English, making it an excellent place to start your 'Pivot to Asia'!

Brand Presence

This is important to be able to succeed. If you sell well-known brands, conversion should be much higher. Own-brands will have to build their presence via social pages and HK traction to enable good ROI on Chinese advertising spend.

Languages and Localisation

Simplified Chinese is a must for any substantial sales drive into China.

English will work OK for HK but banners and key USPs should be in Traditional Chinese.

All banners and USPs should reinforce the fact that you accept local payment methods and that goods are 'Departed UK' and use local couriers and tracking.

Traffic Channels

Google and Facebook

Excellent coverage in HK.

Google Remarketing — this actually works in China and is more reliable technology than Baidu's equivalent, so is often used by agencies.

It's worth checking with your Google PPC agency whether this can be activated.

Baidu

Baidu is the Google of China. The fact that China is so big makes Baidu so big and a potentially very costly marketing exercise for any would be marketeer. It's very important that this is approached with caution and very specific (city-centric) targeting in order to limit spend.

WeChat

This is what we know as Facebook, Google, WhatsApp, Amazon, eBay, Ticketmaster, Expedia, PayPal etc. all rolled into one. It can be used for payment, free or paid, social media, mini ecommerce sites, tickets, bills, flights — pretty much anything. For companies looking to build up a presence in China, a company page on WeChat is essential.

Company pages can be from registered Chinese entities, or as an 'overseas' account from foreign business. Both are good options, but for your page to be displayed to the Chinese consumer in China, you need a Chinese WeChat company account. This is two or three month setup process and is complicated. Some of the partners we met in China can provide this service. NOTE: If you use a 'business license provider' you must check that the partner gives full access to the rights, data, followers, and so forth.

WeChat Ads are an option that can be set up with a simple advertiser account — therefore there is no need to set up a company in China to access this channel.

Tmall and Other Shop Fronts

The large majority of direct-to-the-consumer ecommerce sales in China are transacted on 'mini sites' or shop fronts on the various big player marketplaces. Own-brand websites are a secondary and more 'branding-focused' venture. The high volume takes place on the likes of Tmall.

The feedback we received is that it's difficult for standalone websites in China to compete on the same scale as these giant marketplaces. So much traffic goes through Tmall or WeChat or JD stores that custom individual websites will for the most part make up less of a percentage of overall sales than their Tmall counterpart.

Marketplaces are the first stop for specific products but are very expensive and competitive in terms of advertising budget.

WeChat stores are better for brand demand generation, content creation, influencers, and building your WeChat and China presence.

Key Influencers (KOLS)

These individuals have massive traffic-driving and revenue-generation power in China. They generally charge a fixed fee to promote a product. This can be expensive but choosing the right partner can literally exposes your brand to millions of consumers overnight.

Brand Ambassadors are sometimes a cheaper option.

Key Trends

Banners and Ad Formats

Audience preference is different — Chinese customers prefer to have lots of text in ads. This takes up a large percentage of the image. Different ad formats and sizes — 6-7 aspects/versions.

Special Promo Days

11th November — known as Singles Day or 'Double Eleven'. This is the biggest day for ecommerce sales on the planet and dwarfs anything seen on Black Friday. Alibaba recorded $25.3billion in revenue on their platform alone on this day in 2017!

18th June — known as JD singles day or 618. As with Alibaba Singles day, many other merchants have started giving discount on this date.

Mobile

+80% Chinese users shop by mobile device.

Social Logins vs Email

Chinese consumers don't use email as a login or reference. All is generally done via a native app or social login e.g. WeChat, QQ, Alipay.

QR Codes

Used for everything in daily life — website links, sharing, hiring bikes, paying for gas, fruit, veg, beer, you name it!

And that's it! We hope this article serves as both an interesting overview of our latest trade mission to China, as well as a useful reference to key trends and findings coming out of Asia in 2017.

At IRP Commerce we will continue to strive to provide the best in research and development and to provide the tools for all IRP Customers to take advantage of the opportunities that present themselves in global ecommerce.

For more detailed information and guides on taking advantage of the opportunity HK and China, please refer to the upcoming Strategy Centre article Step by Step Guide to Growing Sales in Hong Kong and China.

Comments

Anonymous - Very informative.... presents a major opportunity
20 Dec 2017 17:23
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