With years of impressive economic growth, China is seen as an El Dorado for international companies, becoming the world’s second-largest market after the United States. A decade ago, China was considered a world manufacturer with millions of workers and cheap labour.
However, China has evolved its activities, especially in promising and innovative areas such as new technologies and data science. As the purchasing power of China’s tech-savvy population continues to increase, more and more foreign companies try to enter the market and gain Chinese consumers every year.
Nonetheless, it would be helpful if you considered that foreign brands could no longer monopolize the Chinese market, as competitive Chinese brands are ready to take a piece of the pie.
Therefore, having the right strategy is essential to successfully exporting to China. In this article, we’ll give you all the keys to exporting your products in China smoothly, as well as some tips and advice from SENCENT’s experts.
China - One of the Most Dynamic Markets in the World
China has been one of the fastest-growing markets for overseas brands in recent years. In fact, as the demand for higher quality and premium goods continues to grow, innovative services such as digitalization are paving the way for emerging trends.
For example, with urbanization and rising disposable incomes of consumers seeking new experiences and new culinary flavours, the Chinese have become one of the most valuable customers internationally today. Before entering this thriving market (Chinese domestic vs international companies) with fierce competition from many players from across the globe, it may make sense to do preliminary research on the Chinese market itself.
Why Should I Choose China to Exports my Products?
With over 980 million people connected online in China, e-commerce is an industry that has grown dramatically over the past few years and will be even more promising in the years to come after the Covid-19 outbreak. In addition, consumer spending in China is expected to triple to more than 8.5 trillion USD a year by the end of 2025. China is ideal because it is the place to drive growth, even after COVID-19 has affected many businesses.
Also, as purchasing power increases, Chinese consumers are more tended to spend more on oversea products that are considered to be of better quality. The Chinese market is shifting from an investment focus to a consumption-led market. Still, entering this huge market can present challenges for foreign companies.
In order to seize all opportunities and avoid the pitfalls of a competitive Chinese market, extensive research is necessary. In fact, some sectors of the economy are closed to the outside world by the Chinese government (Don’t hesitate to get in touch with SENCENT for more information about specific sectors).
In addition, even though the government of China has taken steps to curb corruption and lack transparency in commercial practices, they are still seen as serious obstacles for foreign companies.
What Products Are Suitable for Export to China?
In fact, there are many favourable sectors and opportunities for overseas brands that want to enter the Chinese market. A few years ago, it mainly depended on what market you wanted to target. For example, the sectors in northern and southern China are different. Nowadays, thanks to Chinese cross-border e-commerce, you don’t have to focus precisely on a particular region, as it is accessible all over China.
Beauty Products and Personal Care
China is the new powerhouse in the world beauty industry. The population of 1.4 billion people and burgeoning use of e-commerce platforms have made it one of the most profitable markets for cosmetics brands, who see China as an opportunity to multiply their business exponentially.
In 2019, compared with 2018, it increased by 13.8%, and the value of China’s cosmetics market exceeded 477 million RMB. On the other hand, as of April 2021, the monthly retail trade revenue of cosmetics in China has reached 27.22 billion RMB, accounting for 340 billion RMB in 2020.
Although overseas brands had relatively little competition with Chinese companies a few years ago, the market has become more competitive with the increase in the popularity of domestic brands such as Perfect Dairy.
As local brands win the market daily, overseas brands must now be more advanced and offer high-quality products to stand out from their competitors. The days when being a foreign brand was the gold standard is over.
Skincare products are also very beloved in China, both men and women, and the market size is expected to reach 393.63 billion RMB by 2025. China’s beauty industry has been recovering rapidly since the COVID-19 pandemic.
Despite lower revenue from 2020 due to lower product sales, consumers are now more concerned about their skin condition than ever and have a deeper interest in skincare products. So if you focus on beauty and skincare products, as long as you are motivated and ready to adapt to the Chinese consumer, the market is waiting for you.
Fashion
China has been the world’s largest clothing manufacturer and exporter over the last decade, but its role in the fashion world hasn’t always been as strong. After China joined the WTO and cancelled the textile quota agreement in 2000, the export of clothing increased greatly!
Today, they account for more than half of global production and 30% of all clothing sold globally. But the Chinese are now more tended to buy clothing from well-known oversea brands, where the concept of face and appearance dominates.
The more expensive and fashionable their clothes are, the more tasteful they are, according to Chinese society. Also, fashion is interested not only in brands targeting female customers but also in those that focus on menswear, which is a growing trend in China.
In conclusion, if you want to sell fashion products to China, you should seize the opportunity, but don’t forget that Chinese consumers are very reluctant to purchase brands they have never heard of, so it is essential to develop their online products. It also enjoys a high reputation before entering the Chinese market.
Food
China’s imported food industry is a profitable and dynamic market. As the middle class rises, so does China’s demand for imported goods and their demand for exotic products such as cheese, milk, chocolate, etc. As China’s economy continues to grow, a lot of Chinese are increasingly aware of the potential dangers in their food.
With this new awareness comes a desire for imported brands, which are generally considered safer. The younger generation’s shift towards Western brands rather than domestic brands has also contributed significantly to the growth in the consumption of imported food in China.
Bottled water is also popular in China because it has several benefits, including being free of bacteria and other harmful substances that can be found in tap water. Bottled water sales have increased in recent years, which can be explained by rising food safety standards and the numerous scandals annoying China’s F&B industry.
The bottles are suitable for all ages (kids are able to use them with their own straws) and are perfect for those on the go. If you go to China one day, most Chinese citizens will say they never drink tap water, not even boiled tap water, because it is considered to be polluted and harmful to their health.
In fact, according to Statista, China will account for 20% of the global bottled water consumption market in 2020.
With 5% growth ten years ago and 9% annual growth through 2021, this phenomenon presents a very promising and profitable market for foreign brands slowly taking over the Chinese market.
China surpassed the US in 2013 to become the world’s largest bottled water market, with sales reaching 208 billion RMB ($32.6 billion) in 2019, up 9.5 per cent yearly. According to The Economist, between 2010 and 2015, bottled water in China increased from 19 billion litres to 37 billion litres.
Contact Us if You Want to Export to China
We help large international companies to SMEs to successfully enter the Chinese market in the best possible way. To this end, we have more than ten international experts who specialize in various fields, from food and beverages to alcoholic beverages, fashion, footwear, luxury goods, cosmetics, baby products, new technologies, etc. International experts, as well as local Chinese experts, know and understand the Chinese market.
With over 15 years of experience, SENCENT can help you identify your competitors and help you determine the most appropriate strategy in communication, advertising and marketing. Our services will shorten your time so you can focus on your marketing strategy with our marketing experts.
