Set-Up-Company

As part of the Chinese government’s plan to open up the economy, many free trade zones have been developed across the country. The Shanghai free trade zone (FTZ) in China is yet another pilot project that aims to modernize particular industries and revitalize the economy.

If you’re a foreign investor who’s looking to set up a company in China, it may be beneficial to consider the Shanghai FTZ as your base of operations. That’s why we’ve outlined a list of all the unique advantages that the Shanghai FTZ presents over other trade and customs zones.

1. Financial Reforms

Financial reforms within the FTZ allow businesses to establish WFOEs within a shorter time frame, get licenses for cross-border financial products with ease, and benefit from relaxed administrative controls.

All these reforms are intended to enhance the ease of doing business in China and ensure expedited operations.

2. Easier customs clearance

Previously, the complexity of China’s customs regulations meant that businesses would either move goods through Hong Kong or get deterred from doing business in China.

Realizing this problem, the Chinese government now allows companies within the FTZ to get quicker clearance of goods and materials at the customs center. This is designed to lower costs and complexities of logistics and ensure quicker movement of goods into the country.

3. Simplified administrative systems

Often, paperwork and unnecessary administrative requirements would bog down operations and scare away investors. At the Shanghai FTZ, administrative procedures have been drastically simplified. Even the process of applying and registering for space in the FTZ is now relatively straightforward.

4. Competitive regulatory and tax environment

New tax policies have been developed to support entrepreneurs and innovative business models. Companies can now decide if they want to pay taxes on the imported components or the finished goods. This is coupled with tax rebates in the FTZ to facilitate growing firms.

Need help setting up your business in Shanghai FTZ?

Business China has over ten years of experience helping investors navigate through local laws and cultural norms. Their wide range of services includes helping foreign firms establish companies in multiple Chinese free trade zones, including the Shanghai free trade zone and Zhongshan free trade zone.

When planning to start a business in China, one of the first things you need to decide is how to enter the market. Establishing a corporate entity in the country is usually done via three main company types:

·         Wholly Foreign-Owned Enterprises (WFOEs),

·         Joint Ventures (JVs), and

·         Representative Offices (ROs).

Each strategy has its own opportunities and drawbacks, and we’ll go over the basics of each so you can determine which one is right for your company.

1. Wholly Foreign-Owned Enterprises (WFOEs)

Establishing a WFOE in China is by far the most popular means of entry into the market. In this case, the investment is owned entirely by a foreign legal person and the company falls in the Limited Liability Company (LLC) category.

Minimum capital investment: In general, there are no minimum capital requirements unless the company is operating in a regulated industry (banking, insurance, trading securities).  

Types of WFOE: Depending on the industry, you must choose the type of WFOE you want to register. The three main categories of WFOE are Trading WFOE, Consulting WFOE, and Manufacturing WFOE.

Level of control:

With a WFOE license, you can employ local staff, issue invoices, legally occupy office spaces, and access grants and funds offered by the government.

2. Joint Ventures (JVs)

There are two options of Joint Venture for foreign investors:

·         Equity Joint Venture (EJV): is where profit and risk are shared in proportion to the equity of each partner in the EJV.

·         Co-operative Joint Venture (CJV): is where the profits are distributed according to terms in the contract rather than registered capital.

Minimum capital investment: There are no minimum capital requirements for JVs. However, China’s EJV law does mandate that the foreign investor should contribute at least 25 percent of the registered capital.

Level of control:

Level of control depends on the type of contract, but this is the favorable option when the local party has expertise in the industry and on the ground knowledge.

3. Representative Offices (ROs)

An RO offers a local window to foreign investors who want to carry out preliminary activities, such as market research, establishing partners, and building PR.

Minimum capital investment: There are no minimum capital investments, but local expenses must be shown as overseas remittance. The process is relatively easy and quick compared to setting up a WFOE in China or a representative office.

Level of control: The foreign party has control over activities but the scope of each activity is limited. An RO is not an independent legal activity and so can’t carry out any direct commercial activity.

Choose a trusted local consulting firm

If you’re looking to set up a representative office, start a wholly foreign owned enterprise, or register a company in China, it’s best to work with a trusted, local consulting firm.

With over ten years of experience, Business China has helped many foreign firms establish successful operations in China.

China’s transition from an agrarian economy to a rising technology powerhouse is, in large part, due to the tech-receptive audience in China. It comes as no surprise then that both brands and platforms are extensively incorporating VR technology to enhance the customer experience in the mainland.

While most countries have only begun to dip their toes in the virtual reality (VR) pool, China has been forging ahead, creating practical applications for the technology and forming a new market for virtual retail experiences.

With the VR market in China currently standing at an impressive 8 billion USD, there’s no doubt that VR technology will shape China’s retail space in the future. Foreign brands that are looking to set up WFOEs in China can learn from the successful implementation of VR by these firms.

Alibaba

Alibaba’s Buy+ feature allows users to shop in a virtual setting with 360-degree views of products and virtual malls. While many other retailers rely on expensive headsets, Alibaba has focused on mass acceptance through a simple cardboard VR headset that connects with a smartphone.

According to Alibaba, nearly 8 million people tried the Buy+ option within the first ten days of its launch—a majority of these shoppers being tech-fluent Chinese millennials. Although the feature is still in beta, it shows the growing appetite for novel retail experience among the young Chinese population.

Tencent Tencent is a major player in China’s gaming community and has used VR technology to build its own operating system and VR console project. Currently, it’s generating a lot of user interest, and the company is working on launching a

VR version of the popular social media app, WeChat

. The technology will allow users to create avatars that can hang out with their friends in a virtual environment.

OnePlus

OnePlus is a leading smartphone manufacturer in China that designed a VR space station as part of a launch campaign for its new smartphone, the OnePlus Nord. During the promotion, over 60,000 attendees were ‘transported to a space station where they learned about the new smartphone’s features.

The project was a success as it led to an impressive 30 percent conversion rate. While VR isn’t a direct offering here, it’s an excellent example of how a firm can incorporate VR into their marketing strategies.

How can foreign businesses succeed in China?

Despite globalization and the growing appetite of Chinese consumers for international products, there are significant cultural and technological differences in China. Working with a reliable local partner can help foreign firms choose the right entry strategy. To improve your chances of success, it’s best to employ the services of an experienced consulting firm.Business China has over ten years of experience helping investors navigate through local laws and cultural norms. Their wide range of services includes setting up a representative office and forming a wholly foreign-owned enterprise (WFOE) in China.

In 2014, the Chinese government announced its plan to implement a national credit system that is now entering its final stages of adoption in 2020. Once applied, the system is expected to influence every aspect of society, from individual consumers to corporate entities.

For foreign investors planning to set up a company in China, an understanding of the Chinese Corporate Social Credit System (CSCS) is vital.

That’s why we’ve broken down the basics of the credit system here, along with its financial implications on businesses.

Let’s start.

What is the Corporate Social Credit System?

China’s Corporate Social Credit System aims to build a transparent business environment and a trustworthy society. The mechanism relies on the expanding role of the Internet and technology that will be used to track the performance and business information of all entities.

Local governments will collect data from their jurisdictions and transfer it to the National Financial Credit Information Basic Database to create a unified record. To include micro and small business and rural areas in the database, the Credit Information System will also be integrated with the National Database.

What are the elements of the CSCS?

Ratings

The sheer geographical size and population of China make standardization a complex task; depending on the region and industry, standards and boundaries also differ. However, common elements can still be recognized through two categories: trustworthiness and honesty.

Businesses that are categorized as ‘trustworthy’ will receive several perks and benefits, while ‘dishonest’ organizations will suffer consequences. Businesses classified as extremely dishonest will be blacklisted with names published online.

Timeliness

The credit records of any entity can be reviewed upon request, which will feature data from a minimum of six months to at most five years. Publicity periods can also vary depending on dishonesty—information about blacklisted businesses will remain published unless they are removed from the list.

Data collection conditions

The information collected will be divided into three sections: basic data, information on dishonest practices, and ‘other.’ When businesses achieve awards, carry out CSR activities, and get commendations, the score will improve.

On the other hand, actions such as tax evasion, late tax payment, failure to comply with laws, and abnormal business practices will result in deductions.

Rewards and punishments

So why should businesses care about what score they have? A high score will be rewarded with several perks such as priority during administrative procedures, better fiscal and project support, priority access to investment opportunities, and lower bank fees.

The credit scores of businesses will also impact personal scores of senior management employees in the legal and financial departments. This means that high-rated businesses will have access to better talent too.

What will CSCS affect foreign investors?

Investors that are planning to open wholly-foreign owned businesses in China or open a joint venture can benefit from the new credit system. A quick credit check can reveal the history and trustworthiness of suppliers, partners, and other strategic stakeholders in China. From a financial perspective, a good score leads to several incentives, such as low fees, and excellent cost savings.

At the same time, the need for compliance is much more pertinent now. Entrepreneurs, managers, and business owners need to engage in more conscious decision making that’s in line with the rules and regulations.

 Working with a local consultant that has knowledge of regulatory laws and local customs can help you leverage the CSCS to your advantage. Business China is a leading consulting firm for businesses planning to launch operations in China.

They offer hassle-free packages that include several services, including WFOE investment management, setting up a bank account in HK, and setting up a trading company in China.

With an estimated 1.2 billion monthly active users at the end of the first quarter of 2020 and nearly 30 percent of China’s mobile app usage, there’s no doubt the WeChat is China’s foremost super app.

The introduction of mini programs in 2017 was a game-changer and brought about significant disruption in the e-commerce space. As China’s mobile users move away from standalone mobile apps, WeChat’s mini programs offer a cost-effective solution for brands looking to connect with consumers.

But like any other third-party solution, WeChat’s mini programs also come with certain drawbacks. Let’s take a closer look at the pros and cons here.

Pros of WeChat Mini Programs

The Platform Size

When over a billion users access the app daily for messaging, booking, shopping, and several other related services, you’re guaranteed an instant connection with consumers. Not even the best standalone app can get you that kind of immediate exposure—so leveraging this platform’s popularity and accessibility is undoubtedly a smart strategic decision.

It’s Consumer-friendly

As Chinese consumers become more discerning, trust is a major factor in any brand’s outreach plan. WeChat is a familiar and trusted platform, and mini-programs allow users to browse and shop for products without ever leaving the platform.

Multiple channels can be used to find mini programs, including branded QR codes, shared details of groups, articles, WeChat Moments, and a discovery menu in the app.

It’s cost-effective

Introducing your brand within an established ecosystem helps reduce the cost of implementing back-office systems. For instance, users can pay within the app using WeChat Pay, so brands don’t have to establish separate transaction mechanisms.

Additionally, mini programs also offer a degree of customizability that can be used to build brand identity and promote different products and campaigns.

Cons of WeChat Mini Programs

Loss of Control

Although customization within the app is possible, it is still subject to WeChat’s policies and guidelines. This might not meet the needs of certain brands that want complete control over the look and feel of their content.

Additionally, since brands are closely tied to WeChat, any negative press or exposure will likely affect brands on the platform too.

Limiting ecosystem

Mini programs can also limit brand activity as the promotion is contained entirely within the WeChat platform. As a result, the mini program essentially becomes an ‘extension’ of the official online store, which can reduce its effectiveness.

For example, if brands have to maintain online stores in addition to mini programs in WeChat, it reduces the overall cost efficiency.

In the post-app environment, the presence of WeChat mini programs has been a game-changing solution for brands. It’s also an excellent solution for foreign businesses looking to tap into the lucrative Chinese market.

  Work with a Reliable Local Partner

If you’re looking to set up mini programs on WeChat, open a bank account in Hong Kong, or register a company in China, it’s best to work with a trusted, local partner.

With over ten years of experience, Business China has helped many foreign firms establish successful operations in China.

Most business schools tell students that knowledge of technology, management, and business acumen are the key ingredients of making it big with a startup. However, the now-billionaire founder of Alibaba Group, Jack Ma, had none of these when he began his journey in 1995.

Before starting his own company, Ma was rejected from 30 job interviews and knew nothing about technology. Today, he’s one of the most influential men in technology and entrepreneurship.

Here are three learnings from the visionary entrepreneur’s life:

It doesn’t matter where you start from

Jack Ma came from humble beginnings; he didn’t have a degree in business or software development. However, he still managed to create one of the most successful brands of today.

This shows that your level of education, upbringing, and resources can only give you a head start—it’s your own perseverance and grit that gets you the job.

The greatest failure is giving up

Jack Ma was no stranger to rejection before he started Alibaba. He failed his final college exam three times before making it through. His college applications were rejected several times before he finally got into Hangzhou Normal University.

After graduating, he applied to 30 jobs in the corporate sector as well as in the training academy—all of which were rejected. Moreover, before he began Alibaba, Jack Ma also started two other companies that failed.

After years of hardship, it was Alibaba that bore the fruit of his efforts and led to the success story Ma is today.

Act fast on opportunities

While it’s important to assess situations and weigh your options before acting, this practice can prevent you from ever making a move. Sometimes it’s best to grasp opportunities as they come by and learn from them, regardless of whether the outcome is favorable or not.

Cast a wide net of opportunities and see what comes your way, if something makes sense in the moment, don’t be afraid to seize the day.

Starting a business in China?

Jack Ma’s story is inspirational for entrepreneurs in China and around the world. If you’re planning to start a business in China, overcome language and tradition barriers by working with a reliable, local partner like Business China.

Business China is a leading consulting firm for businesses planning to launch operations in China. They offer hassle-free packages that include a number of services, including opening a Tmall store, starting a store on AliExpress, setting up a bank account in HK, and setting up a trading company in China.

The economic reforms of 1978 brought about massive changes to the Chinese economy and made it the economic superpower that it is today. However, with a focus on manufacturing and building bottom-up maturity, financial markets were largely ignored.

It wasn’t until 2012, when Xi Jinping came into power, that “the Chinese Dream” incorporated a focus on financial markets. The reforms he introduced were aimed at deepening financial markets and giving the stock market a more significant role in corporate investment.

As one of the most developed financial markets in the world, the US stock exchange offers a basic blueprint for what China aims to achieve. In this piece, we’ll take a look at the differences between the two and highlight some of the unique differences.

Maturity

The Chinese stock market is less mature compared to the US stock market, which is a direct result of the many other differences between the two countries. Although the Shanghai Stock Exchange (SSE) was established in the 1860s, it was closed in 1949 when the new government took over. It was only in 1990 that it reopened, along with the newly established Shenzhen Stock Exchange (SZSE).

On the other hand, the well-established US stock market which is 228 years old—the first New York Stock Exchange (NYSE) originated in 1792.

Value

The value of stock in the Chinese stock market is mostly determined by the government. Although the government doesn’t directly regulate the value, most companies on the stock exchange are state-owned and the government controls buying and selling of stock.

In the US, the federal government doesn’t invest in stocks while smaller state and local governments have a small percentage of the stocks so they can’t determine market level.

Regulation

The US stock market regulation process is quite transparent with minimal intervention from stock regulators. While this has its own issues, the good thing is that regulators don’t decide who gets listed and who doesn’t.

In Chinese markets, the government has a strong control over who can get listed. As a result, it’s difficult for a startup to carry out an IPO. Firms need to be profitable for at least three years and have good political connections to get listed.

Planning to list your company in the Chinese stock exchange?

Despite its drawbacks, listing on a Chinese stock exchange has several benefits. To ensure a successful listing, work with a trusted local consultant like Business China. They offer hassle-free packages that include a number of services, including setting up a bank account in HK, listing your company on the stock exchange, and setting up a trading company in China.

According to China Daily, China is one of the most lucrative business avenues in the world right now. Entrepreneurs from all over the world are heading to China to benefit from the country’s huge innovation potential.

But it’s never smooth sailing when it comes to doing business in the new economic hub of the world. There are many barriers that you need to overcome, such as:

A huge consumer base

To understand why this is a ‘problem,’ let’s take the example of the Chinese mobile market. According to a study by Forbes, the Chinese mobile market is not just extensive but also highly fragmented.

There are hundreds of millions of users, over 400 app stores, and different tiers of cities. It’s not easy for a new company to advertise on every marketing channel.

This is why advertising mobile phones in China is not just expensive but also highly complicated. Most businesses need to advertise across multiple platforms in order to at least reach out to a considerable cross-section of the population.

The solution is to ever opt for mass marketing. The market is too vast for a new entrant to grasp. There is no need to move too quickly. Take your time and do your research. Try and understand the market to see which specific segment aligns with your business better.

Lack of cultural understanding

The business culture in China is not the same as that in Western countries. In China, if you run out of hard copies of a proposal during a meeting, for example, your client could get offended. Similarly, Chinese clients expect documents to be printed, and in good quality.

You need to be well-dressed, on time, and must enter the room in a hierarchal order. The point is, business culture in China is different. The companies that don’t pay heed to any of these differences end up losing out.

In China, leaders and managers don’t like being questioned. In the US, it is common for subordinates to disagree with their boss or gave an alternative suggestion. In China, this might not be a great idea. Therefore, abstain from doing so.

Rushing things

As a Western entrepreneur, you might be like moving fast. This could keep you from closing business deals in China, however. Western businesses are generally eager to get move ahead when working with new clients. This could be a barrier to entry for your business because that’s not how things work in China.

Before coming to China, leave this notion behind. The Chinese business culture expects you to first try and build a strong relationship with the client before closing the deal. Don’t make commitments unless you’ve met the potential client multiple times. The decision-making process is longer. So if you want to be successful in China, learn to be patient.

For your business to succeed in China, you don’t always need a million-dollar idea! A more reasonable requirement is understanding the market, and striking when the iron is hot. In the case of China, your strategy matters more than anything else.

Let’s take a look at some ways you can enter the Chinese market:

Market identification

China is not as homogenous as we think it is. It’s a huge country with a population of 1.3 billion people—each of whom has distinct desires! Its populous nature makes it a lucrative market for most business domains. This also makes the Chinese consumer market highly diversified and vast.

When you’re planning on taking your business to China, the first thing you need to understand is that it’s not a single unified market, and that you can’t target everyone. Economically and socially, the market is highly fragmented and disparate. There are huge differences between different provinces in terms of consumer spending patterns, average income, literacy rate, social behavior, lifestyle, and education. There are also loads of sub-markets with different demographic and economic characteristics.

This brings us to our first entry strategy: choose your niche. Don’t assume you’ll captivate the nation. Try and study different demographic segments, and target the segment that you perceive has the willingness and spending power to buy your commodity.

This is why reason most foreign businesses tend to focus on high-income areas like Zhejiang, Guangdong, Jiangsu, and Shanghai.

Choose the right location

As discussed above, your target location makes a major difference. Certain regions in China are known for specific industries. Shanghai, for example, is a hub of pharmaceutical and petrochemical business activity. Similarly, most electronics and IT businesses are based in Beijing. Shandong is popular for agricultural goods and oil, whereas most kitchenware, furniture, and textile businesses are based in Zhejiang.

Other than that, cities in China are also divided in terms of Tiers. Tier-one cities are said to be wealthier than Tier-two, and so on. Most businesses aim for Tier-one cities because they’re considered mature markets in terms of consumer spending patterns.

This is why Tier-one cities are also considered to carry lesser risk for foreign businesses. However, Tier-one cities may also carry higher operating and set-up costs. This is where Tier-two cities take the lead.

Seek help from a company registry service

For a foreign business entity, entering the Chinese markets is a lengthy and extensive process. You need to get the required licenses as per your business domain. You also need to get your company registered as per the government’s requirements. A company registry service will not only walk and guide you through the process, but will also help you stay on top of compliance-related tasks.

Building a brand from the ground up is just the start. The real challenge is helping your brand reach the target audience that you have in mind.

Advertising not only creates awareness about a certain product or service, but also bridges the communication gap between a company and their primary consumers.

In this post, we’ll discuss how international brands can advertise their products in China:

Digital marketing is the way forward

Digital marketing is not only surging in China, but the digital landscape is also quite different from that in the rest of the world. In the West, we rely on Google for our searches.

In China, Baidu holds the crown. Instead of saying Google it, people in China say ‘Baidu Yixia.’ If your focus is on search engine optimization, stick to Baidu. It has the greatest market share in China at the moment, and is basically a monopoly.

Another thing to note is that the digital ecosystem in China is dominated by mobile use. There is very little dependence on desktops and other platforms.

Chinese consumers also prefer watching videos to understand products. At the same time, they’re known to have short attention spans. If you’re advertising your product to Chinese customers through video, make sure the content is engaging and that it’s as short as possible.

Social media advertising

If you want to advertise your product through social media, the possibilities are endless. While it’s true that China is big on WeChat and Weibo, these aren’t the only available options. There are thousands of social media platforms, most of which support paid advertisements.

Other than that, you may also find social media platforms that are specific to your business domain and niche. If your business belongs to the finance or investment sector, Xueqiu might be a better option. Similarly, if you’re a travel business, Mafengwo is the way to go! Other generic social media platforms include Toutiao, Zhihu, Douban, and Xiaohngshu.

Content marketing

This form of advertising also relies on the World Wide Web to help you reach out to your potential customers. It is usually employed by small and medium scale enterprises that can’t afford to pay for billboards and TVCs.

The key here is to make sure you’re creating content that resonates. For this, you may need help from a local Chinese content creator. Chinese consumers are very particular about language. Other than quality, you should pay equal attention to relevance.

You also need to be particular about the design scheme. Certain colors are considered unlucky in China. The same might not be the case in the West.

It’s common for businesses to assume that entrepreneurial success solely depends on the commodity that’s being sold. But this couldn’t be further from the truth.

The way a product is marketed to its primary audience plays a vital role, especially in the case of China. One wrong marketing move could lead to all your efforts going down the drain.

Let’s try and understand why this is the case:

Not understanding the local culture

When doing business in China, there has to be a localized strategy in place. Chinese markets don’t work the same way as those in the West, and much of this can be attributed to cultural differences.

Let’s take the example of renowned UK-based fashion brand, ASOS. Although ASOS was immensely successful in the UK and the US, it could not garner the same level of sales in China, and eventually had to shut down in 2016.

Why did this happen? Consumers in China aren’t used to paying hefty delivery fees. China has one of the world’s most affordable and effective logistics systems, making deliveries immensely affordable. Local logistics platforms like Taobao and Tmall have long been a Chinese favorite due to their affordability.

On the other hand, ASOS charged a significantly high delivery fee that consumers just didn’t care for.

Culturally inappropriate advertising

Sensitive advertising also has a key role to play. Dolce and Gabbana learned this the hard way. Very recently, the brand aired an ad in which a local Chinese woman tried to use chopsticks to eat Italian food. In the ad, a male voiceover was giving her instructions. Chinese audiences found the ad to be very culturally inappropriate.

The woman in the ad struggled to eat spaghetti and was portrayed to be someone who was behind the times. It was assumed that the ad implied that Chinese women were too uneducated to adapt to European culture. As a result, it came under a lot of fire online.

Take this as a word of caution: when marketing to the consumers in China, you need to be wary of their cultural sentiments.

Not paying attention to content localization

The way you advertise your product also needs to be understandable and relevant for a Chinese consumer. This is where ‘content localization’ comes in. Here’s the thing: the way Chinese audiences consume content is vastly different than how people do so in the West. They use different social media platforms, and have different consumption behaviors.

Whatever marketing content you create, it’s important that it resonates with the Chinese audience. One of the most common mistakes brands make is not getting the language right.

Translating English content directly into Chinese isn’t always a great idea. Mandarin is a multi-layered, contextual language. This is why you should never use an online translation. Direct translation will always be full of mistakes, and your content could be misunderstood.

The restrictions on advertising in China have pushed companies to come up with innovative ways to reach their target audiences—and at the same time, better understand their evolving needs.

As such, some interesting terms have become deeply embedded in the Chinese marketing vernacular. These expressions aren’t based on the latest fads, but are, instead, a reflection of the changing needs and habits of Chinese consumers.

If you’re planning to market your product in 2020, you need to know about these three essential terms before you proceed.

Xiachen (下沉)

In the past, brands have focused their marketing efforts toward first and, sometimes, second-tier markets in China. However, in the last few years, consumption in these cities has fallen because people have become overwhelmed by all the options they have.

Xiachen literally translates to being submerged or sinking. It has become a popular term among marketers who want to move down to lower-tier cities of China and reach new audiences.

These audiences are not only more receptive to marketing efforts, but they also plan to spend more than consumers in top-tier cities. They have more disposable income because the cost of living is much lower in these parts of the country.

Additionally, they also have more time to spare on entertainment, such as online shopping, because they have less hectic work schedules.

All of these factors combined makes this market segment highly attractive to marketers. The key is to understand how their preferences differ from those in first-tier markets and then adjust your communications to reflect those preferences.

Guochao (国潮)

Over the last few years, young Chinese consumers have become increasingly interested in domestic brands and styles that incorporate traditional Chinese culture into their products. This trend, known as guochao, is a reflection of changing consumer preferences among younger audiences.

While older Chinese generations believed western products to be the standard for quality and success, China’s young adults do not make those associations. This consumer group has strong buying power and is increasingly sought-after by domestic and international brands.

Private Traffic (私域流量)

The term private traffic was born out of the heavy restrictions that were placed on most Chinese e-commerce sites and social media platforms that limited organic growth. It means to reach internet users directly, or in a way that you won’t have to pay them.

Currently, WeChat offers marketers the opportunity to reach out to consumers on a personal level. Small online communities have popped up across the popular platform and they help brands leverage personal connections to improve sales and gain valuable consumer insights.

Looking to start a business in China?

Starting a business in China can be extremely rewarding. However, certain laws make it difficult for foreign firms to set up operations.

Incorporating a business in China, forming a WFOE, and setting up a representative office requires an understanding of Chinese laws and conventions. Business China has over ten years of experience in helping companies set up operations in China and Hong Kong.

Despite the fact that we live in an increasingly globalized world, starting a business in another country still requires careful planning and research. There are many instances of large successful firms failing internationally because they didn’t take cultural differences, preferences, and norms into account.

China, in particular, remains an elusive market that continues to perplex many marketers. With a population of over 1.43 billion and skyrocketing e-commerce sales, the country is an attractive option for many online retail companies. However, it’s not as easy to break into the Chinese online retail market as one might think.

If you’re planning to launch an e-commerce business in China, here’s how to get started.

Understand if your product has a Chinese market

Begin with a thorough analysis of the product and determine what consumer needs it is able to satisfy. Your research should be done keeping the tastes and preferences of the Chinese market in mind.

Remember, your product may have done well in one country, but that doesn’t mean it’ll be a success with Chinese consumers. The best way to gain valuable insights about your product is by interviewing potential customers. Ask them what they think about the product and how it can fill a gap in the market.

Carry out market research

If your preliminary interviews have yielded positive results, it’s time to start conducting some market research. Find out who your target consumer is—age, gender, socioeconomic class, lifestyle, and so on.

You will also need to find out more about the market and existing players. Find out what the competition is doing and how you can differentiate yourselves from them to build a sustainable advantage.

Obtain relevant legal licenses

Once the research phase is over, it’s time to get started with the formulation phase. All businesses need approval in the form of an ICP license before they can operate in China.

Despite easing restrictions for foreign business owners, it’s still difficult for foreign firms to obtain the license, so it’s best if you work with a local consulting firm in China.

Choose the right platform for China

Restrictions on advertising and social media content mean that you’ll have to be mindful of the platform you’re choosing to reach your customers. Setting up your own e-commerce platform requires skill, and you’ll have to find local developers too. It will cost more too, but it’s a quick way to differentiate your brand from the competition.

You can also choose to feature your store on an existing e-commerce platform, such as AliExpress or Tmall. Your overall branding strategy should direct the decision. AliExpress, for example, is best for B2C businesses that rely on bulk orders.

Employ professional help

Navigating China’s complex legal and cultural landscape can be daunting for foreign businesses. Whether you’re planning to set up a physical store or an online presence, its best to employ the services of an experienced consulting firm.

Business China has over 10 years of experience in helping international firms set up representative offices and launch successful operations in China. The company also excels at assisting with Tmall store openings and setting up shop on AliExpress.