Three Reasons To Adopt A Cross-Border E-Commerce China Market Entry Strategy
Determining a market entry strategy for China is unique to each brand, its awareness in the market, internal resource prioritization and appetite for risk. While an offline retail presence is critical to the long term success of any China market entry strategy, many brands are turning to cross border e-commerce as their initial China market entry strategy.
Why are brands adopting cross-border e-commerce as their initial China market entry strategy?
- Cross border e-commerce via platforms like Tmall, WeChat, Little Red Book, Douyin and others does not require a Chinese trademark or China product approval by Chinese regulation authorities such as the CFDA. With long lead times for China regulation approval, this is the main reason food, vitamin and beauty brands adopt a cross-border e-commerce first strategy for the China market.
- There is no need for a China legal entity with cross-border e-commerce, which not only reduces the cost of creating a legal entity, but also significantly reduces operational complexity and resource needs.
- You can pull from global inventory, without the need for dedicated inventory for China. This frees up your inventory requirements for the China market, and also allows you to present your entire portfolio to the China market without missing opportunities in the global market.
Although cross-border e-commerce on Tmall, WeChat and other platforms is getting easier and easier, it is still only a step in your market entry strategy. Successful brands will need to enter the China market domestically, both online and offline, to fully realize the opportunity and scale the business, but early efforts in cross-border e-commerce will allow brands to test the market, hone their China market strategy and avoid costly mistakes upfront.
China Luxury Advisors Inc (CLA) is a China strategy consultant that advises and works collaboratively with luxury and premium brands, retailers, streetwear brands, tourism brands and more to develop their China market strategy.
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