SETTING UP SHOP IN THE CHINESE ONLINE MARKETPLACE

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1 SINOZCO WECHAT SETTING UP SHOP IN THE CHINESE ONLINE MARKETPLACE Published: 22/07/2014 By: Ryan McDermott Table of Contents Understanding the Local Online Landscape 2 Taobao and Tmall 3 Web design, Chinese-Style 5 Baidu and SEO in China 6 With one of the largest economies in the world, over 600 million potential customers, and online spending having doubled every year from 2003 to 2013, it s no wonder more and more businesses are trying to set up shop in the Chinese online marketplace. Even the Chinese Government is putting its weight behind E-Commerce with the latest 5-year plan, implementing policies aimed at quadrupling annual E-Commerce volumes from 2010 to 2015 to $2.9 trillion. This report is designed to both, provide an overview of the online environment in China and how this differs from the Western online environment and how to practically use digital marketing techniques and applications to sell your companies goods in China.

2 Understanding the Local Online Landscape Having successfully marketed your companies products in a number of countries, you could be forgiven for expecting that all you need to succeed in China is a translated website, some online marketing, and maybe a.cn domain name. However the reality is that the Chinese market is completely different from the West. Before even thinking about entering the Chinese online marketplace, companies should understand that Chinese web users do not want to access Western; social media applications, search engines, instant messaging platforms or online auction / sales platforms. YouTube, Facebook and Twitter are blocked, and Google barely registers with its market share hovering in the low single digits. Instead, to succeed in China companies will need to acquaint themselves with their Chinese analogues: Youku, Baidu, QQ, Weixin (WeChat). CHINESE VERSION ENGLISH VERSION NO VERSION 2

3 Taobao & Tmall Taobao is a Consumer to Consumer (C2C) online marketplace owned by Alibaba and used for selling every type of product imaginable to the Chinese market. Some of the weirdest products currently sold on Taobao; The DJI Phantom 2 Quadcopter The same type quadcopter shot down by Syrian rebels is being sold in the TMall store of DJI Innovations for 4,999 yuan. The DJI Phantom is a remotely controlled flying device which also has a built in camera. Live Scorpians On Taobao, live scorpions are popular merchandise, with more than 800 vendors offering anything from African emperor scorpions sold as pets to live Chinese armour-tail scorpions offered as health food. Hire a Boyfriend Before the Chinese New Year, there was an explosion of listings of men offering their services as pretend boyfriends. CASE STUDY 11/11 SINGLE S DAY The 11th of November is now one of the number one sales events on the Chinese calendar each year. Single s Day on Nov 11, or 11,11, saw China s online retailers slash prices by up to 70%, drawing shoppers in their droves. In 2013 TMall and Taobao customers filled their carts with $3 billion of goods in 24 hours, eclipsing the $1.25 billion record US retailers did on Cyber Monday. 3

4 Tmall is Alibaba s pure Business to Consumer marketplace in which, only brand owners / authorized distributors are permitted to sell their goods. For businesses looking to enter the Chinese market, Tmall offers a unique opportunity not available in Western online retail platforms such as, ebay and Amazon, which largely combine B2C with C2C. In recent times Tmall has been actively marketing to foreign brands as the demand for international goods in China continues to increase. One example of this is the addition of Tmall global, a dedicated section of the website devoted to foreign brands. Aliplay Like ebay, Tmall and Taobao have their own payment solution, Alipay, which is a payment platform used by individuals and businesses for making and receiving payments much like PayPal. However, Alipay has achieved success the likes of which PayPal could only dream of, with registered users in excess of 850 million and in February 2014, announcing mobile transaction volumes were $157 billion compared with $27 billion for PayPal. Alipay s main user base primarily consists of buyers and sellers participating in e-commerce transactions however Alipay is fast overtaking the credit card as the preferred method of paying for goods and services with an escrow service for added peace of mind. For businesses it is very important to understand that consumers in China now prefer using Alipay for digital transactions above all other methods. This means companies need to engage those with inside experience of how to integrate Alipay compatibility for selling any kind of goods / services in China. 4

5 Chinese Web Design There s no doubt that technologically, Chinese consumers like to keep upto-date, especially with their mobile devices. But on desktop computers, it s another story. PCs only really became widespread in China in the last decade, during Windows XP s peak, and, due to a combination of factors, Internet Explorer 6, has stayed in use much longer than was ever intended. This has resulted in Internet Explorer, especially the XP-compatible versions 6 and 8 to become the de facto standard for Chinese websites; many online banking systems, and even some government websites, rely on Microsoft s ActiveX software, and most Chinese websites are designed IE6 in mind, giving a very outdated look-and-feel by Western standards. In fact, with worldwide IE6 usage being less than 5% and in most developed nations, less than 1%, outside of China you would be hard-pressed to find web developers willing or able to build a IE6 compatible website. Design-wise, Chinese websites are also very different from their Western equivalents. Key features of a Chinese website that differ from the West are; Dense tightly packed text Tiny low-quality images More columns than you can count Bright clashing colours and flashing banners Overuse of outdated technologies like Flash This is due to a range of cultural and linguistic factors and a reliance on the way that websites have traditionally been created. Further, Chinese customers are generally looking for a lot more information when they visit a businesses website and generally the more information on the page for users the more time people will spend on the website. 5

6 Baidu & SEO in China While in most countries you might google something, in China you would Baidu it (with their slogan, 百 度 一 下, 你 就 知 道, roughly translates to Baidu it, and you will immediately know ). As Baidu is the undisputed leader in Chinese search, with its market share nearing 75%, any Chinese online marketing strategy needs to factor in Baidu specific SEO. The most important distinction between Google and Baidu is that unlike Google, users can purchase the first search result on Baidu, bypassing the need to develop a long term SEO strategy. This can be a good thing for larger companies, however it makes things more difficult for small to medium sized companies as competitors can use their resources to buy up all relevant key words. Companies need to be aware of Baidu if they want to sell goods in China and utilise specialists who know how to best develop a cost effective Baidu SEO strategy. SEO can be an extremely expensive lesson so it is vital that companies know what they are doing and have advisors with inside experience and knowledge. 6