June 07, 2018

Why China?

This blog post is written by CEO Niels Ralund of FDIH

 

Almost 1 out 3 web-purchases from Danish consumers are being made in foreign stores such as wish.com, Zalando and Amazon and last year Danish consumers spent 37 billion DKK in foreign online stores.

 

Our online export is way less than that.

 

That’s a problem because the giants’ expansions are threatening Danish companies. Therefore, it’s extremely important that Danish companies become more successful in selling to both our own consumers and to foreign markets.

 

In FDIH we help our members get started with export and we are focusing more and more on that. We have various events about export – ranging from conferences to small network groups. We publish reports and guides about how to enter new markets and we work politically to make it easier for companies to start their export adventure.

 

Why China?

 

Short answer: China is the biggest e-commerce market in the world with around 750 million internet users.

 

It is expected that the e-commerce volume in China will surpass the e-commerce market in the United States, UK, Germany, Japan and France combined by 2020. The country is home to some of the biggest e-commerce companies in the world, the middleclass is booming, they are more than happy to buy online and the Chinese consumers love Danish goods.

China is also home to some of the biggest cities in the world, which means that you can concentrate on one city and you will still be looking at a potential customer base of millions.

 

In other words, China is an obvious market for Danish companies.

 

Sounds great. Any challenges?

 

Getting into the Chinese market can elevate your business and secure you millions of new customers. However, there are some obstacles. Before you start your adventure in the east, you need to have a strategic plan. Your plan should answer some of these questions:

 

  • Do you need local agents who know the market and where do you find them?
  • Should you translate your site into English or Chinese and who can do this?
  • How do the consumers prefer to pay? (think Alipay and WeChat Pay)
  • What about marketing – should you use influencers, social media etc.?
  • What do the customs and VAT rules state?
  • Are there any special rules about my specific product?
  • Why and how should I register my product?
  • Who can deliver my goods?

 

These are just a few questions and obstacles you need to consider. And we haven’t even talked about the fact that the Chinese government might have a word or two to say.

 

Use the Danish brand

 

If you are looking for obstacles they are easy to find.

 

But that shouldn’t scare Danish companies away from the huge market. Denmark has a good brand in China and surveys show that the Chinese consumers connects Danish products with quality. Especially food products, dairy products and design products are popular in China. A good name gets you far in China (and everywhere else) so Danish companies can use the “Danish brand” in their marketing.

 

Furthermore, Danish companies hoping to make China their new market have access to a lot of knowledge and help from both experts, authorities and foundations such as FDIH.

 

 

Platforms can be your shortcut to the market

The Chinese consumers love their platforms and a clear majority of trades are conducted on platforms such as Tmall.com and JD.com. Using these platforms can be an effective and easier way for Danish companies trying to enter the Chinese market. But remember; setting up your business on Tmall.com, Jd.com or any other platform in China isn’t a walk in the park and there are quite a few criteria you need to be aware of.

 

If you feel like you need some help (you probably do) Ehubnordic can help companies join the Nordic multibrand store on Tmall Global and enter other platforms. In FDIH we recommend this kind of collaboration between companies and experts and we see it as a way to boost our export to China and the rest of the world.

 

Inspirational cases

As mentioned, Denmark has a good name in China. This is due, in particular, to those companies that are already selling quality products to Chinese consumers. Widely different companies such as Arla, Danish Crown and Normann Copenhagen are successful in the China and should inspire others. Recently Sinful.dk, who sells sex toys online, are also experiencing increasing interest from the Chinese.

 

The differences in companies proves that if you do your homework and have the right product and business plan, China is a very promising market to enter.