www.remodista.com

Beginner’s Guide for Retailers in China Strategy, best practices and lessons learned from those who have come before.

Sponsored by:

Executive Snapshot of Global Retail Disruption

www.remodista.com

The opportunity is eye-popping. McKinsey

and Co. projects that China's online sales will

reach $420 billion annually by 2020,

becoming the world's largest online retail

market in the process. China's population of

Internet users stands at 500 million today,

and stands to grow by leaps and bounds as

the Internet becomes accessible to even

more of China's 1.4 billion-strong population.

Jack Ma, the billionaire founder of Alibaba,

China's answer to Amazon.com, says it best:

"In China, e-commerce is a lifestyle."

Simply put, there's never been a better time

to enter the Chinese market. The

opportunities are staggering—but so are the

challenges. What best practices can you, a

North American-based retailer, use to break

into the Chinese market? To see real return

on investment in the Chinese sector? And,

most importantly, to have the kind of staying

power in that marketplace that guarantees

longevity for your brand, year after year?

If success in China is your goal, these

lessons will help you get there.

Marketers are lining up to get into China, and for good reason.

www.remodista.com

China's Consumers: More

Alike than Different

If there's one mistake foreign retailers make

when entering the Chinese market, it's

assuming that the Chinese consumer is

fundamentally different from the Western

consumer. The fact is, we're more alike than

different. Yet, it's the subtle differences that

brands entering the Chinese space must

understand in order to thrive:

•  China's social media platforms are their own

•  Brand authenticity is key in a marketplace

flooded with knockoffs

•  The value of a friend's recommendation on

brands they can trust is worth more than a

hundred spiffy display ads on China's top

commerce sites

The Chinese consumer isn't one-size-fits-all. They are as varied and complex a customer base as North American customers. -Remodista Think Tank Panel Discussion

“ ” It's a young, mobile, and modern

consumer population. In many ways,

Chinese customers are more sophisticated

than North American and European

consumers. They have their own social media

sites (Sina Weibo), their own commerce sites

(Alibaba, Tmall), and they're constantly on the

move. You won't find a laptop in their hands

unless you put it there yourself; China's

buyers are wired for a mobile experience. The

mobile-only commerce world is coming in

North America, but in China, it has already

arrived.

www.remodista.com

Chinese consumers use their online tools in a

highly sophisticated way. For example, North

Americans use WeChat, a messaging app, to,

well, message. China's buyers use it to reach

out to a brand's customer service team when

they're on a buying site, to do transactions,

and to look at brand videos. If there's a way to

make an online tool useful in the purchasing

process, the Chinese consumer has figured

out how to do it.

Retail Trends in China:

Western Brands and

Authenticity Win the Day

According to China Digital Review, retailers

entering China often make two mistakes:

They assume Chinese consumers want a

"Chinese" version of their product

They assume that the Chinese only pay for

products that will help them gain

"face" (prestige), such as luxury brands

Yet the biggest international winners in the

Chinese retail industry include more than just

luxury brands. Western food products are

doing well (because they're perceived as

safer), for example. No matter your sector,

products with true authenticity will gain trust,

not a "Sinofied" version of it that feels like it's

engineered for one particular market.

Chinese consumers want "the real deal" in a

marketplace flooded with pirated goods and

cheap knockoffs—and that's one big reason

why a brick-and-mortar presence that allows

customers to interact with your brand,

alongside a strong commerce presence, will

help you build credibility in China.

A deal is a deal until it changes. It pays to develop relationships with your prospective partners to ensure that you’re well represented.” -Mitchell Binder, President, King Baby Studio

“ ”

www.remodista.com www.remodista.com

Best Practices for Diving into the Chinese Market

Avoid the Identity Crisis

As soon as you think you might be entering

the market (or somebody else might "steal"

your brand, forcing you to pay large sums

to gain ownership so that you can legally

market under your brand name).

TAKE ACTION: Be quick to register your

brand trademarks. Talk to other companies

who have gone through contract

negotiations. Contracts are never

"completed" in China; signed contract are

often re-negotiated over the life of a

business deal.

Find a Partner

Because a deal is never done and the

nuance in China is primed for complication,

it’s important to find partners who can help

you navigate the waters.

TAKE ACTION: Staff up with people who

understand China from the inside out.

Invest in those relationships. You might

even find yourself singing karaoke with your

Chinese team before your first business

meeting with them.

To market successfully in China, reach the consumer with an authentic, relatable brand they can trust—

one that they feel comfortable recommending to their friends. Invest time to understand the business

environment as well: it’s a world where trademark and contract law is fundamentally different than in

other parts of the world.

WHO?

www.remodista.com www.remodista.com

Every deal you get into in China is an ongoing project. That's why developing relationships with partners who understand the social nuances is critical to success. -Kelly Stickel Founder & CEO, Remodista

“

”

www.remodista.com www.remodista.com

Online Natives

The digital landscape is different in China.

The way they experience and utilize

technology and mobile commerce requires a

different approach.

TAKE ACTION: Research the top commerce

sites, like Alibaba and Tmall. Use Google

Insights to find the search terms they use

most frequently. Once you understand the

landscape, start small. Commit to the market

knowing it may take time to see a real return

on investment. The most successful

companies make long-term commitments in

China, understand the culture by having

experts on the ground, and focus on the

quality and authenticity of their brands.

Best Practices for Diving into the Chinese Market (cont.)

It's not a race to get North American retailers in front of the Chinese consumer. It's a global effort to offer better products and services to them—and they know the difference. -Samantha Kent, Director of eCommerce, JackThreads

“ ”

www.remodista.com

We can’t overemphasize how quickly the Chinese are mirroring Western demand for authentic, quality, premium goods that reflect modern consumer discernment. -Chinese Digital Review, 2015

“ ”

VISIT THE REMODISTA SANDBOX: http://goo.gl/TEGQFv

Get involved! Are your teams prepared to tackle these challenges? Learn, grow and interact with other brand leaders in our COMMUNITY SANDBOX:

China was once a faraway "Middle Kingdom,"

but today, it's poised to be at the center of the

marketing world. Learning best practices for

getting your brand in front of Chinese

consumers, and mastering the nuances of the

business environment you'll experience, will

help your company have a long and fruitful

relationship with the largest buying population

in the world.

Start small, find the right partnerships, hire

China experts for your on-the-ground team,

demonstrate that you understand the

business culture, and reach the consumer

with a message that's both mobile and

authentic. The time you invest in getting the

basics right in China will pave the way for

your brand's success for years to come.

www.remodista.com

ABOUT THE AUTHORS

McKinsey projects that China will become the world's largest online retail market by 2020 with online sales forecasted to exceed $420 billion annually, driven by a growing consumer class and the world's largest population of Internet users, now more than 500 million people.

REMODISTA FOCUS AREA: China Commerce

Remodista RETAIL & MOBILITY DISTILLED

www.remodista.com

Remodista is a think tank examining disruption in global retail. Our mission is to provide insight, education and innovation to global brands through collaborative research and analysis.

•  Kelly Stickel, CEO, Remodista •  Ernie Diaz, Publisher, China Digital Review •  Andrea Guthrie, Independent Global Consultant •  Sheila Donovan, Global Marketer, Global DM Solutions •  Kelland Willis, Product Development, SAP •  Chau Banks, EVP,CIO and Channel Integration, NY&Co •  Katy Tonkin, Director of International Search, Point It •  Samantha Kent, Director eCommerce, JackThreads