As an experience-abundant cross-border marketer and sales strategist between Europe and China, I often come across pitfalls not only during the export, but also in cross-border marketing. This article is about one of those hard to understand from the surface of the phenomenon.
Today I did a little research on a popular product in China, available on numerous Chinese e-platforms and other online channels. The research was triggered by a complaint about the pricing.
The product was a water filter cartridge.
On the brand official website, the price is 45Euro.
I typed in the Chinese key words at taobao.com and the price results showed 145RMB (around 18.5Euro) – it’s consumer price. Surprisingly strange right!? And then the same product on a different shop shown within the same search results was sold for 99RMB. I guess most of you would consider it fake. Read further…
Taobao stores provide abundant details in picture formats and other evidences to prove that they are legitimate and service-minded. This one even had “official stamps” from the “official Chinese office” attached with an extra note: “flagship stores in Tmall and JD have to sell official price otherwise they will be revoked of dealership status; so please value our honest and humble price can be offered here.“ Both stores have same detailed evidence.
I then went on to the Tmall flagship store of this brand, same product — Consumer price: 239RMB (around 30.5euro). The most attractive promotion on that product page says a filter dispenser plus 4 cartridge packages (27 pieces) will benefit from 50% off the original price.
Now it’s rather clear to me. It cannot be counterfeit with such a complete product line in each store. The manufacturing complication vs margin wouldn’t worth the work. I started to see the picture of this product’s life: how it was launched and became popular in China and I could also foresee the rest of the dealers start to drop the product due to the pricing chaos.
So what is the reason for this pricing chaos? The answer is: Market need manipulates manufacturing. The product is created just to fit the market need. Apparently the profit is not interesting in this game, but quantity is. And the price was likely compromised due to sales-only driven distribution without proper control. So the pricing chaos is made by wrong manufacturing-marketing strategy, even if the initiative was smart.
So here are the 3 principles to ensure your products and brand last in Chinese market:
1. Choose a partner with no conflicting interest to your distribution structure.
It’s not surprising to see one Chinese company plays multi-roles as logistics company, supply chain company, wholesaler and retailer. At first this seems to be an advantage rather than a risk. However, don’t forget there are uncountable “supply chains” out there. And as long as it’s a Chinese dealer engage the market directly, there are nearly always conflicts of interest. So, to be straight forward, I suggest you partner up with a European business minded company who you can rely on to wholly represent you, and truly knows how to work with sales channels in China to form a healthy, reliable structure. It’s a little more work, but it’s well worth it if you choose the right partner to do the job first time round.
The extended advice is: avoid co-manufacturing a product line with your own brand name, or, make a better profit share structure to prevent compromising your pricing strategy.
2. Choose a partner who really understands both of the markets.
It’s not hard to understand that strictly following European strategy without knowing the Chinese game rules will not work; Playing Chinese games on their terms on their turf is a big risk and can have costly repercussions for your brand initiative in China.
In cross-border business especially cross-border e-commerce business, we truly need comprehensive knowledge and experience to leverage western theoretical brand philosophy and Chinese sophisticated practice. (Find an interesting reference here: http://bit.ly/atmallvpl).
3. Choose a partner who speaks and understands the language (Chinese) in native level.
To win the cross-border game in China, a native speaking Chinese expert is absolutely critical. Even a translator won’t tell you the methods to find out the truth behind the communication and offered services. You need to be able to translate the true meaning by understanding the culture and hidden motives.
Native cross-border experts that can translate for you, understand your business and objectives and can deal on your behalf are the best solution to avoid unnecessary frustration and set-backs.
A real business minded Chinese speaking person can capture the success rate by just sensing the tones of the conversations; by reading Chinese, you can find many hidden sales channels and avoid many pitfalls too; you can also realize how a product is alternatively branded just by their pricing structure in different places with related details; of course, experience matters too.
It’s exciting to explore the huge potential of the Chinese market, but be wise to remembering these 3 principles to ensure a long and prosperous life for your brand in China.
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About the author
Tingting Zhang is an experienced Europe-to-China cross-border ecommerce marketing expert and sales strategist. With more than 10 years professional experience throughout Europe and China, Tingting is also founder of the cross-border branding e-commerce system: AtMall.com. The innovative system offers a wide range of technology astute services to launch European brands and products in China.
AtMall.com is an effective tool abridging business logics from two sides of the world for automating and promoting brands in China with integrations to leading Chinese e-commerce platforms, marketplaces and offline channels. AtMall is prepositioned as your marketing and sales department for your best practice in China.
Register on atmall.com/vendorportal to take the first steps on the road to China. With safe, professional guidance and solid operations.
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Contribution: Malcolm Smith ; Yuan Zou.
