Starting own business is always challenging. Launching a business abroad is even much harder. But nowadays the international market seems to be more interesting for small Chinese brands than the local market. Social media, e-commerce, worldwide platforms, and government support –– all these can help to be successful at such markets as Europe, North and South America, Australia, South, and Southeast Asia, Africa. There is a huge range of opportunities for Chinese companies in the global market.
Of course, international expansion has not been on the agenda for Chinese business for long. In fact, the Chinese market with its 1.42 billion population is the biggest for any company. China’s market definitely was populous enough. But it has changed.
Within China, rapidly changing demographics, rising incomes, increased consumer spending and demands an increasingly open business environment have all helped to make the Chinese market increasingly attractive to Western businesses across a variety of industries, but also made it highly competitive for locals.
Still small and medium enterprises are not sure about getting abroad. They have a lot of doubts, so let us try to dispel some of them.
After all, why small and medium Chinese companies should sell only abroad?
There are two main groups of reasons for this: domestic and international.
Let’s start from domestic.
1) Highly competitive nature of Chinese market.
By the day, the Chinese market is really competitive and fast-paced. Fierce competition in China dates back 40 years with Reform and Opening-up when the government began implementing more liberal market economy reforms. This competitive force can be felt pulsating in local grocery stores, textile factories, and the thousands of import and export companies of every variety. The overloaded market simply pushes companies to explore other opportunities.
2) Economy changes and evolution.
During the past decades, the world have been witnessing how the Chinese economy shifted from a manufacturing to a service-oriented one. That made Chinese consumers even more demanding than Westerns. Nowadays they want quality, innovative goods, and services. Thus, by meeting the higher demands of their local customers, Chinese companies feel that they are now better placed to expand internationally as they have the focus and skill to appeal to a broader and more global audience.
3) Rising costs.
Recently, the costs of production and labor in China have dramatically increased. It’s become cheaper to produce some goods in other countries, such as Thailand, Indonesia, or Africans countries. And with production abroad it becomes more expedient to distribute products on site, just to save logistics costs. On the other hand, expanding one’s business allows producing and selling more units, which, in turn, can also decrease the costs per unit.
4) Government help
Helping SMEs survive and become more competitive in the global market is essential for economic growth in China. In the past few years, the central and local governments of China have adopted a new series of policies and measures to promote the rapid launch and growth of SMEs in the global market. These efforts include increasing the export tax rebate of some labor-intensive products, offering greater financial support to SMEs, and providing knowledge assistance for SMEs to go global.
The Chinese government is endorsing the ideas for their companies to “go out” or “go global”. The message of this endorsement is clear. It indicates that the second largest economy in the world means serious business and therefore global ambitions for its companies have moved center stage. This ambition is further spurred via grandiose projects like the One Belt, One Road (OBOR) initiative that was launched at the end of 2014 by President Xi Jinping.
The growing ambition of the government to make China great again has turned many companies into a strategic asset to achieve this national ambition by becoming influential at the global level.
Apart from domestic reasons, globalization also create a number of opportunities for Chinese business abroad. Nowadays the international market demands Chinese goods. The global world is ready and waiting for Chinese products. And the reasons are the following.
5) Affordable price
China is still a country with a high level of productivity. It can be a great source of all kinds of goods according to the necessities present on a certain market. Chinese market overflowing by different products with a good price that are not so easy to find in Europe, for example, some simple items as furniture, bedding, lighting, signs, plastics, clothing, accessories.
Also, there are such price-sensitive markets as Africa or other developing countries who always welcome low-priced Chinese goods. Nowadays almost all African countries flooded with them. Whether it is tires, automobile parts, stationery, perfumes, cosmetics, computer hardware, furniture or machinery, China already has dominated the African markets.
Back in 2010 multimillion corporation, Alibaba Group built AliExpress to cater to the growing demands of international buyers. AliExpress fastly became really a great platform for drop shipping business because there’s less upfront capital, lower overhead, and tons of products to choose from. It is easy to build an online store, sell AliExpress products, and even promote a site, but your success all boils down to execution.
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Our Services: Branding, Personal Branding, E-Commerce, Search Engine Optimization, Advertising, Weibo, WeChat, WeChat Store, Little Red Book, Facebook, Linkedin and Twitter.
Amazon Business also offer new services for Chinese manufacturers, and Amazon’s new Australia site will feature goods from China. JD.com’s international e-commerce platforms in countries like Russia and Indonesia are even customized to the local language. JD.com also operates an affiliate e-commerce platform called Joybuy that allows users to browse in English and a variety of other languages, similar to Alibaba’s AliExpress platform.
Alibaba and JD.com currently allow Chinese consumers based in countries like Australia, US, and regions like Southeast Asia and Greater China to buy directly from their e-commerce platforms.
By offering shipping to countries outside China, these e-commerce sites are giving Chinese brands an amazing opportunity to expand internationally.
International social media platforms also can help to promote your product abroad. Even if Facebook or Twitter are far from being true e-Commerce platforms, they offer a good plate of opportunities for selling products. One can find the products (or list them) and get in touch with the owner to arrange payment or negotiate the price. And Instagram not long ago started to test purchasing functions. And it’s not “just the beginning”, it’s the trend.
As long as Chinese business for a lot of reasons still is not familiar to international social media platforms, they are not sure should they start or not work there. But such agencies as AICY can provide professional help in managing Facebook, Twitter or Instagram commercial account. So making business abroad will be much easier.
7) “Made in China”’s status is changing.
That’s not a secret, that in the past Chinese products had an incredibly bad reputation. But little by little things change. By now foreigner customers start to understand that there are good Chinese brands and their quality is high.
Once the brand leaves its local market and goes overseas it receives international recognition. The more Chinese players come to the international market the sooner “made in China” will become another name for quality.
8) Chinese sector of the international market.
For now, global overseas Chinese population has surpassed 100 million, and that their spending power cannot be underestimated. Chinese consumers sometimes require different products than what is available to them in the countries they now reside in, because of their Chinese way of life.
Overseas Chinese represent an increasingly lucrative consumer segment, especially as online consumer spending growth at home is expected to slow as e-commerce penetration plateaus in major cities. However, in lower-tier Chinese cities, online platforms such as Pinduoduo have seen phenomenal growth by selling cheaper products to users with lower spending power.
Markets like Australia, as well as Southeast Asia with its 600 million consumers, have become even more important to e-commerce companies like Alibaba given current US-China trade tensions. With a Chinese diaspora of over 1.2 million – 15 percent of which are Chinese students studying overseas – Australia has the highest proportion of overseas Chinese per capita outside Asia.
Is all above pure theory? No, it’s not.
The big world has already got some amazing cases of successful Chinese companies in the global market. Huawei, XiaoMi, Oppo, and others are Chinese companies who in short time become serious international players and no one can underestimate this fact.
Huawei employs more than 180,000 people worldwide and serves more than 3 billion customers (the US market excluded). The company has always been a private organization that is owned largely by its employees (about 98.6%). Being an employee-owned company makes it less surprising that for its founder Ren Zhengfei and any Huawei executive people matter most when important business decisions are taken. Moreover, Huawei is recognized as a company aiming to create an integrative work culture where east and west meet, where employees’ enjoy a heightened global sense of awareness. Huawei pursues high global standards such as safety, health, language, customs paperwork, laws and regulations, local customs and etiquette. How did Huawei escape the typical traps Chinese companies step into when going global? Much has to do with the thinking and philosophy of its founder.
Another bright example is Xiaomi. It has emerged as the market leader in several key regions like India and other parts of Asia when it comes to affordable and value-oriented smartphones, Xiaomi The good run extends onto regions like Europe, where Xiaomi has managed to achieve strong annual growth.
Xiaomi’s recent results show that the company is focusing on cutting down its dependence on the Chinese market and growing it further in international markets, as it ended up receiving only 60% of its total revenue from China this time as compared to 72% last year. Its combined net profits for Q4 2018 tripled to CNY 1.85 Billion ($275 Million) YoY, exceeding average estimates. For the full calendar year of 2018, Xiaomi brought in revenue of CNY 175 Billion ($26 Billion) and made a net profit of CNY 8.6 Billion ($1.2 Billion), which is pretty impressive on its own.
In South and Southeast Asia markets we also can witness a unique Chinese marketing strategy, which already have proved itself.
Chinese companies generally are expanding to other markets that are similar to China – mobile-first, mobile-only markets. China is expanding into Southeast Asia, South Asia, South America, Latin America, Africa. As cross-border is becoming a new thing, the new fad, there will be a lot more money in this space, which on one hand will be positive for us because our companies will get funded more easily, but on the other hand, the better deals will be more competitive and we’re going to have a lot more competition.
The challenges and problems that consumers have in Southeast Asia and South Asia are quite similar to the ones you’ve seen in China over the last decade or so, so the solutions that the Chinese entrepreneurs have developed are more suited to solving the problems in these markets versus the one-size-fits-all (strategies) that you get from, say, Facebook or Google.
Chinese strategy is different from Western. U.S. companies have gone in direct with their platform that they sell to every country, whereas they’ve done is partner and invest in local players and bring in technology and know-how, especially around areas like artificial intelligence and machine learning. They’re not going in under their own brands or with their own products. This strategy is a lot more effective, so it’s China-plus-local versus North America.
By now China is poised to overtake the US as the second largest global economy by 2020 and destined to remain an engine of global growth for the next decade. So it’s time for Chinese small business to go global.
The global market is hungry for affordable articles of good quality and Chinese enterprises can provide it.
Cultures and perceptions shift in new countries, but the rules of marketing are always the same. Chinese business just needs to build an audience, earn their trust, learn what they most want, then sell that to them. It’s always easy to make using social media, such as Facebook, Linkedin, Twitter, Instagram for these purposes. It works every time, regardless of language or location. And there are such agencies as AICY who can help to make Chinese brand global.
Brizzo is a dynamic and energetic investor, marketing strategist, musician and online reputation specialist. He is the Co-Founder of AICY Create, https://www.aicy-create.com/, a leading marketing agency based in China, with expertise in Personal Branding and China Digital Marketing.