By selling your product or service in another country, you can introduce your company to huge markets, increase your sales and profits, gain brand recognition, reduce the risk of only operating in one market (eg, due to economic or seasonal downturns) and extend your product’s life cycle.
Which country? There are several steps:
- Making a list of countries to be interested in.
- Should take into account Business Environment in the countries that comprises the Political, Legal, Economic, Technological, Geographic, Social-Cultural.
- Considering more carefully the product – is it suitable for any of the countries on the list?
- Should undertake the usual market research, to ensure that people in the target market will want to buy your product or service
When to enter?
There are two options: aim to be ‘first to market’ or wait and see how successful competitors are and follow them into the market.
By aiming to be ‘first to market’, companies will be taking several risks. Firstly, regardless of how thorough your market research is, you cannot guarantee that people will buy what you are selling. Secondly, depending on your market entry method, you may have to invest high capital or meet resistance from potential local partners who are unsure that the product will succeed.
By following your competitors should they succeed, you will know that there is a market for your business and it is much more likely that local companies will be willing to partner with you.
However, you run the risk that local customers will have become loyal to your competitors’ brand and will not want to buy from another company.
Market entry methods.
When you know the scale of entry, you will need to work out how to take your business abroad. This will require careful consideration as your decision could significantly impact your results. There are several market entry methods that can be used.
- Exporting
- Licensing and Franchising
- Joint ventures and strategic business alliance
- Foreign direct investment. Greenfield Investment
- Piggybacking
- Turnkey business project
In this article will talk about Exporting using Cross Border e-trade, using China as an example.
COVID-19 brought out many industries e-commerce battlefield. COVID-19 caused consumer good sales to move from offline to online channels as consumers were hesitant to visit offline stores. Additionally, foreign brands’ sales declined dramatically in their home countries, thus they doubled-down on Chinese e-commerce platforms.
Habitts of Chinese customers.
- Chinese consumers prefer to buy goods on mobile phones.
- They like to try new brands.
- They like well-designed packages.
- They trust those products more if those were popular online or recommended by people/influencers they know.
- The domestic logistic is advanced in large cities, and delivering process usually takes 1-3 days only. So consumers do not like to buy from e-stores which require them to wait long to receive packages.
If to start cross border e-trade there are key ideas of operation strategy.
- Choose a cross-border e-commerce platform and warehouse to open an online store.
- Branding and marketing on popular networking platforms.
- Work with KOLs (key opinion leaders) and KOCs key opinion customers).
- Livestream selling on chosen cross border e-store.
What are advantages of cross border e-trade? Advantages of cross-border e-commerce over regular trading:
- Opportunity for a producer to export smaller quantities to China.
- There is no need to certify and test the products as they are imported into China for personal consumption.
- Reduced tax rates.
- Easier customs clearance and other procedures.
- Free trade zones with developed infrastructures are located in many cities in China. Warehouses and logistic services are convenient.
Cross-border e-commerce trade: logistics and warehouse
Examples of Cross-border e-commerce trade: platforms
Digital marketing strategies to gain customers in China.
Blogs Platforms / applications with mainly textual and graphical content, namely Xiaohongshu, Weibo, WeChat and Zhihu. On these platforms, content is primarily UGC (User Generated Content), such as reviews and product reviews. For example, Miranda Kerr has her official account on Xiaohongshu.
Short video platforms. Brands create promotional videos to engage users and get feedback. It is a more indirect channel to increase audience interest in the product. For instance, Porsche has its official account on Douyin, and Porsche asked other popular accounts to make videos about Porsche cars.
Live streaming platforms are the closest in-store shopping alternative to online. KOL demonstrates product features and specifications in real time. At the same time, the audience can ask questions to KOL to remove any doubts they have before making a purchase. This makes it one of the most effective sales promotion methods. Adidas has long duration livestream at its official Douyin account.
KOLs are famous persons whose appearance with products is valued by a broader audience and they trusted and respected specifically their status quo or specialties. KOCs are valued by their opinion from their experience with products and services. They are people of no status quo, which makes them relatable to the audience. The size of KOCs’ followers may be smaller. KOCs’ followers are very loyal.
If you are considering enter China market using cros border e-trade our suggestion would be use Douyin – The New Social Commerce Frontier For International Brands. Douyin, TikTok’s twin sister, was also developed by ByteDance company.
Douyin is for Chinese market and Tiktok is for overseas markets. Douyin has all functions of TikTok, while Douyin has some functions which TikTok does not, such as e-Store, sending gifts (money) in the livestream show, and cross-border e-commerce store. Till August, 2020, Douyin had 600 million active users. It is Top 1 app among short-video apps. The GMV（Gross Merchandise Volume）of Douyin e-commerce in 2020 was above 500 billion yuan (around 74.5 billion USD).
Here is an example how much it could cost to enter China market using Douyin in first 180 days and what could be achieved result.
Example of Marketing plan in development stage in 180 days.
No one market is easy to enter there are many opportunities and challenges. But is is worth to try.