Visibility and Control. Critical Factors for Growing Your Business in China
Economic Growth
This economic growth in China has given Chinese citizens more spending power. They are no longer just looking inside China. There is a rising demand for Western products particularly in fashion, with clothing and shoes from Italy, pharmaceutical products from Germany, and health and beauty products, like vitamins and skin care products from Europe and Korea.
There are various reasons for this rise in demand for Western brands. First of all, Chinese consumers see Western products as high-quality products. Another reason is that some raw materials are hard to find in China, making certain products hard to produce.
Size does matter
China is one of the biggest markets in the world. There are over 1,4 billion people in China. Next to its sheer size, there is another essential feature of the Chinese market. Internet penetration is at 71%. Chinese consumers spend over five hours a day online, mostly on their phones, compared to three hours in the rest of the world. It is one of the main reasons mobile commerce is so prominent in China.
And it’s not just consumers who shop so much online. The B2B e-commerce market is also booming. China’s e-commerce market is the largest in the world. In 2025 it will be 2 trillion dollars. That is three times the size of the e-commerce market in the United States.
Distribution is Key
Online commerce is not the only important channel in China for western brands. Don’t forget the retail chains with brick and mortar stores. Several large retail chains have over three thousand stores. The main benefit of working with these retailers is that they know the Chinese market well. There are many different regions in China. Consumers behave differently in each region. Local retailers know what their customers want.
Rules and Regulations
Chinese law works differently than the west, so you need local expertise. You are fine if you follow all rules and regulations, but it’s easier said than done. It’s a good thing the Chinese government supports trade.
Challenges when importing into China
The procedure to import goods in China is complicated. There are several challenges that Western companies face when they want to sell their products in China.
Importer of Record: To import goods into China, you need an importer of record. This importer of record needs to be a Chinese legal entity that takes full responsibility for the import. Establishing a local legal entity in China is challenging. You need to know the local language and culture and be fully aware of all rules and regulations, the tax system, and the documents you need to name the most important things. You also need Chinese staff.
An alternative option is to use an intermediate who can facilitate your trade in China, like Ahlers. Using Ahlers’ Trade Facilitation services, you can focus on marketing and sales, and we take care of the rest. We make sure the goods are transported to China, deal with Chinese customs, and store your goods in one or more of our warehouses, from where we can take care of distribution.
Getting Goods Through Customs: To get your products through Chinese customs, you need to make sure your goods meet all the requirements in terms of quality. Samples need to be tested, approved and certified in China. Chinese safety and quality standards have to be met. Ahlers has the knowledge and experience to determine what products need to be tested and certified and what is required to get your goods through customs.
The benefits of Trade Facilitation
As I mentioned before: speed is of the essence, so you need to have local stock at the right place at the right time. Ahlers has a network of warehouses in China, from which we can ship your goods to retail stores or end consumers.
We take care of the whole logistics process from import until delivery to your customer, whether a distributor, a retail chain or a Chinese consumer. We manage the entire chain. Combined with our powerful business intelligence tools and supply chain analytics capabilities, this gives you complete visibility and control of your supply chain in China.
When you leave supply chain and shared services processes up to your trade facilitation partner, you can focus all your energy on what matters for your bottom line: developing new business and keeping your customers happy.
For more information on Trade Facilitation, download the Whitepaper Entering New Markets.
At your service
If you have any questions about trade facilitation or doing business in China, contact one of our experts or send me a message on LinkedIn.
Author Bio
Arno Coster is Director of Sales & Business Development - Global Trade Facilitation & After Sales Services at Ahlers in China. Ahlers provides state-of-the-art logistics support in sustainable supply chain management, warehousing, projects & machinery logistics, secured transport, trade logistics, after-sales services, and data analytics. Their extensive experience and knowledge of the Chinese market make Ahlers your ideal partner for business in China.
