Author: Sadiq Suleman
Nowadays Chinese companies are focusing more and more on buying products via online mediums and they seek to acquire complete and current information regarding the product that they purchase. The Manufacturers and distributors, from which the Chinese businesses purchase their products, are enhancing the content and the features of their e-commerce website and product descriptions. The reason behind this is that the online buyers usually prefer to purchase from websites/platforms, which can provide reliable information regarding the product including whether the product is available at that moment or not.
Source: Forrester Research Inc.
The percentage of Chinese business buyers who make more than a quarter of their work-related purchases online is likely to double within three years, to 34% (Forrester Paper: Digital Transformation Made Simple for B2B eCommerce in China). However, these Chinese business buyers prefer to purchase their products via online shopping from those suppliers which can offer these Chinese business buyers clear information regarding the products and also regarding the prices of the products across all online and offline selling channels. Moreover, these Chinese business buyers also show their confidence on such suppliers which willingly offer updated information online to their customers regarding the availability of the product.
As part of a study by Forrester, a survey was conducted which involved more than 550 suppliers in China who belonged to various industries such as high-tech, retail and oil and gas, automotive, consumer products, manufacturing, distribution and life sciences (TradeKey operates in more than 35 industries). Besides that, as a part of that same study an inquiry was conducted to find out online purchasing preferences and in this regard a survey was conducted which involved 200 business buyers in China from state-owned enterprises, multinational corporations, privately owned companies and government agencies. These Chinese business Buyers were representing companies, which have average annual revenue ranging from 200 million Yuan (US$31.3 million) to more than 5 billion Yuan ($781 million), and they were carrying out leadership roles in their organizations such as, Chief Marketing Officer, Chief Executive Officer, Director, Manager and Vice President.
The reported concluded that buyers were interested in accessing accurate product information, availability of stock, return or exchange policy, any benefits attached or loyalty reward programs, order status, order history and the ability to download sales sheet and product information. Fortunately, suppliers have already taken steps to have better online presence (If you have not, check out our e–commerce solutions). Almost 97% of the suppliers are working on the e-commerce platform, while 95% are upgrading or implementing CRM (Customer Relationship Management) systems.
Apart from online channel, a supplier from outside of China can choose from different entry modes to enter into the Chinese market. The wide majority of firms that emphasize on selling their products across the Chinese market would have to start initially with a distributor that is working in the local market. If the results of the distributor do show any potential, the next stage in this process would be towards initiating more activities for sales within China through development of a local office for sales. Such a stage could also comprise of localizing the manufacturing process for becoming intensely competitive. A premium price would certainly be justified if one is able to provide good quality service along with a well-known brand.
Incorporation of any business in China would certainly require a period of incubation along with a significantly high amount of investment. It is certainly the core reason that medium size as well as small foreign-based companies emphasize on working with a distributor along with an intermediary that comprises of an incubator that would be able to provide a legal business license for operations with other business services.