In an interview with Drapers last month, House of Fraser’s chief executive Nigel Oddy revealed details of the department store’s imminent launch into China.
Initially, this is bricks-and-mortar stores, but with online sales now accounting for 15.4% of revenues, a digital launch must surely figure in future plans.
Meanwhile other retailers such as Marks and Spencer, Next, Superdry and Topshop are all ramping up their online presences there.
There is little wonder that China ranks high on brands’ online internationalisation plans - it offers a potential market of 301.89 million consumers; take-up of mobile devices is 47.3% (expected to be 54% by 2018) and a relaxation of regulations make it an attractive market. Management consultancy McKinsey suggests this year, a third of global spending on ready-to-wear clothing, jewellery, watches, designer bags and shoes will come from the Chinese, and with their strong interest in western brands, this makes the country an exciting prospect. Here are some key considerations for those contemplating expanding into China online.
A Chinese perspective
As with any market, it is vital to know your audience. In China this means understanding not only consumers’ attitudes to shopping online, delivery time expectations (similar to Australia, these can be up to 24 days due to the size of the country) and how they search for items, but also their brand loyalty and opinion of foreign brands and products.
The Chinese differ from the Japanese, who much prefer native products to foreign ones, as the Chinese middle-class see western brands as more reliable and authentic. They also prefer personal contact, so when designing your site, you need to consider how you will deliver this - through live chat or comment functions.
As a society, the Chinese have a strong sense of family and tradition, so images reflecting family and friends resonate. Colour, language and text versus image layout will all have a role in ensuring your success. Your first priority will be the correct use of local language and then design layout and colour.
It is relatively well known that red means happiness and good luck in China – by changing a call to action button to red, one brand saw a 13% increase in responses; and by conducting cultural conversion analysis and implementing its findings across 11 language sites globally the same brand achieved a 500% uplift over a six-month period.
Other colours can also have a significant impact: blue is seen as trustworthy in the UK and has a similar positive impact for the Chinese as it stands for immortality, whereas white reflects death and mourning. Orange signifies joy and courage, whereas green means dependable.
On a product level, the sheer scale of the country makes climate a consideration when developing online promotions, particularly for clothing retailers. Promoting snow boots to the locals in Guangzhou (in the south) may not be the roaring success that you experience in Beijing (further north).
For a site to be visible via the main search engine Baidu, hosting your site in China is important, as is having a physical office in the country, a stipulation by Chinese law, and holding an Internet Content Publishers License, which is mandatory. It is also essential to make sure you have a .cn or .com domain name so both local and global search engines can index, and use the right Chinese language. For mainland China this is simplified Chinese, but in Hong Kong traditional Chinese is preferred.
You should allocate budget for paid search on Baidu and other engines - it indicates you are willing to invest in China and highlights your business is legitimate and enables you to display an official Baidu V badge. This gets your adverts a better position on the page and better formats.
Asos.com, Burberry, Uniqlo and Reebok have established ‘storefronts’ on Alibaba’s Tmall marketplace to help them launch online in China. The attractions of Tmall are clear - it ranks in the top 10 most visited sites in China and allows brands to create their own stores that reflect their branding, helping brand awareness. Tmall levies fines for sellers caught offering counterfeit goods, so genuine products are valued.
The seasonal dates that get Chinese shoppers spending
Similar to the key seasonal shopping dates in the UK, China sees a significant increase on particular dates.
National Day Golden Week, October 1-7
More than $158.94bn (£104.72bn) was spent on retail and restaurants last November during Golden Week, commemorating the People’s Republic of China’s National Day, making this a key week to consider for promotions. A second major uplift takes place around Chinese New Year, which will be February 8 in 2016.
Singles Day, November 11
Singles Day attracted a smaller but significant $9.3bn (£6.13bn) of trade in 2014 making this the largest single online shopping day in the world. The event, developed by Alibaba in 2009, has grown 60% from 2013. Celebrated with young singles organising parties and karaoke, online purchases of a wide range of goods are driven predominantly through the Alibaba site. Other brands also now run Sales on this day.