Top five challenges facing small companies entering China and how to overcome them

Entering the Chinese market and selling to China’s 1.4 billion potential consumers is an epic undertaking. Businesses that understand the potential challenges associated with expanding must use a cross-border marketplace that will help small and medium enterprises (SMEs) navigate supply-chain disruptions, a rising need for sustainable practices and language barriers.

For Australian companies looking to expand their business into China, here are five challenges and strategies on how to overcome these hurdles:

1. Cracking a complex market

Expanding into any foreign market is difficult, but the challenge is greater for smaller brands grappling with an unfamiliar language, stretched supply chains and potentially a hefty bill. In this endeavour, patience, research and partnerships are key. Understanding the market that you are entering is crucial, as is earning a consumer’s trust. Businesses should look at who the Key Opinion Leaders (KOLs) are in the region and leverage their influence to launch into a foreign market. Language barriers can cause issues between brands and platforms, so investing in a trusted third party ensures a smooth transition.

2. Selling luxury online

For luxury brands selling goods over the internet, these require a higher degree of trust and security, even more so if the brand is considered niche. For example, sustainable jewellery brand Courbet recently launched on Tmall Global and is leveraging new technology to engage shoppers online. The company can now show its products via 3D image rendering and a range of high-tech features connect sellers with prospective customers, who can use the platform to ask questions and experiment with different designs before settling on one.

3. Rerouting supply chains

Supply-chain disruption is a challenge that businesses are facing globally, creating additional speed bumps for SMEs. German chocolate maker Lauenstein Confiserie is one of 290,000 merchants who took part in Alibaba Group’s 11.11 Global Shopping Festival, where they had to overcome lengthy raw material delivery delays. Maximilian Kaub, Executive Partner at Lauenstein said, “The markets were totally closed, we couldn’t get any goods through customs and that took quite a lot of time to pick up again.” Lauenstein Confiserie engaged with KOLs who need large volumes of product before starting promotion, during the Festival. This engagement caused the company to reroute large quantities of their Europe-bound supply to China.

4. Localisation

For brands entering a new market, the process of localisation where you tailor products and services to the needs of local customers is imperative. So how can a business adapt products to a foreign consumer base without ever visiting the country? Finding a direct path to customers is key, business-to-consumer (B2C) helps companies receive more feedback, learn more about customers’ needs and cut middlemen costs, ultimately allowing them to provide better and potentially more popular products. The cross-border B2C eCommerce market is expected to reach $4.8 trillion by 2026, according to research group Facts and Factors’ report published earlier this year.

5. Growing sustainably

Brands selling to China are often headquartered thousands of kilometres away and countless tonnes of carbon emissions away from Chinese shoppers. For example, Melbourne-based coffee roaster The Sustainable Coffee Company grappled with keeping true to its name while setting its sights on China’s burgeoning consumer market through Tmall Global. The company has been carbon positive for 14 years, meaning carbon emissions generated by producing and delivering its products more than made up for with offsets like biodegradable or recyclable packaging, rooftop gardens and sustainable energy.

When looking to expand to China, The Sustainable Coffee Company calculated the carbon emissions generated by sending coffee to China and the journey to Tmall Global warehouses. Companies that are looking to sustainably expand into China will be a work in progress, collecting data that gives an accurate emissions number to determine how much brands will need to increase their carbon offsets.