Australia China

Business Council

Setting up an Online Store for China

@AusChinaBC

Welcome

Alison AireyCEO

ACBC

@AusChinaBC

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@AusChinaBC

Presentation

Ms Honor McLennan, Assistant Director (China Team)

@AusChinaBC

Presentation

Mr Ryan Molly, CEO Redfern Digital

Setting up

an Online Store in China

FOOD &

BEVERAGE

CLOTHING &

FOOTWEAR

MOTHER &

BABY

HOUSING &

FURNISHING

BEAUTY &

COSMETICS

ENTERTAIN-

MENT

ELECTRONIC

DEVICES

WATCHES &

GLASSES

JEWELRIES &

ACCESSORIES

Safety 90%

Pricing 68%Ingredients 65%

Pricing 70%

Style 68%Texture 56%

Comfort 55%

Safety 90%

Ingredients 58%

Quality 70%

Safety 60%

Safety 71%

Quality 65%

Quality 67%

Safety 60%

Function 66%

Safety 58%

Design 80%

Pricing 65%Material 65%

Design 84%

Pricing 69%Material 59%

Fresh fruit

SeafoodFresh milk

Sneakers

Casual wearSportswear

Infant formula

Prepared foodDiapers

Toys

Pots

Kitchenware

Skincare

CosmeticsFragrance

Outdoor gear

Fitness gear

Water purifier

Cleaning robotsAir purifier

Watches

Sunglasses

Diamonds

PearlsGold

7

TOP CONCERNS

MOST NEEDED PRODUCTS

PURCHASE INTENTION IN THE NEXT SIX MONTHS

22.9%HIGHER SPEND

20.4%LOWER SPEND

19.5%HIGHER SPEND

20.5%LOWER SPEND

26.6%HIGHER SPEND

18.4%LOWER SPEND

20.0%HIGHER SPEND

29.4%LOWER SPEND

29.9%HIGHER SPEND

12.7%LOWER SPEND

21.4%HIGHER SPEND

19.0%LOWER SPEND

24.6%HIGHER SPEND

25.6%LOWER SPEND

28.5%HIGHER SPEND

20.6%LOWER SPEND

30.4%HIGHER SPEND

20.5%LOWER SPEND

Chinese consumers show strong interest in purchasing Beauty & Cosmetics and Mother & Baby

when it comes to general cross-border shopping online.

Which one is right for me?

SME (In-market)

Large (In-market)

Large (Market-entry)

Domestic WeChat Mini App

Vertically Integrated

Douyin Store

Paid Media Launch

CBEC Tmall & JD

CBEC WeChat Mini App

Paid Media Launch

Daigou

Domestic Tmall & JD

Vertically Integrated

Offline Retail

Paid Media Launch

Daigou

CBEC Tmall & JD

CBEC WeChat Mini App

Paid Media Launch

DistributorDistributor

MARKET ENTRY MODELS

SME(Market-entry)

Little Red Book: A social e-commerce

platform. Users come to RED for trusted, quality content. It is an ideal place for new

brands to create word of mouth and build its brand presence in the highly competitive

Chinese online market.

Douyin Store: Douyin allows users to both link to stores on e-commerce platforms such as

Taobao and set up a native e-commerce shop. Setting up a Douyin store allows

followers to buy products directly on the app.

Youzan is one of the most popular WeChat store developers.

Benefits of these platforms include:

●Easy to offer discount codes●Import products directly from Shopify

●Receive payment v ia WeChat and Alipay directly to overseas bank account

Tmall Global Tmall is the cross-border arm

of Tmall.com, with a user base of 601 million. It is a B2C platform and one of the

most popular cross-border market places in China where international brands can

run their own stores.

Kaola is one of the largest e-

commerce hypermarkets in the Chinese market.

JD Worldwide is the cross-border arm of

JD.com and it’s the second largest B2C platform in China. JD is known for its

excellent logistics network.

Social Media & Grassroots Ecommerce, Flagship Stores and New Retail

Hema is Alibaba’s rapidly expanding offline

retail store. It’s the digitization of the entire value chain.

WeChat Mini Program are built within the

WeChat platform. Users no longer need to leave the WeChat ecosystem.

10

Setting up on WeChat

Why use Mini Programs to engage online users?

• A new way of connecting to users and prov iding serv ices• Easy to access and grow on WeChat, delivering a heightened user experience

• WeChat account (own media) + mini program = social commerce platform• Integrate membership system and shop functions – CRM features

• Multi-channel traffic acquisition• Easily accessed and disseminated within the WeChat ecosystem – closed loop

• Higher exposure (the mini program is automatically saved once it’s clicked into)• Personalization for the followers

1.2

Billion

1

Billion 746

Million

2

Million

MAU on

WeChatMini Programs

Launched

RMB of Daily

Transactions through Mini

Programs

Mini

Program MAU

Current numbers on WeChat…Setting up an account on WeChat

• WeChat is the largest social media platform in China, with over 1.2 billion monthly average users

• A cheaper alternative to setting up an entire website• When a user subscribes to a brand’s WeChat account, a personalized

welcome message can be sent to them, alongside options for learning more about the brand

• An automat reply system can be set up for followers

Managing Costs of E-commerce Platforms

Tmall Global:

• One-time deposit fee: RMB50,000 to RMB300,000

• Annual serv ice fee: RMB30,000 to RMB60,000

• Commission rate per transaction: 2 - 5%If the store sells products across multiple

categories, then the applicable fees are equivalent to the highest category fee.

JD Worldwide:

• Refundable deposit fee: USD15,000• Annual serv ice fee per store: USD1,000

• Commission rate per transaction: 2 - 8%

Kaola:

• Initial deposit: RMB10,000 to RMB100,000

• Annual serv ice fee: USD1,000• Commission rate per transaction:

2 – 10%

Xiaohongshu (Little Red Book):

• Deposit fee: Varies depending on the category and brand, but on average,

is USD3,500 for foreign brands. • Annual serv ice fee: RMB10,000 to

RMB60,000• Base commission rate: 5%

LRB dropped its commission rate from 15-20% to 5%, citing the COVID-19 outbreak

as the reason.

Discounts and Promotions

Steady normal price + normal

coupon

Platform marketing strategy

CRM to increase loyalty

Promotional price + promotional

coupon

Sales Pricing• Stable daily prices to increase the credibility of the

brand

• Discounts can be controlled by issuing coupons and discounts or by reducing the price

• It is difficult to establish brand image if the price is

too low• Brands can prov ide KOLs and Taobaoke customers

with exclusive coupons• Offer benefits through a CRM system (membership

system) specifically for new and old customers

Discount Strategy• Use discounts to reduce price if it is higher than

competitors• Use discounts to pull up the ATV if the price is similar

to competitors

Sales strategy (Promotions)• Hold promotions during the traditional and popular

holidays

• Conduct campaigns throughout the year, e.g. centered around a specific theme or for product

launches• Rev iew campaign results and adjust strategy

accordingly

Drive

traffic to

E-commerce

store

01

02

03

BundlingA popular strategy for brands is to package multiple types of SKUs at one time. It gives consumers an opportunity to discover what SKUs they like.

MerchandiseBrands can come up with creative merchandise offerings that goes with their main products to encourage purchase. E.g. Alcohol brands designing shot glasses to sell with their alcohol, or baby food brands designing bibs or toys to sell with their main products.

Limited EditionBrands can develop limited edition products for specific holidays or campaigns to enhance the feeling of exclusivity, and drive sales during that time.

04 VIP/Loyalty SchemesEnsure that customers have a reason to purchase again by offering VIP and loyalty schemes with unique, added value benefits.

Tips for creating repeat purchases

Content Format

Graphic

contentQ&A

Live-

streaming

In-APP Advertising

Options

• Banner advertising

• KOL live-streaming• App opening ads

• SEO management

• Taobao Express• Diamond Booth

• Tao Bao Ke

• Pin Xiao Bao• You Hao Huo

Examples:

Recommendat ionqualit yproduct sdaily

•Productintroduction +

brand story

Unboxing, t est ing,and responding insync

•Product packagingand texture display

•Try-on haul

Post s for brands’follower community,able t o interact with

cust omers

•Product s

introduction +Int eractive cont ent

Recommendat ionsect ion for onlyqualified cross-

border product s.

•Product

introduction +brand story

In-APP Marketing Case Study: Taobao & Tmall Global

One of the biggest issues foreign brands encounter

when entering China is that they underestimate

the budget needed for an effective marketing

strategy. Yearly budgets for brands can range

between USD 10,000 on the lower end to over USD

1,000,000 for larger brands

Marketing services that your budget may look to

cover include:

i. Baidu Search Engine Optimization & Search

Engine Marketing

ii. Public Relations

iii. Website Development

iv. Paid Media

Paid Media and BudgetingTo increase brand awareness and drive traffic to online stores

01

02

03

Social Media/E-commerce

Paid MediaPaid promotional tools built into the platforms

Product SeedingSending products to grassroot users to generate noise about the brand

Key Opinion LeadersKOLs can promote the product or service to their follower base

Types of Paid Media in China

• Social media has evolved rapidly with the emergence of

multi-platform strategies for brand communications, becoming one of the main sources of information on

brands for potential consumers.

• Brand marketing has evolved from simple online

engagements to an online-to-offline approach.

• In a broader sense, social marketing helps to develop

a brand experience circle.

Brand marketing and social media are evolving together.

Source: iResearch; Kantar CIC

The 2000s

Social media as a platform to increase

brand awareness

The 2010sSocial media as a platform to engage

and communicate with consumers

The 2020s

Social media lies at the core of

creating a brand experience circle

The evolut ion of social media

Social media is a key touch point

connecting the other elements

in a brand experience circle.

Source: iResearch; Kantar CIC

Brand experience circle

BRAND

Offline

Distribution

Social

Marketing

Media

Advertising

Embedded

Marketing

Offline

Events

Online

Distribution

• A complete brand experience circle

will make sure that consumer

expectations are met and exceeded,

which can contribute to building

positive IWOM (Internet-Word-of-Mouth).

• This can help to improve the brand

image, allowing more people to

become engaged in the circle,

attracted by recommendations from friends, family members or KOLs.

Content Marketing: Own Media

To develop touchpoints for reaching consumers across different social media platforms, brands should create official accounts and develop a content marketing plan for their own media pushouts.

• Understand different styles and formats for

each of the platforms

• Specialize content according to

demographics and interests to increase

engagement

• Stay on top of trends or hot topics

• Always have a call-to-action

• Create content that invites user participation,

e.g. challenges, giveaways, contests, polls

• Develop content pillars to focus on for each of

the platforms

• Consistent brand style, design, image and

identity across all platforms

WeChat, as the largest platform, is a great tool for brands to build communities

and encourage customer loyalty.

Closed Systems and Restrictions on Direct LinksMany of the major social platforms in China are closed systems or have restrictions on what

outside websites or platforms can be directly linked.

Closed Systems

The closed systems make the

platforms’ content difficult to index for search engines.

Alibaba’s platforms are not indexed

on Baidu, which forces customers to

search for products on the platform and not the search engine.

Restrictions on Direct Links

Restrictions on links to external websites prevent

the diversion of user traffic off the platforms

WeChat regulates external links, especially to competitors. Direct links to e-commerce

platforms such as Taobao and Tmall, news

aggregate platforms such as Toutiao, and several short video platforms such as Douyin

and Kuaishou are blocked.

Weibo implemented new regulations restricting

access external links, with exceptions for government authorities, authorized media,

major web portals and some official businesses.

What about Websites?Chinese consumers have a different purchasing journey, as they will often

search for and discover new products

directly on e-commerce or social media platforms, rather than through a search

engine. However, ahead of trade shows, brands may still want to set up a Chinese

viewable website as a form of company

validation.

A website can be valuable as:

• A reliable source of information on

the company

• A lead generation platform

(more so for B2B)

• A customer serv ice touchpoint

• A brand validation tool

• Server

• Domain

• ICP registration

• Police registration

• Content translation

• SEO and maintenance

Hosted in Mainland China

Requirements for setting up a Chinese website:

Not Hosted in Mainland China

• Server

• Domain

• Content translation

• SEO and maintenance

* Domains can be purchased from a registry** ICP stands for Internet Content Provider. An ICP license is a state-

issued registration that allows a China-based website to legally

operate in the country. Having an ICP license allows companies to host their websites on a server in mainland China and is required for

all businesses that have an e-commerce site in China. The server is usually leased through a service provider such as Alicloud or

Amazon Web Services (AWS).

Search result for “Man-made meat”(Plant-based meat) on Baidu

A website that is invisible or has no traffic makes

no contributions to either marketing or sales.

Based on students’ search behavior, websites

should be optimized to the most relevant

keywords (SEO), thereby boosting the website’s

v isibility on search engines.

• Brand Keywords

• Product Keywords

• Target Audience keywords

Website marketing

Before attending tradeshows in China, brands can set up their WeChat accounts and prepare the QR code to their account. During tradeshows, to direct consumers or business partners to engage with the brand afterwards, brands can display their QR code.

WeChat QR codes are widely used in China and are an effective method of encouraging new consumers or business partners to stay connected after the trade show. Brands can add tags to anyone that scans a specific version of the QR code to indicate who the followers are, e.g. which QR code was scanned.

Connecting during Online/Offline Tradeshows

Example of RedFern Digital’s

WeChat QR code

Make it as easy as possible for people to access your products

• Brands need to ensure that they are across

as many sales channels as possible, then invest in paid media to create massive hype

to drive traffic volume.

As many outlets as possible!

Case Study: PenfoldsCategory : Wine, AlcoholBrand: Penfolds

Origin: Australia

Ecommerce & Social MediaOnline channels: JD, Taobao, Tmall, WeChat, etc.

JD Tmall

Expanded sales channelsIn 2014, Penfolds expanded onto e-commerce

platforms in China in order to gain access to a

wider range of channels for sales and promotions.

Investments and localization in ChinaMany foreign wine brands sell tea products from abroad by

working with Chinese distributors. Penfolds works with Fuyi

Group(富邑集团), which helps the brand to act quickly and meet the needs of Chinese consumers.

Consistent design and productionPenfolds uses designs and productions that are of high quality

and consistent with its branding for the China market. Using

consistent packaging designs and communication styles, the

brand is able to delivery their brand identity to the Chinese

audience, building up brand recognition in the China market.

Promotional channelsPenfolds also frequently collaborates with WeChat KOLs to bring

traffic to sales channels and uses an omni-media strategy across

platforms.

MAKING BRANDS CHINA RELEVANT.

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CWIP

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B

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SB

C B

D

E

S S P

WHATDOWEDO

Brand Audit Sampling

Creative Solutions Branding

Social Media Strategy

Digital Integration

Ecommerce

Production

Brand Packaging

SEO & SEM

Research

Paid Media IP Monitoring Web Development Consumer

@AusChinaBC

Q&A

Ryan Molly

Setting up an Online Store for China

Thank You