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Daxue Talks transcript #12: How to enter China’s offline FMCG market in 2019?

Find here the Daxue Talks episode 12. From the talk with Igor learn in 2-5 minutes how to enter China’s offline FMCG market in 2019.

Full transcript below:

My name is Igor Temirov, I’m an expert in developing foreign markets and for the last five years, I have been in China, helping several companies to enter the Chinese market.

  1. What are the different platforms to sell on?

It is a big dilemma right now. Maybe a couple of years ago, everybody would say “Oh you have to be on Tmall, if you are not on Tmall you cannot sell”. But, in the last two years, we have seen a growth of a lot of new APPs like Pinduoduo, like Jung Ji, Yong Xiang, where the sales are comparable or even higher than on Tmall and JingDong. So, at the same time, some companies chose the strategy of selling only on the Tmall platform. It is also working, it is also workable, but I think you need to work with the big guys, with JingDong and Tmall and I think Tmall would be your ultimate goal.

But at the same time, don’t forget about these newcomers, because these newcomers need to impress the investors, they need to impress and they are finding absolutely unique deals where competition for your product will be much smaller and will be much more focused, and we have a lot of successful examples with Yong Xiang, Pinduoduo and other platforms.

2. If I want to sell offline FMCG goods in China what steps need to be taken?

Technically it is pretty much the same process as any other country in the world. So, your best way in China is to recruit your local Chinese sales managers. One of the features of the Chinese market is that it is very difficult to find distributors in China because distributors do not advertise them online, on their website, … so, they keep quiet. So, when you recruit your Chinese managers they are coming with full knowledge of the market, distributors, pricing strategies, everything. And they have, in many cases, special relationships with their buyers of the main chains.

Then you prepare your presentation, a PPT with the main features and unique selling points for your product where you are describing your price positioning and, very important, what kind of marketing support you will give to your brand. Then you do the negotiation with the retail chain. The only difference with China is that it takes much longer than in the West. In the West, these negotiations are happening during one or two months, a maximum of three months and you are in. In China, this could take from six to twelve months of negotiation.

Enter China's offline FMCG market

3. How can I set up an online store to dropship FMCG in China without having a presence in China?

This is the so-called cross-border online format. So, yes, there is a possibility to establish your sales, but, if you look at the numbers, five years ago everybody was excited about this format and everybody was thinking that “Oh it will be like maybe 50% of our online sales”, but if you look at the numbers inside Tmall, it is very small. So, yes you can to that but to be honest it doesn’t justify the numbers: numbers are not there so this, I would say format, is not so impressive and not so recommended.

Daxue Talks is a show powered by Daxue Consulting, a china-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.