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Features of China's FMCG market

Daxue Talks transcript #11: Features of China’s FMCG market

Find here the Daxue Talks episode 11. From the talk with Igor learn in 2-5 minutes about the features of China’s FMCG market.

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 differences and similarities of the Chinese FMCG market compared with the west?

There is obviously one factor which is the size.

The second factor is the number of global competitors. So, if you go to… I worked in France, I worked in Germany, in the Netherlands, in the US, … you can go to France, you will have Carrefour, you will have Auchan, but you don’t have Walmart, you don’t have Tesco, you don’t have public chains. And, when you go to China there are all international global chains: they are all here. You will have Walmart, you will have Carrefour, you will have Chinese, you will have Japanese chains if you go in the west you have the major Japanese retail chains, you have some from Thailand, …. So, you really have to work with the leading retail chains.

And, the third factor is that none of these chains covers the whole of China. So, you are practically working in an area where even the largest chains with 400 stores do not cover the whole of China. You have to build your strategy not only based on the major retail chains but also on the local and regional players.

And about the last factor, I am always saying that 50% of what is happening in China is exactly the same as in the West because it is a western model of distribution: you have supermarkets, you have sales managers, you have buyers, you have distribution centers, you have promoters and these are all elements of the western retail or distribution. But what differs China from the rest of the world is of course online, because it is technologically completely different, by size, by logistics, by convenience, by the dynamics. So, it is probably the last factor that I want to mention that you have to be prepared in China that in twelve months it will be a different place. It is so dynamic in terms of products, in terms of new formats and business ideas.

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

The first step you have to do is your website in China, in Chinese, on Chinese servers. A lot of companies are thinking that “Oh we will just translate our European website into Chinese and we are fine”: No, it is not fine, it is not working completely. So, it’s not working because Chinese consumers cannot access your website, it will take them 2 to 3 minutes to load one page and they will not do that.

The second thing is the cultural difference and the difference in the perception of the content. Chinese people can physically, physiologically, perceive, can read, consume, a lot of characters on one page. So, if Chinese consumers look at the European pages, they think this is fake because there are only 3, maximum 5 pictures, where we know that in China if you take any platform, any online store, it is 13 to 17 pages. It is funny that sometimes, even if I am reading about western brands, I go to Chinese websites because Chinese websites are putting much more information about the brand, about the quality, features of the brand. So, this is the first step.

The second step is that I would suggest recruiting an online sales manager. This is the guy who will help you to get into the main platforms (online platforms), including the top ones: Tmall, JingDong, … And, another person that I would strongly recommend is to recruit a Chinese designer: a graphical designer for your website. Why? Because in Europe, most of the websites don’t change even for 1 year, 2 years and there is no problem, I mean nobody cares about this. But in China, you have to upgrade, update, change some of the content on your website, on your online platform weekly, bi-weekly. So, you will save a lot of money by having this person inside your organization because a lot of these visuals and graphic designs, you can use both online and then offline.

3. How essential is it to create your own ( website in China?

You have to watch how consumers are buying or selling the product because every day there are 500 new brands appearing in China and the same number disappears in China. And the first reaction on the person is “what is this product or brand name about” and consumers are trying, for the first step, to see “are you real or is it fake”. So, that is why establishing your website will send the message that this is real. The second point is…this is linked to the question “what is the influence of online to offline”. A lot of distributors, a lot of retail chains, will immediately search for your product: Is it fake? Is it real? Are you registered in China or are you still, you know, just talking? So, that is why it is important.

FMCG in China

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.