7 things to consider before marketing your business to China – part 1
China’s economy is booming, we are now third largest economy in the world, and there is no argument that we will become the world’s largest economy in 10 to 20 years’ time. The 1.3 billion population, double-digit growth rate, 4 trillion economy stimulus plan……
We could feel the trend, as more and more overseas companies approach us to assist them enter the huge Chinese market. They are determined, well-equipped with excellent product or service, they are confident with their business goal in China.
However, the lack in understanding of Chinese business culture and business practice could dramatically affect the ROI, the return of their investment. To put it simple, it is extremely important to figure out how the business operate in China before you start to sell in China, isn’t?
No. 1 The payment issue
In international trade, T/T and L/C payment terms are very common, we seldom use other payment methods like credit card, western union, cheque, or other third party payment platform like Paypal in large quantity international trade business.
In ecommerce, third party payment platforms like Alipay, Tenpay, Chinapay, 99bill etc are very common, so if you accept payment through Alipay, tenpay and other major Chinese third party payment platforms, it will be convenient for your clients to make the payment. Credit card payment are also common in China.
Chinese normally don’t trust an unheard-of ecommerce website, so they are unwilling to make payment through the payment system on those website. Practically, you could set up a transaction in a well-known ecommerce site like Taobao.com, people will be more happily to pay through there.
Withdrawing money from China has been an issue for foreigner companies, Alipay recently has launched a service which make the payment of ecommerce in China much easier, however, they do charge USD1000 system setting up fee and 3% transactional fee.
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No. 2 Business culture
China is a country that is in the process of shaping up our credit system, we tend to doubt the legitimacy and creditability of any business before we prove that they can be trusted. Trust is a key issue for across border transactions.
It is helpful if you display the certificate of your business license, tax license, certificate of well known organization(such as ISO, FDA, UL).
We are not familiar with business practice in your countries and we don’t have resources to verify your business. Buyers will feel released if your business has some endorsement from China, for example, membership of a Chinese organization, bank account in a Chinese state run bank, documents issued by Chinese government. Or even better, if you have a representative office in China, or at least a telephone number in mainland China that people will feel easy to call and track.