Business in China: Chinese Consumer Preferences
Why do business in China? Read on to learn why this emerging marketplace is a major moneymaker for US-based sellers and how you can cater to Chinese consumer preferences.
Overseas expansion is a common milestone for any successful company. Established marketplaces like those based in Europe, Australia, New Zealand and Singapore provide security, but more dynamic markets — China or India, for example — can be more lucrative. So, why do business in China, and do Chinese consumer preferences differ from those in the US?
We’ll answer those questions, and a few others, in this brief guide. First, we’ll explain why China is a good choice for international expansion, and then we’ll explore four unique Chinese consumer characteristics you need to be aware of.
Why do business in China?
So, why do business in China rather than in India, South America, or any other economy? In short, because China has the biggest e-commerce market in the world. China boasts the largest digital buyer population worldwide, making it the most mature e-commerce on the globe, and in 2022, 46% of all of China’s retail sales took place online.
More broadly, forecasts by GlobalData predict that the Chinese e-commerce market will reach $3 trillion by 2024. So, this growth and established customer base offer an enormous opportunity for American businesses looking to expand internationally. And if this wasn’t enough, data from the IMF shows that the Chinese economy is on track to grow by 5% this year, even with all the uncertainty and global supply chain disruptions.
Other practical reasons to do business in China include:
- Market stability: China has been growing at a steady rate for over four decades, so it’s a reliable, stable destination for expansion.
- A skilled workforce: If you need talented, competent workers and specialist manufacturing know-how, China is the place to be.
- Low corporate tax: Corporate tax in China is typically 25%, which is slightly more than corporate tax in the US but much less than corporate tax in India, Mexico, or Brazil.
- Easy port access: A large number of world-class seaports make Chinese products easy to export.
Chinese consumer preferences
The advantages of doing business in China are numerous, but you’ll need to modify your marketing tactics and product-centric literature to do well in China. Next, we’ll dissect four of the most influential Chinese consumer preferences.
Curiosity is key
Knowing their products well is important to Chinese consumers in committing to a purchase — especially if they’re considering buying from an unfamiliar brand. Marketplace experts agree that people in China are curious about foreign products and find social proof and word-of-mouth recommendations very compelling.
Incorporating this preference — this desire to seek information — into your Chinese marketing plan is vital. Make your product descriptions detailed and educational, and provide a list of FAQs for consumers wanting to learn more. Use social media to cultivate proof and encourage happy customers to spread the word by giving them money-off coupon codes or free gifts.
Luxury is in vogue
Luxury goods are big business in China. According to research by financial services company Santander, Chinese consumers consider price an indicator of quality. Consequently, luxury goods manufacturers trading in the country are doing better than ever. For example, consumers spent over $73 billion on premium wares in 2021 alone.
Excitingly, McKinsey data shows this taste for indulgence shows no signs of stopping. China’s luxury market is predicted to grow by 14% this year, giving it massive influence over the types of fashion trends and luxury products we’ll see elsewhere in the world.
However, we’re beginning to see a shift. While Chinese shoppers bought 70% of their luxury goods abroad before the pandemic, this preference is starting to evolve. China’s domestic luxury sales doubled from 2019 to 2021 doubled from 2019 to 2021 to $68 billion. So, brands that get in early can capitalize on this growth and secure their place in the future of the global fashion industry.
China shops local
Chinese consumers prefer local products for their quality and innovation – not just for lower prices or a sense of national pride. Working with domestic manufacturers and developing a local supply chain means you can easily cater to these preferences and generate revenue.
Another reason Chinese consumers choose local brands is customer service. Accessible and responsive customer service is essential in China, so you must create a comprehensive and robust aftercare plan to compete with industry peers. Many US-based companies enter partnerships with third-party customer service solutions (Callnovo, for instance) or hire customer service agents who speak the local languages in China.
Simplify international transactions with a Chinese business account from Zyla
US-based marketplace sellers that decide to expand overseas — especially in emerging economies — benefit from working with experienced partners. Zyla is a leading payment provider, offering cross-border payment solutions for all business types. So whether you need to buy or sell overseas, we can help.
The free-to-open Zyla Account enables businesses to make collections and payouts internationally – giving you the freedom to do business anywhere, all with the security of our online platform.
- Open multi-currency accounts with local account details
- Make fast and secure global payments to suppliers, staff and partners
- Collect funds from marketplace sales
- Keep costs down with competitive rates