China is the worlds larges consumer market, with a population of 1,4 billion people and a fast growing middle class. Most European brands have a costumer based between 200 to 400 million people. Meaning, if EVERYONE in Europe is your target market, then why not focus on one market with a bigger reach.
This further is pushed by the fact that the middle class is expected to continue growing, and the country has just set a strong goal to double the middle-class income of 2020 by 2035. Meaning, it will not only be the biggest middles class but also one with a purchasing power comparable to US. Once this is done, China will be the world’s largest economy, consumer market and people with have a purchasing power comparable to US or Europe.
Combined with a population with positive outlook of the future and wanting live a more individual lifestyle has created a booming demand for more brands, product, variety, all to fill peoples needs, wants and just wanting to find the right product that they feel is fit for them.
So there is no surprise people are rushing to this market, and trying to get a piece before the market stabilises and calm downs.
Now there is still time to establish a presence as a go to brand in new niches.
This has created a booming market, that has keep growing even during Covid. With international brand’s moving in, local brand’s blooming and a range of mix between the two. All trying to satisfy an ever growing consumer group.
However, this won’t last forever. Now new niches are being created and filled, more people joining the middle class and finding products they like. At some point, supply will be bigger than demand, and the market will stabilise like Europe or US.
Once this happens, you won’t go in to grab new niches, you will have to fight off existing competition.
Changing mind sets from “Oh here is something new that fits me, I want to try!” to “which one of all these choices will fit me and which should I get.”.
And the switch will happen in a few years… As both the market, government and people are pushing for it with support, lowering barriers and “creative imports”.
*Creative imports or DaiGou: people traveling or living outside of China buying products and bringing or sending them back to sell inside of China as the good isn’t available in the market or due to price in market being high.
So where to start? First questions should really be, should you start? Or should you let somebody else handle it. The market is fast, complex and requires full attention. So unless you want to drop everything, learn mandarin and moving to China. You might need some help.
There is about 18 different major social media channels and 14+ online sales channels that you would likely need to know about. As all when it comes to social, content and channels in China is between 5x – 7x bigger than in Europe.
You need a value chain that works from start to finish, delivering the product door to door within 24h in some cities and ensuring that it works with all channels, agents; while still being competitive.
Ensuring you are protected from IP theft, price wars and other issues that might come along risking your expansion.
So you need to keep a good eye on your market, brand and cash to ensure the expansion goes well, if you don’t have a good handle on the expansion this can fast become a black hole for cash.
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