Remodista Think Tank - China Commerce 101

Remodista
Think
Tank

China Commerce 101
Community Collaboration Partners

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GLOSSARY
Truth of Dare: eCommerce 3
China Commerce Solved 4
Making Maps 7
Legal Establishment: A Basic Guide 12
Cross Border Commerce: The Core Concept 16
Choosing a Commerce Model: B2B 20
Your Salesforce and Pricing 24
Choosing a Model: 3rd
Party Platform 26
China Commerce: How to Stand Alone 32

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TRUTH OR DARE: ECOMMERCE
#1 Truth - Your Kindergartener and most Chinese shoppers will never see a laptop in their
hands unless someone else puts it there. They aren’t wired to find it valuable.
Laptop usage is going down, and our thought leaders are still looking at it as the Holy Grail.
It's low hanging fruit, so not a good long-term plan. Technology change in business seems
to lag far behind the urgency, and time is of the essence. Not because the world is
crumbling, but because our general transactional go-to-market strategies are outdated and
not seamless for a global approach.
What is eCommerce...what is going away? It’s a heavy onsite eCommerce platform
implementations within in a business. It is usually an onsite, multi-year, multi-million dollar
approach to transactional commerce.
It's big, it's expensive, we like to bolt stuff onto it, it's going away.
General pain points for these expensive implementations: many brands are invested in
eCommerce platform technology, with no knowledgeable internal resources who
understand the product's potential, less available external resources through consulting
management, and brands are left throwing more money at the problem to meet their
business objectives. A mess, and we will see this ball of yarn continue to knot, as we head
into 2015.
People will continue to transact on a laptop, but the numbers are dropping as we speak.
The focus should be on listening to the consumer and understanding their growing points of
entry. Laptop Superbowl is over. Time to place a new bet.
We hope you are building a new plan, or a cut over plan that re-stacks focus on your
consumer's growing points of entry: wearables, watches, glasses, mobile devices, LCD
touch screens to name a few.
Putting technology ownership in the cloud, and having the product be in charge of its
capabilities sounds like a good business model. Let the brand focus on the lift and not the
configuration of software. The consumer is driving the purchasing now, not technology.
Technology is pervasive and much like connective tissue bringing everything together in a
seamless sort of way...so it's not the heart.
Here are two questions you should be proactively asking your platform providers:
1. Are you heading into the cloud with some sort of SaaS model?
2. Am I coming with?

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CHINA COMMERCE SOLVED
Technology hardware costs continue to fall, at the same time, education is opening up to
the entire globe, and we see a new middle class emerging. This is important to understand
because it is not the consumer you are looking at today, but the consumer of tomorrow.
They will be here quickly, and it will be imperative to acquire them with a global strategy.
If that is not enough to get your attention, then look at Alibaba, who is building a world-class
retail brand for the American consumer, with a $200 million dollar investment towards
11main.com. So not only do you need a strategy to acquire global customers, that same
strategy needs to keep your current customer as well.
Imagine how much easier it is for a Chinese company to acquire US customers versus US
brands acquiring Chinese customers?
We are organized and it is easy to do business in America. Doing business in China is
confusing, challenging, and overwhelming to the average US Brand. However, we have no
choice because the world is becoming global, so we have to figure it out. We need solutions
and platforms that can take a brand around the world, and we are mapping out the players
who can help our brands acquire customers and transact globally.
I spent some time talking with Ernie Diaz, Chief Marketing Officer, of Web Presence in
China, about the 5 basic steps for extending an American brand into the Chinese market
thinking with mobility. As we move through our Global Brand Commerce program we will
take an in depth look at each of these steps, along with identifying community partners who
have innovative solutions.
KS: How can a brand establish a legal presence in China?
ED: The first step to China sustainability is establishment of a legal entity. Don’t fear the
commitment: fear the repercussions. Virtually any business –related initiative, from
advertising to issuing receipts, requires a license and chop.
Many SMEs have neglected this step, as only a few years ago the process of establishment
was far less streamlined than it is now. As a result, these companies relied on distributor
agreements, leaving their branding and strategy up to a third party, and creating grey
channel competition problems.
Given the large base of western-run firms specializing in China establishment, which
together with government streamlining result in lower costs, the downside of going into
China versus the cost is not justifiable for the company committed to growth in the market.

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Yes, there are ways to piggyback on another company’s licensing for the short term. It
should go without saying that such a company should be a trusted in-country partner.
KS: How does a brand look at positioning in China? Can it be done with hands on
research and/or with big data?
ED: Market research is no longer a matter of pricy industry reports and multi-region surveys.
The ever-growing number of Chinese who want to pay the premium for western quality are
searching and buying your category of goods online. Baidu, China’s Google; Tmall, the B2C
online giant, and other portals get traffic from every corner of the country.
A manual search for your terms and seeing where the links take you, is in and of itself a
revelatory experience for western brands curious to see what platforms, content, and
competition is out there.
Better yet, though, is that advances in analytic data gathering make big China data readily
available. For example, Tmall has recently developed an api allowing programmers to hook
in and get all significant numbers for a product category – Who’s buying and selling, to
Where in China, to how many units at What price. Good analytics will pay for itself in terms
of the smart strategies they enable in terms of pricing and ad spend.
KS: Localization - How does a brand stay authentic, while telling the story right in
Mandarin? What is a realistic content plan and engagement plan?
ED: A lot of brands take localization to mean they must change to appeal to the purportedly
inscrutable Chinese consumer. One thing to take as an article of faith – the Chinese
consumer is a global consumer. China’s McDonalds did not proliferate across the land
because they offer taro pie as well as apple. Information Age consumers demand
authenticity and transparency, East and West.
The real trick in going local is adapting to China’s systems, not its consumers. Slow Internet,
slower administrative processes, fast-changing platforms of choice to promote on. Stay
agile, and stay yourself.
Translating content into Mandarin for both accuracy and impact is just the first of the
challenges. Digital properties have to be light, hosted in country, and responsive for the
mobile devices which 82% of China’s 630 million online use it as their primary access to the
Internet. Reliable advertising networks take ages to build, or clout to tap into, with digital ad
networks still in their infancy here. Again, an in-country partner with a proven record of
helping companies profitably leap these hurdles is a less resource-intensive path then
setting up one’s own China team for such, but still much more amenable to long-term
success than questing for the magic Chinese distributor.

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KS: Implementation - Stand-alone or Tmall?
ED: It’s tempting to avail oneself of the many channels available in such a huge market. But
the increased difficult in communications makes a simple, flexible strategy much more likely
to succeed. Communicating your vision to new Chinese stakeholders, making mistakes
quickly and adjusting accordingly, measuring to find out what’s working and what isn’t,
these are the prime directives for success in China’s chaotic new consumer economy.
Keep digital uppermost in mind for both sales and promotion. Just as in the West, the new
Chinese consumer goes online, but mostly through their mobile device, to research, make,
and share purchase decisions, ignoring all but the most well-funded advertising efforts off-
screen. Therefore, smart use of digital will empower a brand to engage a targeted
demographic from across China, rather than confining one’s reach to a few cities.
Further to the power of digital, consider a big third party commerce platform instead of a
stand-alone site, as the former grants far easier setup, and cheaper traffic. China’s social
ecosystem is virtually a mirror of the West’s, with FB, Twitter, Instant Messenger, and
YouTube analogs enabling integrated capabilities to get your messaging to a growing base
of the right eyes.
KS: Logistics - How does a brand find a good 3PL? How do you set terms of service,
and dealings with returns and after service?
ED: China currently offers 13 million square meters of warehousing that meets international
standards. If that sounds sufficient, consider that Boston offers the same area. Add to that
the struggles of prompt delivery across the world’s third largest country, in which the
majority of road and rail systems are that of a developing country.
True, the government is investing heavily in these systems, with high-speed railroads and
gleaming highways spreading at an astonishing rate. Meanwhile, online platform giants such
as JD and Alibaba are investing in massive logistic centers in an effort to give the rest of
China a level of delivery that matches that on the country’s East coast.
Nonetheless, alliance with a modern, full service 3PL provider is worth the extra effort. Full-
service can include online assistance, call-center, and dealing with returns.

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MAKING MAPS
There is no overstating how much more accessible Chinese consumers are today, now that
virtually every one of them purchasing western goods is online.
The fact that your Chinese demographic lives online also gives you the opportunity to know
your market as never before possible, before investing any resources in reaching that
market.
No doubt you’re aware that Google and Facebook thrive on capturing all your information.
Well, you may have heard of China’s Google, Baidu, and Alibaba, which had the largest IPO
in history. They, too, thrive on the collection and redistribution of their Chinese visitors’
information.
All this information means the ability to get an astonishingly clear picture of your Chinese
customer, your competition, and how to position in the market before establishing there, a
detailed map of the market that will make the journey to a profitable China presence clear
and quantifiable.
The Chinese Internet: A Click Away
But before we discuss using Baidu and Alibaba’s information for a map to the Chinese
market, it is crucial to realize that there are truly no barriers left between you and Chinese
consumers. Even though Google and Facebook are blocked to them, their Google,
Facebook, and Amazon are only a click away for you. Online tools, automatic ones right in
your browser, overcome the language barrier at a touch.
There is no better exercise for someone interested in the Chinese market than to do some
keyword research on Baidu and Alibaba’s Tmall, to understand that the Chinese consumer
is a click away, and that better maps of the market can be made at home than even the
most seasoned China hand could have, in country, just ten years ago.
A Quick Guide to Chinese Keyword Research
Begin by installing Google Translate on your browser’s toolbar.
Next, go to Baidu’s fanyi.com and enter a keyword for your industry. Fanyi is superior to
Google Translate for English to Mandarin, as this is Fanyi’s core function.
As an example, we’ll use “eyeliner”.

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Enter the copied text into the search bar at Baidu.com and hit enter:
It’s important to note that all links with the 推广 character indicated by the arrows are paid
results. The long list of paid results from Chanell, Loreal, and Maybelline make it clear that

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the giants are already in the market, and using search engine advertising as a channel.
Clicking on those sponsored links will reveal much, not just price point, but that some of
those giants are making mistakes, with broken links and slow-loading pages.
But make sure to auto-translate the results page, in order to check out the content of links
that aren’t sponsored:
The first two natural (non-paid) results are from Baidu knowledge properties. This is pretty
much your go-to tactic for thought leadership, to be covered in a later post – finding the
Baidu information about your industry and adding to it at the right places.
Further scroll will show you fashion sites, and other platforms that form the center of the
online conversation around your keyword.
Don’t forget to also plug your translated keyword into the Tmall.com search bar. Taobao
and Tmall are both Alibaba properties, but the latter is the brand-verified, B2C platform that
Alibaba built in response to complaints over the C2C chaos of Taobao.

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The results for your product search on Tmall will come up based on a combination of who is
selling the most, and who has the best ratings, two metrics intimately tied to each other.
Click on some of the top results, auto-translate the product pages, and make sure to take
note of the add-value information provided for the product, as well as the comments
section.
Voila! In less than an hour, you can be conversant on the top selling brands, price points,
and platforms where your product is being discussed. Don’t forget that you can enter your
keyword on sites such as JD.com, Weibo, and Tieba as well to collect even more in-depth
information, using your handy translator button to get a good sense (if not letter perfect
translations) of news and views relevant to your product and industry.
Mapping the Win with Programmatic Data
Anyone who undertakes the exercise above will have taken a fundamental step in grasping
the potential of a data-based approach to the China market.
But even those who don’t are more than likely aware of the rapid development of data-
driven marketing intelligence. Terms such as “big data” and “smart data” are rapidly

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trending from buzzwords to clichés, with many decision makers understandably unclear on
the features, let alone the benefits of programmatic data.
The benefits of programmatically collecting data from Baidu, China’s Google, yields
advantageous information such as:
§ All relevant Mandarin phrases used to search for a product or product category, and
their search volume
§ How many competitors are bidding for which Mandarin phrases, at what price range
§ Arbitrage opportunities for relatively popular search terms with relatively low bid
ranges
§ Which sites have the highest potential for thought leadership/content marketing
The benefits of programmatically collecting data from Alibaba and other 3rd
party
ecommerce sites reveal data points such as:
§ Monthly online demand for a product range, broken down by price point
§ Detailed profiles of your competitive set, including not just sales numbers and
revenue but also
o Most/least popular items
o SWOT analysis based on ratings and comments
o Estimated marketing budgets
§ Detailed profiles of your demographic
o Demand broken down by Chinese region/city
o User journeys from awareness to purchase
o Demand levels for product lines already in market
A digital agency with robust in-house technical capabilities can deliver these information
assets and more. In addition, an agency that can boast both programmatic capabilities and
a vetted ad-network can also provide:
• A set of highest value sites to advertise on, based on varying placement rates
compared to site traffic, click-through rates, and projected conversion percentages
• A recommended marketing budget for tiered revenue and branding benchmarks
• Detailed projections of ROAS and run-rates along varying time scenarios
The data-driven approach to mapping and positioning in the China market is not only
feasible, but also becoming standard strategy, not just for global companies, but for much
leaner organizations, thanks to the scales of efficiency made possible by IT advancement.
At the very least, the organization considering China should realize that exposure in the
market can be greatly mitigated with good data, and should be that much more skeptical
about approaches based on putative cultural expertise.

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LEGAL ESTABLISHMENT IN CHINA: A BASIC GUIDE
After gaining China market intelligence, the next step is to gain an understanding of what
legal processes will best serve your China plan, and what your approach to localizing for the
China market will be.
The following is meant to give you a high-level grasp of what will be involved, with resources
for further exploration.
Do you have to establish a legal presence in China to sell to the Chinese? No, and as
technology and market forces combine to make cross border commerce more feasible, the
possibilities for China market penetration sans Chinese entity are expanding.
Also, finding a distributor/agent to “handle” China for you does not necessarily involve
formal establishment. This hands off approach to the world’s biggest market involves
inherent limitations that progressive organizations need not expose themselves to, and is
rather contrary to the hands on approach espoused by Remodista and the upcoming Global
Brand Commerce event.

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Having said that, a robust strategy for tapping China will involve marketing directly to
consumers via Chinese channels, will require some form of subsidiary. Such subsidiaries are
known as “Foreign Invested Enterprises” (FIEs), of which there are four possible forms:
1. Wholly Foreign-Owned Enterprise (WFOE)
2. Sino-Foreign Equity Joint Venture (EJV)
3. Sino-Foreign Contractual Joint Ventures (CJV)
4. Limited Sino-Foreign Joint Stock Company
The first two are by far the most commonly chosen subsidiaries, with the second being
more common for businesses that will rely heavily on local support in the form of land,
factories, and/or a local partner.
In recent years, however, as technology has made the Chinese market a much more
navigable landscape for a foreign enterprise, the WFOE has become by far the most popular
subsidiary, with over 80% of foreign companies choosing this form of establishment in
2009. The WFOE gives a western enterprise a level of control and autonomy which
demands effort, but is generally much more rewarding and less risky mid to long term.
WFOEs require a minimum of approx. $5000 investment, and can rise depending on the
intended scope of business, and its aims, such as hiring personnel and granting visas.
Competitive legal costs, however, of retaining a good firm to handle the process range
between $10-$12,000, with some firms charging as little as $3-5,000.
Here are firms which Web Presence In China can recommend for low-pressure, add value
assistance in the matter, although ten minutes of Google due diligence can yield a host of
options:
Ecovis Beijing
Dezan Shira & Associates
UB & Co.
Protecting Your Brand in China
The prospect of being copied creates far more resistance to China market penetration than
is generally warranted. Note that IP infringement cases unfailingly involve globally
recognized brands such as Disney, Rolex, and the like. This is not to say that Chinese copy-
catting poses no problem, but rather that for any company without a global reputation,
copy-catting will be concomitant of considerable brand and revenue growth, a relatively
good problem to have.
Still, IP protection is a must for companies and brands with long-term plans for China.
Failing to register IP in China negates the right to legal recourse should problems arise.

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Currently, all Chinese laws for IP including patents, trademarks, and copyrights are aligned
with international standards, although enforcement of such can involve the full brunt of local
Chinese practice.
In terms of digital commerce, however, great strides have been made in abolishing the sale
of counterfeits, regardless of western media coverage to the contrary.
First of all, online Chinese consumers are savvy and obsessed with store ratings, so that
any C2C vendors on Taobao, for example, who are selling fake goods at real prices are
quickly sussed out and driven out of business with bad ratings and comments. Also,
nobody who purchases a Gucci bag for $20 thinks she is getting the real thing, while the
desire to do so rapidly dwindles in the wake of China’s ever more diverse brand ecosystem.
Secondly, third party commerce platforms recognize prevention of fake goods being sold as
critical to their own bottom lines, and are taking appropriate steps, to the extent that Alibaba
has spent a reported $160 million in the last 14 months monitoring for counterfeits. It should
be noted that the locus of counterfeit activity is on C2C platform Taobao, where western
brands are very ill advised to establish. Meanwhile, Alibaba’s B2C platform Tmall is only for
verified brands and their designated subsidiaries.
This year’s most high-profile case of counterfeiting involved luxury & cosmetics platform
Jumei, which was discovered to be selling counterfeited Armanai, Hermes, and Burberry
products.
This underlines the point of counterfeiting in the B2C realm being of primary concern to
iconic brands, a downside to those companies’ yearly high nine-figure China revenues.
Nonetheless, well-developed, if not iconic, brands should take steps to registering their IP in
China to prevent a Chinese entity from preemptively registering and locking the company
out of its own market. Theft of product design and associated IP is of greatest threat to
those who manufacture their goods in China, who are also likely, aware of this threat and
have failed to take steps out of negligence, or the mistaken belief that there is no IP
protection system.
An important exception pertains to IP that can be digitally copied and transferred, such as
music, video, and artwork. Both sale and protection of such IP in China is a high-barrier
endeavor outside the scope of these articles.
China’s government takes its poor IP enforcement reputation seriously enough to have an
English language website offering news, case studies, and guides for IP application.
Otherwise, the following firms are noted for their competence in guiding western companies
to effective IP registration solutions:

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Lehman, Lee, & Xu
Harris Moure
Rouse China
Those in China without some IP preparation in place are overdue. Those considering China
needn’t fear entering a thieves’ den and start retaining consultation forthwith, but should
realize that IP infringement is a real possibility that can be dealt with effectively, especially
the further in advance it’s prepared against. Hopefully, the foregoing has given attendees of
the Global Brand Commerce event a basic grounding in what’s involved.

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Cross Border Commerce – The Core Concept
The Chinese Internet is home to the world’s biggest online market, a market with boundless
demand for quality western products, but vastly undersupplied. Balancing this opportunity
for western companies, however, are the many obstacles to establishing an effective online
presence in China, obstacles not present in other foreign online markets.
Chief among these obstacles is the need to establish a legal Chinese entity in order to
access good IT infrastructure, as well as most of China’s critical advertising channels (Baidu
search engine advertising, display advertising on most big platforms.)
There are many ways to approach cross-border, outlined below, but the core concept
is selling online to Chinese customers without official China presence, and logistics
(including customs clearance and fulfillment) handled by a third party.
Why the Chinese Consumer Crosses the Border

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From the Chinese online consumer perspective, cross-border is haitao, or “buying
overseas”. Understanding their motivations for going haitao, and looking at haitao user
journeys, is key to determining if cross-border is viable for your China brand commerce
model.
The haitao segment of China online commerce is a healthy one, no doubt, topping $35
billion in 2013, fueled by more than 18 million Chinese shoppers. True, that is a fraction of
China’s $300 billion online retail market, and over 300 million online shoppers from the same
year. Still, haitao is growing at a healthy 30% YOY compounded, and 18 million birds in the
hand are arguably worth more than 300 million in a bush on the other side of the Great
Chinese Firewall.
Simply put, though, the vast majority of haitao purchases are motivated by a blend of price,
authenticity, and availability of already well-known brands. For example, Chen Li Mei is a
32-year-old female sales manager in Shangqiu, a city in Henan province of over seven
million with no international brand mall presence. Li Mei wants to buy L’Oreal’s Revitalift.
She can drive three hours to a mall in Zhengzhou, the provincial capital, or she can order
online. In both cases, she’ll be paying 30-50% more than she would overseas, thanks to
VAT and other factors. In the online scenario, she has to worry about authenticity.
Current Cross-Border – 3 Kinds of Sites
Enter the three kinds of Chinese platforms driving at least 80% of haitao shopping. There
are sites such asUsashopcn.com , which buy and resell from western ecommerce sites.
Then there are Chinese-owned logistics company sites, such as Haitocheng , which buy
products directly from western vendors, and rely on their rapid logistics networks for
competitive advantage. Finally, there are site such as HT51, portals with all manner of rated
Chinese agents promising the lowest prices on authentic western goods, often through less
than transparent means (smuggling).
Click-through on any of these sites will reveal home pages similar in that all the products
are from globally-recognized brands - Michael Kors shoes, Hugo Boss shirts, Bulova
watches, Fisher Price play sets, GNC supplements, and so forth. It makes sense, really –
why would Chinese haitao middlemen take a chance on a brand unknown to the larger
Chinese market? Their wheelhouse is promoting their platform, then delivering the goods
fast and cheap, not building unknown brands for traction in the China market.
True, there is a growing segment of haitao shoppers who go to foreign sites directly, such
as Macy’s or Asos, then go to Chinese BBS with complaints and questions about size
differences and return policies. But such sites belong to brands with pre-existing, hard-won
recognition in the China market.
Cross Border for the Non-Iconic

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So of all the challenges a brand without global recognition faces in utilizing a cross-border
approach, driving Chinese traffic is the most difficult. Mandarin localization can be
implemented on a site with some rigor, and there are a growing number of Chinese logistics
companies with stateside warehouses ready to help with orders.
But how will your target Chinese market discover you? Without a Chinese entity or partner
agency, you cannot engage in efficient forms of online marketing: pay-per-click, banner ads,
or multi-channel participation on focused portals. Your site cannot be hosted in China, so
you will languish in SEO results, and your site’s load times will be so unreliable as to
jeopardize conversions and search results.
Alipay, China’s number one payment gateway and an Alibaba property, has recently
launched a cross-border product, ePass, to empower the cross-border merchant. The most
salient features are integration of Alipay, allowing easy transaction settlement, as well as
access to Alibaba’s logistics network, CaiNao.
More importantly in terms of the main challenge, ePass also grants some access to
Alibaba’s massive advertising ecosystem. This is the truly beta feature of the product,
however, as China’s laws are quite clear about disallowing non-Chinese entities from direct
online advertising. Alipay’s stance on clearing this gray area between the Alibaba ecosystem
and the law has not been forthcoming.
Nevertheless, Amazon.cn has launched a cross-border model allowing Chinese access to a
growing number of Amazon.com stores, and JD is expected to be announcing its cross-
border offering by Q2 2015. Benefits of localization and logistics can be depended on. But
don’t expect any easy advertising solution to the problem of how a non-Chinese entity can
drive traffic.
There are low-cost methods of generating awareness and driving targeted traffic, to be sure,
primarily in the forms of content marketing and social media. These require dedication to
good content, and long time horizons for any real traction, barring exceptional cases, as far
as little-known brands are concerned. Well-known brands, as mentioned, have a de facto
Chinese cross-border channel.
So as the payment and logistics pieces of the cross-border model become ever more
efficient, expect increasing noise from agencies and platforms promoting cross border as a
profitable option. Before engaging, however, get a good answer to one question, “How will
you drive targeted traffic to my site?”

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CHOOSING A COMMERCE MODEL – B2B
When covering China’s online commerce, Western media focuses on recognizable
consumer brands and the retail market. Meanwhile, 78% of China’s $1.6 trillion 2013 online
market was based on B2B transactions.
In other words, the online B2B potential for your product or service in China is most
likely multiples of its B2C potential.
China is transforming into a consumer economy. More than a hundred cities with
populations greater than Berlin’s are not waiting for slow-moving international organizations
to come to them with the quality goods and services they demand. Instead, millions of
Chinese entrepreneurs are capitalizing on the opportunity to provide supply. Predictably,
these entrepreneurs and organizations turn to the Internet first to search for and forge
relationships with western companies.
Challenges to Making B2B Connections in China
Challenges to face in realizing your China B2B potential can be divided into technical/legal
aspects and marketing challenges, with some overlap.

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Technical/Legal:
- Legal establishment or trusted agency to operate on your behalf
- Hosting in country
- Set up of ad accounts or agency control
- Creation of chosen digital assets
Marketing Challenges:
- Identifying platforms with target audience activity
- Development of advertising assets with plan for testing
- Standard operating procedure for leads generated
Naturally, global brands and those with some track record in China have a natural
advantage in optimizing B2B traction. On the other hand, it has been our experience that
almost every western brand operative in China had significant gaps in their technical and
marketing flows. In short, starting from scratch to communicate your story authentically and
in a scalable manner holds its own advantages in terms of efficiency.
A Flexible China B2B Model: The Hosted Landing Page
Think of the hosted landing page as a spin on the direct marketing fliers that used to come
in the mail, and which we are often redirected to online – scrolling pitches intended to take
us from Awareness to Action without leaving the page.
A landing page does the same thing, but can be bolstered with multimedia, including video.
Also, landing pages directed at people looking for a product to sell or perform necessary
business functions, convert at a much higher rate than B2C pages.
Other advantages of the landing page:
- Easier to host in China
- Load much more quickly on any device
- Fast creation and modification further to testing
- Perfect for mobile interaction
Interestingly, many of Web Presence In China’s global clients have chosen hosted landing
pages as the lynchpin of their China B2B campaigns. For example, Leica Biosystems’
international site was found to perform very poorly in China. Major redesign was needed, as
well as expensive cloud hosting and CDN network.
Instead, Leica went ahead with a series of landing pages for different product groups based
on programmatic market intelligence. Each landing page was hosted on WPIC’s in-country
servers, and had form-fill directed to assigned stakeholders, with a custom dashboard to
track which ads were generating form fills, and where in the sales process the stakeholder
was with a form fill.

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The seventh month campaign returned close to 20 times ROI, and reduced lead times from
11 months to 43 days. Of course, getting those landing pages in front of the right eyes at
the right time was key to those results.
Marketing the Hosted Landing Page
Unlike an app, which presents numerous obstacles to distribution and engagement, the
landing page is very straightforward to optimize for discovery on Baidu, China’s Google, and
other Chinese search engines. Baidu pay-per-click advertising was also a big part of the
campaign’s success, after scraping revealed arbitrage opportunities in keyword search
volume versus bid price for that keyword.
China B2B digital marketing also presents the opportunity of the focused portal. The
Internet has bridged the massive gap in industry networking further to China’s relatively late
arrival to non-government-owned enterprise. Therefore, there are huge B2B portals for all
industries, containing latest news, reviews, company listings, bulletin boards, job postings,
and the like.
Advertising on medical equipment portal http://www.instrument.com.cn drove high
converting leads at rates and costs that traditional social media or non-focused portal
advertising (e.g. Sina.com) will never match.
Of course, Leica has significant existing brand equity in China, which aided conversion
rates. However, unknown brands can benefit just as well from these and other tactics,
without having to go overboard on broad-spectrum, costly promotion.
One example of such is Summerhill Winery. An unknown brand in China, Web Presence In
China undertook content marketing for the company in addition to the above-mentioned
approach. The key was in placing content on Baidu’s knowledge properties: it’s Wikipedia,
Baike; it’s Yahoo!Answers, Zhidao; it’s Google Docs, Wenku.
Chinese considering an unknown brand can be depended on to search Baidu for mention of
it, rather than perusing a big site that is obviously self-promoting. Baidu always returns links
for its own properties on the first page of search results. When Chinese searched Baidu for
“Summerhill” (under its Mandarin name) or terms such as “Canada ice wine”, they found the
brand, for instant credibility and encouragement to convert.
Best Practice Points for B2B Lead Generation
There are other tactics based on the principle of decentralizing a big site’s content, then
going light and point-of-need. Other important principles to consider for a China B2B
marketing model:

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- Authenticity:
Ignore advice that you must Sinofy your offering so that the Chinese can relate to you. Your
target Chinese audience is looking for honest messaging about whom you are and what you
offer, in order to make up its own mind. Patronizing modifications do more harm than good.
Consider Estee Lauder’s “Osiao” line from 2012. An attempt to prove it “got” Chinese
women by including ingredients such as rice and ginseng, the line was a flop, swept under
the carpet, while the products that made Estee Lauder a household name in China continue
to enjoy high demand.
-Instant communication:
Even if you opt for the standard site for your B2B model, make sure there is information for
instant contact on every page, rather than the standard two-click affair to email. Only the
most motivated Chinese prospect will trouble to email you. QQ ID is the order of the day
here, and/or Baidu’s live chat tool.
- De-centralized approach:
Expanding on the example above, the Chinese are as ADD as their western online
counterparts. They do not want to spend ten minutes going through all your site’s marketing
collateral, no matter how painstakingly curated. Having key content on information sites of
record is a much more efficient approach to driving awareness and engagement.

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YOUR SALEFORCE IS THE MOST IMPORTANT PART OF YOUR PRICING STRATEGY
The world is full of amazing people with amazing abilities to develop incredible products and
still you will often see that some of these products are not really successful when they are
launched in the market.
One example I saw about 20 years ago was a building services product, which was
developed to save energy. The company developing it had chosen to focus on sustainability
and electricity savings and the product they developed was unique in that sense. It was top
quality and had an expected lifetime of 15 years. Although it was launched at a price point
50% above a conventional comparable product, it would pay itself back in less than 5 years
in electricity savings. It had all kinds of ‘bells and whistles’ on it but surprisingly it was never
really the sales success it deserved to be. Some said it was because the market place was
not ready for the technology yet but I don’t really buy into that. The product was amazing,
so it was not because of the product. Was it because it was launched at a price, which was
too high or was it the brand? No, I don’t think that was reasons either. So, where did it all go
wrong and how could the company have done it differently?
I’ll try to illustrate it by using Porter’s value chain as starting point.

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When you start developing a new product, you have to ask yourself: “What value will this
product add to the end-user/customer”? I also believe that you have to constantly think
about value in every single component of the value chain. You could call it “value
management“. Everything you do internally in your company has to come out at the other
end as a value to the customer. Some examples could be the outbound logistics and the
distribution channel chosen. The supply chain people have to ask themselves: “why are we
choosing to supply the market this way – what value will it bring to our customers”? The
operations team needs to ask themselves: “if we choose an alternative way to produce the
product, what value does that bring to the customer”? Every decision taken internally before
a product launch have to end up in adding value to the customer.
In the specific case of the building services product everything was actually carried out with
focus on the value the product would deliver to the customer and with focus on the basics
of value based pricing, which starts with the customer in focus. However, there were two
components of the value chain where it wasn’t done properly.
The R&D team (Technology Development) created a product that had an extreme range of
functionalities. If you were to ask one of the engineers about the product they could list at
least 25 features, which would bring extra value to the customer. What they forgot was to
ask the customer was whether these features actually would add value to them? One thing
is to have a perception of customer value internally – the other side of the coin is whether
the customers actually thinks and feels the same way. In this case they didn’t. The
customers felt the product was a bit over-engineered. The fact that there was a

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misalignment between the value perception internally and externally, this early in the value
chain, could have been avoided by doing more groundwork before starting the development
of the product by actually asking potential customers.
Although the product was a bit over-engineered that wasn’t where it really went wrong for
the manufacturing company. No, where it went really wrong was in Marketing and Sales.
The pricing department was part of the marketing team, which is fairly common for value
driven organizations and working together with marketing the pricing team came up with
what they felt was an amazing go to market and pricing strategy, built solely on the internal
value perception. The big mistake that was made was not asking the customers about their
value perception during this process, so the whole strategy was build on the internal
perception of value. When there is a misalignment between the internal and customer
perceived value, it is bound to go wrong when the product hits the market.
The strange thing in this case, was that once the product did hit the market and the sales
didn’t take off in gigantic sales – most of the blame landed in the sales department.
This leads me back to the title of this blog: “Your sales force is the most important part of
your pricing strategy”. The blame landed in the sales department and it often does when
sales don’t go as planned. However, the sales team is only as good as the tools they are
provided with. You can have the best sales team on the planet but if the sales arguments
(value communication tools) they are provided with from pricing and marketing is not
aligned with the customer perception of value, they are bound to fail.
In this case the product was great, despite being a bit over-engineered. The operations
team did a great job in setting up fantastic production and storage facilities. The
procurement team did an amazing job in sourcing the raw materials for the production. The
price was set at a reasonable level. The distribution channel chosen was the right one. The
after sales service offered was above what competitors was offering but the value
communication tools developed for the sales force failed and the customers didn’t
understand the value delivered to them.
This is by no means a unique case because it happens all the time but it is something that
can be avoided by making sure that customer perception of value is set as the base of your
pricing and go to market strategy. Don’t base it solely on your own perception of value. Only
then will your sales force be able to really gain some traction and only then will your product
launch and sales team be successful.

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CHOOSING A MODEL – 3RD PARTY PLATFORM

Written by Ernie Diaz, Publisher, China Digital Review
This is the fifth article, in a ten part series intended to prepare stakeholders for Remodista’s
Upcoming Global Brand Commerce Event. China Digital Review will explore all the
components necessary in establishing a customized platform for tapping China’s massive
online market.
The Case for Choosing a Third Party Platform

The massive opportunity in China’s spiraling demand for western goods is obscured by
three key factors. First, consolidation of China’s Internet makes it ever more expensive to
drive targeted traffic to a stand-alone site.
Also, Chinese consumers are slow to trust a site selling out of the context they are used to,
in terms of platform and payment gateway, lowering conversion rates and spiking cost per

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conversion. Finally, China’s Great Firewall presents ongoing technical difficulties in
maintaining a high performance site.
Third party platforms negate these challenges by providing a technically supported
environment with established trust among Chinese consumers. These platforms spend
prodigiously to bring in traffic, making your efforts to attract targeted shoppers within the
platform that much more affordable and efficient.
What You Give Up by Using a Third Party Platform

Third party platforms cannot hope to offer the level of on-brand user experience that a
stand-alone site can offer. This admonition of course, must be weighted against the level of
trust and familiarity Chinese online shoppers have with the user experience of the sites
explored below.
Also, while you have access to much of your customer data, the third party is the ultimate
owner, and does not share consumer information to a depth that would be available via a
stand-alone site. This limits efforts to keep consumers in your funnel and turn them into
brand ambassadors.
Platform 1: Alibaba
Driving half of China’s online B2C and at least 80% of online C2C, Alibaba is the undisputed
champ of Chinese ecommerce platforms. Key to remember, though, it is that Alibaba is a
platform, not an agent. Alibaba will not take title to your goods, or help you fulfill the order.
Instead, Alibaba provides the world’s biggest platform for sourcing, online shopping, and
online selling. Its mission is to make things as transparent as possible for the consumer, and
as competitive as possible for the seller, with a huge advertising ecosystem and expanding
UX options.
Taobao or Tmall?

Tmall, not Taobao. Taobao is a C2C marketplace, an online version of the massive bazaars
that define offline Chinese marketplaces, with endless stores selling similar items clamoring
for business. Selling on Taobao is a race to the bottom, where winners must offer the
cheapest goods with the best service.
Tmall was initiated as a brand-verified, B2C version of Taobao. As such, this is where
international brands already established go to stake out their territory on Alibaba. Such
territory grants the right to chase out gray market competition and fakes, as well as granting
access to a huge number of people online to buy, although unlike a store in an offline mall,
random traffic is negligible. Good advertising is required to drive convertible visitors.

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Setting Up

Setting up on Tmall.com is an involved process , divided into four stages. First, registration
involves demonstrating China compliance, deposit and surety, as well as agreement to
stringent terms, such as shipping within 72 hours of order placement. Then there is design
of store and placement of SKUs, which can be outsourced to a number of established
providers, but can get complicated depending on UX and number of products to display.
The next two phases are the real test. Driving traffic and revenue is a Darwinian struggle that
necessitates experimenting with Alibaba’s many advertising verticals. It is also pendant on
indelible product, service, and fulfillment ratings, These last two comprise the logistics
phase, an ongoing process of selecting, training, and monitoring a logistics partner who can
manage everything from onsite live chat assistance to returns.
Programmatic market intelligence can drastically shorten the learning curve for entrance on
Tmall. Alibaba’s back end allows for systematic gathering of data that can identify the
competition, their strengths and weaknesses, size of potential consumer base, best
products to launch with, even an estimated cost per sale.
Alibaba Pros

• Fast load times and other technical performance specs guaranteed.
• Exposure to China’s biggest base of online shoppers, in an environment they trust in
terms of payment and delivery.
• A massive advertising ecosystem for driving targeted traffic much more efficiently than
required to a stand alone site.
• An expanding range of UX options, such ad division of a store into customized pages
and JavaScript tool implementation.
Alibaba Cons

• Success depends on good ratings and good marketing/advertising. Alibaba does not
take title to your goods.
• Good ratings depend on not just a good product but also good onsite service and
speedy delivery/returns.
• Good advertising is much more involved than choosing among the menu of Alibaba
services and outsourcing to an Alibaba-approved agent. Those agents are comfortable
in Taobao’s C2C realm, but do not have the experience or skills necessary to drive large-
scale, adaptive campaigns.
• Alibaba takes a commission for each sale, percentage depending on likelihood of return
(5% for shoes and apparel, because of high return rate.)

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What About Tmall Global?

Alibaba’s Tmall Global has been launched as a nascent cross-border option, meaning a
foreign company does not have to establish in China to sell on the platform. This
convenience, however, ramifies into several cons:
• Tmall Global’s domain is tmall.hk. The real Tmall is tmall.com. The point: establishing on
Tmall Global by no means gives easy access to Tmall’s huge consumer base.
• Advertising options are limited due to companies’ foreign status.
• Goods must be cleared through customs, meaning much longer delivery times than
Chinese consumers are used to.
This does not mean that Tmall Global is never the best choice for a third party platform.
However, beware the many Tmall Global cheerleaders who invariably use Costco’s success
as a paradigm. Costco and its Kirkland brand have been in China since 1999. This Wall
Street Journal expose tells more.
Platform 2: Amazon.cn
The best introduction to Amazon.cn is its main pro and con: Amazon buys your goods and
takes care of fulfillment. On the other hand, Amazon.cn has approximately 3% online retail
market share.
Setting Up

Amazon.cn has dedicated teams for each phase of cooperation with the platform, personnel
who are far more responsive and helpful to English-speaking entities than Alibaba’s
overburdened staffers. The contract phase is very much that of arranging an import partner,
with terms usually FOB Net 90 days, and flexibility in terms and pricing, guided by
Amazon.cn’s research team.
Amazon.cn also has resources to design your store page and hook in SKUs, but
encourages a cooperative process in adding multimedia and other information that gives the
in-depth product profile Chinese consumers want.
As for marketing, Amazon.cn also offers flexible marketing packages, with two standard
packages comprising an (approximately) RMB100,000 launch and online promotion
campaign, and an RMB500,000 option that includes offline tactics, holiday specials, and
other tactics.
Vendors are encouraged to track and participate in their marketing performance. However,
it must be remembered that Amazon.cn’s mandate is to sell the product it’s taken title to, as

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well as other products in the same category as yours. Therefore, aggressive marketing at
the expense of similar products’ sales is not an option.
Amazon Pros

• Amazon.cn takes title to goods and handles everything up to fulfillment and returns.
• Amazon.cn’s responsive team allows for feedback and adjustment based on vendor
preference.
• Amazon.cn has its own Vendor Central back end, allowing for relatively easy metric
tracking.
Amazon Cons
• Amazon.cn has exposure to far less traffic than Tmall and JD, although spending and
investing to increase market share.
• Store UX is fairly limited to the standard Amazon layout.
• Pricing, positioning, and branding are in the hands of a third party, reducing
opportunities for innovation and learning to tap the world’s biggest online market.
Amazon’s Cross Border Offering: Hai Wai Gou

In response to the growing cross-border trend, Amazon.cn has a separate section of its site,
Hai Wai Gou (Overseas Shopping) allowing Chinese shoppers to browse Amazon.com
stores. This initiative is in the very early stages, however, so the Amazon.cn team is
localizing primarily Amazon.com stores with established brands.
It is feasible to have an Amazon.com store and request its placement in the Hai Wai Gou
section. However, lack of robust advertising and marketing assistance, compounded with
the longer delivery times inherent in cross border, mean that only established brands or
innovative tactics to drive traffic will result in any meaningful revenue, at this stage.
Platform 3: JD.com

Like Alibaba, JD has healthy B2C market share, approximately 20-25%. Like Amazon.cn, JD
will also take title to your goods and handle fulfillment. Therefore, the setting up process is
quite similar to Amazon.cn’s, while the advertising options give access to significant
traffic. Is JD.com therefore the perfect solution?
JD Pros

• As mentioned, JD.com takes title and handles fulfillment, while having a significant
amount of market share to drive traffic, sales, and revenue.
• com also enjoys arguably the highest trust factor among third party platforms for
authenticity and good delivery.

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• com maintains a logistical edge thanks to huge early investment, allowing fastest
guaranteed delivery times and corresponding high conversion rates.
• JD offers seamless promotion opportunities on WeChat, China’s most popular social
app, although the silence on any performance metrics since the inception of this joint
effort indicates the tactic is far less seamless in terms of ROI.
• JD Cons
• As with Amazon, you are essentially handing over positioning and branding of your
product to a third party.
• While committed to building out as diverse an array of offerings to Chinese
consumers as possible, JD.com does prefer to engage with brands and products that
have high odds of selling well. Less proven brands or product sales may not
necessarily be invited to partner with JD.com, or if accepted, may face less favorable
terms.
• JD has a huge base of offerings in all consumer categories, so gaining traction and
share against competing products may be challenging for lesser known brands, while
options to drive revenue are limited out of JD’s natural concern over conflict of
interest.
• JD deals in large volume, so committing to a contract may be less feasible for the
SME.
JD’s Overseas Offering

Not a company to be left behind in online trends, JD is also preparing its own model for
foreign entities without Chinese licensing. Details are fuzzy pending launch, but a model
similar to Tmall Global’s can be expected.
In the meantime, JD has marketplace model similar to Alibaba’s , with registration and a
surety allows for use of the platform, including advertising. Although JD has a smaller daily
visitor base than Alibaba’s, it does offer use of its logistics to marketplace vendors, although
not taking title to the goods.
Conclusion

A third party online commerce partner in China can prove a lucrative channel. However,
gaining traction on such platforms involves far more than simply setting up a store. In
general terms, Amazon proves best for those seeking to “dip a toe in the water,” JD is
suited for brands with some proven China experience, and Tmall is best for international
brands ready to commit serious resources to the Chinese market.
It can’t be overstated that innovation and programmatic market intelligence can surmount
general guidelines and limitations, however. Innovative social media or content marketing
may drive great traffic to an Amazon store. Setting up your own site, then using a Tmall
store for the shopping cart component can overcome limitations on user data and user

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experience, while still giving Chinese consumers a trusted payment procedure. Adaptability
and a willingness to use new technical tools are huge advantages.

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CHINA COMMERCE: HOW TO STAND ALONE
In most cases, building your own commercial site for China is for the global organization,
deep of pocket and long of China horizon. That being said, it can also work marvelously for
testing the China online waters, and building from there.
Let’s take a look at both of these scenarios as a model, and a third way for Out-of-the-Box
thinkers. By looking at the components necessary, the challenges, and the benefits,
companies from global to growth-oriented in size can have a frame of reference for creating
their own platform in China.
The Models
1. Traditional Stand Alone – Big front end, back end commerce solution
2. Microsite/Landing Page – One to five pages, static, lead-oriented
3. Hybrid Model – Big front end, China 3rd
party commerce solution
Model 1 – Building a Traditional Stand Alone Site for China
~The Components
1. In Country Hosting & CDN
The first consideration, yet all-too-often the last component considered. Your big, beautiful
site must be hosted in Mainland China for any chance at the top performance necessary to
keeping and converting visitors. Despite this fact, all manner of global companies trying to
tap China still just have a mirror site hosted in their home countries, with all manner of
performance and conversion issues. Sound tech is thus an arbitrage opportunity for China.
Sound tech also involves a Content Delivery Network (CDN), which will keep all your heavy,
killer content on servers close to Chinese users and push it out fast. Neither component,
hosting nor CDN, is cheap. Neither component is set-and-forget, unless outsourced, and
even then you’ll need someone talking to the neck beards IT people you’ve outsourced to.
2. Front End
This is where marketing and management have a party, and plenty of opinions. Nutshell
advice: stay on-brand, avoid Sinofying (“Dragons!” “No! Three-generation family banner!”),
and make sure your translated copy is not only accurate, but also carries sales impact.

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The front end is your chance to convey your western brand advantage, and deliver that
unique experience the marketing department has built so profligately.
A major caveat – keep it light! Never forget China has the world’s biggest online population
(650m and growing), but IT infrastructure struggling to keep up. Your ultra hi-res landing
page video of models strutting the catwalk will be enjoyed only by the team that builds it.
Even the most dedicated Chinese fan of your brand will wait a maximum of twenty seconds
for that page to load on her Samsung tablet before closing and going back to her WeChat
messages.
Pro-tip: Give Drupal serious consideration before opting for a more expensive or custom
Content Management System (CMS). Web Presence In China has deployed Drupal for
clients of all sizes, and finds the open-source flexibility plus super-deep array of plugins a
boon.
3. Commerce software solutions
For those new to making the decision, there are world champions of online commerce
solutions such as Hybris and Demandware. They’ll give you the training, partners for
implementation, and a big bill for licensing the software.
Then you have open-source solutions such as Magento – easier to troubleshoot and futz
with, as open-source means the software’s code is open to all. Thus, when your
programmer’s Asperger’s becomes a liability, you can send him packing and bring in a no-
nonsense Serbian for half the wages, remotely.
~The Challenges
1. Driving Traffic
So you want to buy traffic for hot products/services, such as skin-care, handbags,
supplements, and study abroad? You’re facing armies of deep-pocketed competitors. How
targeted-ly can you identify and reach your audience? Why will they stay and convert once
they get to your site? Without answers to these questions, go directly to the Shanghai Hilton
bar for a 10% discount with your China tale of woe (“Yeah, we threw tons of money at
China. Learned a lot.”)
2. Building Community

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Stores on Tmall convert because Alibaba has huge (if gradually eroding) brand equity.
Visitors can look at the ratings for not just product, service, and delivery, but also user
comments, numbers sold, and other ‘bona fide’ stats. So why should visitors trust your site?
How transparent and trust inducing are your offers? How good is your onsite service and
offsite fulfillment?
The more precisely you can answer those questions, with steps to making the answers ever
more positive, the closer you are to tapping gold rather than crapping out.
Pro-Tip: Work your western brand advantage overtime! The more you invest in content and
experience showing just how authentically, rooting-tootingly western add-value you are, the
more reason you’ll give visitors to rejoice rather than reflect that they’re not on the same ol’
3rd
party mondo-platform.
3. Tech/Tech/Tech
How’s your Demandware software working? Demandware uses a CDN for China, but
remember that stands for “Content Delivery Network”, not “Complete Transaction Delivery
Network”. No matter what ecommerce solution you’re using, you’d best be studying
transaction funnels like Spock studies his console data. Find bugs. Fix. Repeat as needed.
~The Benefits
1. Branding Your Way
Your site, your show, your data. Just because people are used to the Alibaba experience,
slavishly copied by every other blessed ecommerce platform out there, doesn’t mean your
site won’t strike a welcome new chord. Especially with plenty of unique, engaging content.
2. Brand Equity
The yang to the yin of giving birth to a viable Chinese community – a network of visitors who
recognize, trust, share, and re-visit your site. A great alternative to a Tmall store, where the
“Similar Products” competitors forever plague your conversion rates.
3. Autonomy
“Five percent of each order goes to you, Alibaba? OK. You own the data? Mm-hm. Mm-hm.
You want me to mark down my top selling items 50% for Singles Day? We’ll get back to you
on that.”

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Model 2 – The Microsite/Landing Page
~The Components
1. Agency/Partner
Model 1 is described under the supposition that China licensing has been completed, in
order to have core personnel tied to critical assets. The microsite/ landing page approach
fits for companies testing China’s deep waters.
A good in-country partner agency means a ride on their license for the essentials, without
the time and costs of bringing that in-house. If they have the tech to build and host your
digital assets in-country, you’ve found the best China allies since President Xi banished all
the magic guanxi officials.
2. Microsite/Landing Page
Microsite, n. – A site composed of 4-5 pages maximum, largely static, designed to get
found, get leads, gets visitors to a predetermined conversion. Looks even better on mobile
device than on desktop.
Landing Page, n. – A one page ‘site’ (possibly with on page tabs for different products in
one service line). Basically a 2.0 direct mail letter . Designed and deployed to the same ends
as its microsite cousin.
3. Form Fill
The most salient feature of either the microsite or landing page. Always seen in close
company with a compelling Call to Action. For broader leads, less fields. For serious leads
only, make them tell you what department of what company they work in. Don’t ask for
emails. Ask for QQ ID.
4. WeChat?
No. Do not believe the press-happy journos or social-media-dependent agencies always
looking for the new hot thing. The last thing WeChat is – an easy peasy direct sales channel.
If you are absolutely crushing Facebook and Pinterest, with a closed loop from content
posting to online sale, get in touch. Otherwise, don’t take Tech In Asia too seriously.
~The Challenges

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1. Closing the loop
Your microsite and/or landing pages aren’t closing significant transactions. That’s another
step. Who’s taking those leads? Who’s that person reporting to?
Pro-Tip: Custom dashboards can make closing the loop almost automatic.
2. Driving Traffic
Microsites and landing pages can be juiced up for Chinese SEO, in order to get found in
organic results, and also work very well with performance marketing. Neither approach,
however, is best left to an amateur, unless said amateur has a lot of time and determination
to beat the learning curve. In the hands of pros, however, combined SEO and performance
marketing can yield 20x and more ROI.
Pro Tip: Social media is free, but so is getting married – in theory. Using Chinese social
media channels to successfully drive referral traffic to either your site is a matter of
quality content, as regular as a Clydesdale on a high fiber diet.
~The Benefits
1. So Scalable
The time and costs of getting a landing page pulling from the right nodes of the Chinese
Internet make an economy trip to the Guangzhou Trade Fair look steep.
Want to test a new title, new graphics, new form-fill? Quicker than the lines to the restroom
at the same Fair.
2. Performance Marketing-Driven
There’s probably a lot to your life besides connecting with Chinese consumers and all that
usually entails – localizing content, choosing channels, fixing tech. Both microsite and
landing page are tailor made for performance marketing – pay per click, display ads, and
other methods that can be automated/systematized. Want a China approach where
numbers talk and marketing lingo walks? Bam.

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Model 3 – Hybrid
~The Components
1. Stand Alone Front End
This entails components one & two of Model 1 – but no component three. No Hybris, no
Demandware. No Magento, no Volusion. Not even a Weebly.
2. 3rd
Party Backend
Instead, you opt for the best Chinese third party platform for you. That doesn’t mean Tmall,
necessarily. Maybe Amazon.cn is taking title to your goods, or JD.com, and handling
logistics, to boot. Nice. When a visitor clicks on your product in the front end, they go to the
product page on Amazon. Or JD. Or Tmall. Or Yihaodian – now you’re in the driver’s seat,
with a front end as half the twin engine.
~The Challenge
Making the Business Case for the double investment of building and driving both a front end
and third party shopping cart. Not investing in great content and targeted traffic from
focused portals? Why’d you build the front end? Not searching for and utilizing your third
party’s best traffic sources? Why are you paying them a commission, or letting them have
access to your brand, and going through the trouble of integration? Then again, an out-of-
the box ecommerce solution isn’t necessarily cheap, either.
~ The Benefits
The Best of Both Worlds:
1.You drive and own your traffic, your way. Your front end gets them warm, and the
recognized Chinese check out closes the deal.
2.Rented access to the best tech in China. Don’t worry about those transactions getting
lost, or the server ever going down. Alibaba and its rivals provide a rock-solid platform for
the crucial transaction phase of your funnel.
3.Once you’re culling JD or Tmall’s traffic opportunities, and comparing the metrics to those
garnered from Baidu and focused portals, you are squarely on the path to winning in China.
Tmall’s traffic too expensive – commissions too high? Bam, your tech team can swap out

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for another platform faster than you can move out of your soon-to-be ex-spouse’s and into
an efficiency apartment.
Conclusion: A stand-alone option for your China ecommerce model is still quite feasible,
despite the consolidation of traffic into the hands of China’s tech giants. When making the
business case, avail yourself of the great data that is more accessible than most western
companies think possible, in order to make decisions and scenarios based on reliable data.

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CHINA SEO MARKETING
Written by Ernie Diaz, Publisher, China Digital Review
This is the seventh in a ten part series intended to prepare stakeholders for Remodista’s Global
Brand Commerce event in NYC. China Digital Review will explore all the components necessary in
establishing a customized platform for tapping China’s massive online market.
Adopting the SEM Mindset
The majority of marketers and salespeople are understandably SEM-shy. After all, the search engine
ad is primarily text based and super-brief. The mechanics of successful search engine advertising
demand a methodical approach that is as scientific as it is creative. Also, the number of people who
click on such ads is a disconcertingly tiny fraction of the people to whom the ad is displayed.
That mindset presents a fantastic opportunity to the western organizations that can overcome it.
Their western competition is often neglecting this highly-effective channel, in favor of traditional
tactics more in their wheelhouse.
Even more advantageous for the China market is how the universal principles of SEM translate
straight across, to wit:
- The tiny fraction of people who click your ad are highly motivated buyers, and the only people who
you are paying for (the primary value of the pay per click concept.)
- Chinese consumers click and convert on the same principles as consumers around the globe
(detailed below.)
- Lack of best practice in the Chinese SEM space presents significant arbitrage opportunities for the
companies that commit to it.
Setting Up
Straightforward, efficient, and scalable, SEM embodies the essence of digital marketing, allowing
you to target highly motivated buyers across China, often for pennies a click. The first hurdle to SEM
in China is an intimidating one, however – setting up a search engine ad account. A Chinese license
is required of the applicant. Those who team up with an experienced, licensed in-country agency
can outsource this concern, but should still read on in order to vet a reliable one.

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The process of setting up an ad account can run into snags as the Chinese search engine
administration responsible can and often does ask for various documented proofs, changes to the
site being advertised, and other non-transparent procedures. A surety deposit is also required to
fund the account.
5 Components of High ROI SEM
The following six components of a high ROI SEM campaign have been proven to return more than
twenty times ROI over six to eight month campaigns. They are applicable to non-Chinese SEM
campaigns as well, but will be outlined for winning on Baidu, China’s Google, Sogou, and Qihoo, a
competitor grabbing market share in mobile search.
1. Keyword Research & Bidding
The prime directive of this component is to figure out what your target customers are typing into the
search bar when they want to find a solution you can provide. Getting started can be as simple as:
a. entering your product and service terms in English into baidu.com, translating to Mandarin,
b. then copying and pasting the translation into the search bar. If no paid results appear, you’ve got
a non-productive term.
c.If you see paid results, click on those ads. The closer those landing pages to your product or
service, the more viable the keyword or key phrase is.
Of course, research can be much more robust than this. The numbers of searches for those terms
can and should be obtained, whether through Baidu’s ad account tool, Tongji, or other methods.
Real arbitrage can be had in finding keywords with relatively high search volumes to bid prices. Such
arbitrage is usually found through programmatic scraping of search engines, however, a process
best left to a partner with tech capabilities and experience in this vertical.
Once a list of desired keywords has been collated, the object is to set a bid price for each one per
click. The search engine interface will offer a range, with more competitive keywords (“luxury
handbag”, “baby formula”)demanding much higher bid prices. A good beginner strategy is to bid
slightly higher than the minimum, and adjust upward according to performance.

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2. Ad copy
The guiding principle here is to grab a viewer’s attention with an ad headline that communicates a
tangible benefit related to the keyword, then the remaining lines to establish the unique value
proposition of your product or service, as well as a call to action. The latter is usually a promise of
some bonus or discount a viewer will get by clicking through and visiting.
As with Google SEM, there are limits to characters and lines of copy, which the search engine tool
apprises you of. It would follow that good Chinese translation is called for, not just for accuracy but
copywriting impact. However, the truth is that a solid 60% of Chinese search engine ads fail to apply
the universally successful formula of benefit, UVP (unique value proposition), and CTA (call to action)
– even Chinese competitors’!
When it comes to Chinese SEM, a great deal of competition is just not that refined in best
practice…yet. Many ads tend to focus on either the company’s reputation or the features of a
product. Meanwhile, ads that follow the universal formula invariably perform better, on Chinese
search engines or otherwise.
This gap is even more pronounced in landing pages. It is truly amazing how many ads click through
to a company’s home page, leaving clickers to search and take extra steps to find the product
mentioned in the ad, thereby dropping conversions to money-losing rates.
3. Landing page
Best practice for the landing page is also universal – restate the benefit and UVP, include high res
imagery of the product or service being enjoyed by people, include social proof (testimonials,
awards, certifications, etc.) and include a CTA for next steps.
Naturally, this is a simplified overview of best practice. This is direct marketing, and landing page
design is an art and a science to those who specialize.
However, you don’t necessarily need a specialist to launch a successful landing page. A Mandarin
landing page that takes visitors along a path well-defined by these steps will get you on your way to
enjoying the high ROI fruits of PPC.

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China factors that will limit the success of the landing page have nothing to do with Chinese
consumers preferring crowded design, the color red, or other poppycock you’ll hear from agencies
trading on your China-ignorance and their purported cross-cultural expertise.
The critical difference in China pertains to the systems, in this case load times. If your landing page
is a translated page or subdomain on your English site, hosted outside of mainland China, your load
times will be slow, and all metrics up to and including ROI will suffer.
Then again, creating a website specifically for China is a significant undertaking in its own right,
challenging enough to send many western brands to Tmall or another third party vendor, where
hosting and performance issues are neutralized. A third way is to design just landing pages hosted
on the inside-firewall servers of a tech-enabled agency, detailed in Part VI of this series.
4. Testing & Measurement
This is where winning SEM campaigns are made. The majority of SEM advertisers spend far too
much time trying to create a perfect ad and landing page, and far too little testing, measuring,
adjusting, and testing again.
Good CTR (click through rate) but low conversions? Change the title on the landing page and the
CTA. Good conversion rate but low CTR? Adjust the ad copy.
The handful of metrics and the steps necessary to test against them are far less complex than that
of your average community college Biology 101 lab. However, the diligence and consistency
required, not the mental acuity, are what keep the majority of SEM advertisers from really driving
revenue. Having said that, the experience and efficiency of SEM experts does speak to the logic of
outsourcing this vertical. A company with a proven track record of high ROI PPC creates a lot of
margin to justify foregoing an in-house approach.
5. Closing the Loop
This step overlaps but also extends from step four. “Closing the Loop” refers to identifying and
addressing all possible holes in the funnel between search engine ad click and sale. For example,
many global companies doing B2B with sales offices in China will have form fills on their landing
page sent to a general email account, with no assigned personnel for follow up and close. A tragedy,

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especially considering that those form fills can be pushed to an assigned recipient’s email, with
copies going to HQ, and protocols for immediate follow up and reporting.
One of the best tools for closing the loop is a custom campaign management dashboard. This is a
customized tool with which authorized parties can log in and view all running ads and metrics, as
well as conversions and follow up actions by assigned personnel. Such a tool is a straightforward
technical proposition for the right agency, but a small miracle in its power to make the China sales
funnel transparent, seamless, and profitable, often cutting lead times to a fraction of their former
duration.
Conclusion
No doubt SEM sounds quite complex to those unfamiliar with it, given the steps outlined above.
Nevertheless, consider that opening the tiniest physical presence in China involves far more rigor, a
far steeper learning curve, at a fraction of the demographic reach that SEM offers. Those who opt for
physical before digital, because the former is their wheelhouse, are buying into China’s brick and
mortar malaise, and missing out on the opportunities abounding in China’s online revolution.

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Authors
Ernie Diaz, Publisher, China Digital Review
Kelly Stickel, President, Remodista
Jesper Hanssen, Owner/Managing Director, Core Pricing Pte. Ltd.

Remodista Think Tank - China Commerce 101

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