Made for China. Launch Your Consumer Brand in China in 3 Steps. The Chinese consumer market surpassed Japan as the second largest consumer market after the USA in 2013. Chinese consumers look for quality and innovation and recognize these qualities in European brands. Large global mass consumer brands as well as smaller niche brands can profit from the growing purchasing power of Chinese consumers. Entrepreneurs approaching the Chinese consumer market start by making a market study first. Questions here are how much demand is there for the product, what about price levels, competition, how should I adapt my product to local market needs etc. In my presentation I analyse different income levels, geographical income spread, growth in different consumer categories, 6 different consumer types based on income and social orientation, and important market trends. Next we discuss the advantages and disadvantages of physical presence and online sales channels, as well as some practical issues related to business registration in China. Then, I go in to detail on how to sell and promote your products through e-commerce channels like Alibaba's Tmall.com and m-commerce channels like Tencent's Wechat. This presentation was given to an audience of students in Sinology and Applied Economics at the University of Ghent in Autumn 2014.

1. Made
LAUNCH YOUR CONSUMER BRAND IN CHINA
for
CHINAin3STEPS
为中国而造
1

2. 2

3. DOMESTIC CONSUMPTION
•Research from the Economist shows China has surpassedJapan in 2013 as second largest consumer market after the USA.
•Analists forcast a rise of private consumption levels in China from the current 35% of GDP to 45-50% of GDP in 2020.3

4. 4

5. 5

6. APPROACHING THE CHINESE CONSUMER MARKET IN 3 STEPS
Market Study &
Product Localization
Brick & Mortar vsOnlineProduct Promotion
6

7. CHINA‟S GOVERNMENT WANTS TO INCREASEDOMESTIC CONSUMPTION
•Growing urbanization
Increasing wages
Better shopping environment (facilities)
•Social security improves
•RMB appreciates
7

8. 290 BILLION RMB2012 SPENDING OF GENERATION „90
670 MILLION MIDDLE CLASS 2022
1.3 BILLION
CONSUMERS
30% YEARLY GROWTHCINEMA VISITS
1/3
LUXURY MARKET
7 TIMESAROUND THE GLOBE10% GROWTH FMCG MARKET
8
3.3 TRILLION RMB
ONLINE SPENDING 2015

9. MARKET STUDY & PRODUCT LOCALIZATION
•Income levels
•Geographic income spread
•Consumption categories
•Consumer types
•Market Trends
9

10. 10

11. 11

12. INCOME LEVELS
SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011); 12

13. INCOME LEVELS
SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011); CanbackDangelfor United States, Japan, Germany and Brazil data
13

14. GEOGRAPHICAL INCOME SPREAD
SOURCE: Nielsen , “A New Era In Consumption 2014”
14

15. SHARE OF MIDDLE CLASSBY TYPE OF CITY, %
SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011);
15

16. CONSUMPTION CATEGORIES
SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011);
16

17. CONSUMER TYPES
SOURCE: Jin LanDu, “From small mass to main stream”17

18. EARLY ADOPTERS
SOURCE: Seth Godin, “Purple Cow” 18

19. INDIVIDUALISM
19
MARKET TRENDS

20. EMOTION = MONEY
20

21. THE HEALTHY LIFE
21

22. CRAVE FOR REST & HARMONY22

23. WOMEN ECONOMY
23

24. BRICK & MORTAR VS ONLINEB&M
Shopping experienceQuality imageLimited geographical exposure
High overhead cost
Online
Market reach
Consumer convenience
Marketing
Logistic challengesLow overhead cost
24

25. ONLINE SALES
•Own website
Establish firm corporate/brand identity
Reference for official product information, prices etc.
Business registration
ICP licence of Ministry of Industry and Information Technology (工业和信息化部)
•E-commerce & M-commerce platforms
No mainland China business registration needed for tmall.hk
Business registration needed for tmall.com
Retour service in China
Customer service in Chinese
RMB payments = Chinese bank account
25

26. E-COMMERCE26

27. FLAGSHIP STORE
Owner of the store must be formal or exclusive representative of the brand
SPECIALTY STORE
Dealers with distribution rights without geographic restrictions in the Greater China region
FRANCHISESTORE
Franchisees with rights to distribute licensed product and valid license from Franchisor
Set up Store
Promote within Tmall
Promote through other channels
27

28. TMALL BRAND PROMOTION
Homepage ads
•Center ads +/-80,000yuan/day
•Sidebar ads +/-45,000yuan/day
CPC (“Taobaotrain”)
•Recommends products to users who have added these to their wish list, and works on bid-basis
•Bids range from 0.1 to 100 yuan
Free channels
•Post your advertisement on Taobaoforum
•E-mail your customers the latest catalog
28

29. CHATGAMES
SCAN
SHAKE
TENPAY
BUSINESS ACCOUNTS
29
CRM

30. MOST CONNECTED CONSUMER
SOURCE: Geometry Global’s 2014 Connect Shopper
30

31. WECHAT BUSINESS ACCOUNTS
Subscription Account
•For individuals and business
•Free of charge
Service Account
•For businesses
•Verification = Set-up fee of CNY 300
WechatStore
•For businesses
•Set-up fee ofCNY 20,000 (TencentPay)
•Part of WechatService Account
31

32. CONTACT
GIANNI GIROLAMI
MARKETING & BUSINESS DEVELOPMENT
+32471 46 04 55
in/chinaconsumermarket
gianni.girolami@chess-nv.com
32