How To Start an Online Business in China？

WowCommerce

2020-01-15

One of the biggest economies and populations in the world – China is also home to some of the best internet services for its residents.

The country is among the few to fully digitize the daily lives of its citizens' thanks to efficient payment methods and readily available online services. And due to these characteristics and more, China is also a great place to do business online or to set up an online marketplace. Even if you don’t want to get your own marketplace, getting a seller’s account on one of the existing popular platforms is still good money.

You Need A Company First

We all know about China’s enclosed government and communistic policies. The regulation does not allow foreigners to directly do business in China and also there’s no way to even get a website unless you have a valid China-legal business ID.

Even if you want to register on one of the Chinese online stores like Taobao, Jindong, Ali Baba, and so on, you will need a Chinese entity first. Unless you are a Chinese citizen and have a Mainland China ID card, there is no way to do online business unless you have a company (could be a WFOE or a JV).

Online platforms like Ali Baba only let you get a dealer’s account if you have a corporate AliPay account. This corporate AliPay account can only be attained if you a corporate bank account in China. Oh, and as you might have expected, this corporate bank account is only available to those who have a legal company in China. In short, no matter what your business plan is, there is not much you can do without forming a WFOE first.

If you do have a company and meet the minimum requirements to do online business in China, here’s what you should focus on next:

Don’t Forget Market Research

You might already have a well-established e-commerce business in your home country, and your goal is to expand into China. Or you want to launch brand new e-commerce only for the Chinese market.

No matter what your current standing is, never assume that your product or service will be fully welcomed in China. Never underestimate the market – Chinese consumers can become hard to deal with and usually have specific needs that are different from people overseas.

Even if your idea or product took great success overseas, it doesn’t mean it will work in China. Google didn’t work in China, Facebook isn’t even allowed, and many other services that work internationally, fail in China – keep that in mind. The risks are even higher if your product or service is entirely new.

Pick A Local Sales Platform

Your choice will depend on the size of your company and your budget for selecting the right marketing scale for your business.

If you want to have a unique presence, you can work with a local web agency that can create an advertisement for the Chinese market. This solution will give your brand a touch of uniqueness but it will come with a longer development process and an overall higher cost.

As an alternative, you may choose from one of the many e-commerce platforms like Alibaba, T-Mall, and JD Mall. These are popular platforms that offer a range of market areas for e-commerce ventures. The cost of using one of these platforms is lower than a personalized solution and even the maintenance costs are lower.

Whatever your decision, doing everything yourself and setting up your own platform might take longer than you expect. The cost itself can be backbreaking – you are trying to penetrate into a market that is already used to and trusts its own shopping platforms.

These platforms have been around for more than a decade and taking their market share can become a monumental task.

Receive Payments in China

The conversion rate of your online business will be significantly affected by providing your customers with a comfortable and easy way to finalize their purchases.

And in China, all payments are done over AliPay or WeChat Pay – it is vital for you to integrate these services into your sales process. Very few people use cash or bank transfers in China, most of the transactions in the entire country are handled via mobile payment services with AliPay and WeChat Pay taking most of the market share.

In the end, setting up an online business is more about working closely with the government and giving regard to the platforms that already exist. If your strategy is to penetrate the market on your own, then you better be prepared to take on the cost and consequences.

You have to make sure that the consumers feel comfortable around your services and don’t have to migrate from what they are used to doing every day to make use of your e-commerce business.

Did you like the article? Feel free to leave a comment below. You can also request a FREE consultation and talk directly to our business experts if you wish to do any business in China.

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