China is already the world’s number one consumer of apparel, number two consumer of footwear and number three consumer of cosmetics.
More and more western brands are sensing that the time is right for expansion into China, and are seriously considering market entry. Below are China Luxury Advisors‘ Renee Hartmann’s Top 5 recommendations of things brands should do before entering the market.
1.) Register your English and Chinese trademarks in China.
The trademarking process in China is long and complex, and depending on your brand name, can be difficult to secure. China is also a “first to file” trademark registration system, so anyone can squat on a given trademark and win a legal settlement against the mark’s “global” owner, as long as they registered first. Regardless of your market entry timeline, register trademarks immediately. The China Law Blog has plenty of information and best-practices on the trademarking process in China.
2.) Understand your brand presence. Brand is king in China.
Western brands that lack physical presence are often surprised to learn that healthy fan clubs already thrive in China, and tens of thousands of products are already changing hands via online platforms without their knowledge. Other prestigious brands are shocked that more people don’t know about them, and that their following is basically nonexistent. You need to understand existing brand awareness and consumer reactions in order to best understand whether you will resonate in the market.
3.) Assess the distribution channels for your product.
Distribution will be your single biggest challenge in China - especially for industries such as branded apparel and accessories which are dominated by single brand stores. Determine whether there will be retailers who will buy your product, or whether you will need to open retail yourself or with a partner. If its the later, be sure you have the product range and brand strength to support a single brand store and attract quality partners.
4.) Identify high quality, trustworthy local resources.
Whether you are hiring directly or finding a local distribution partner, finding high quality local partners that you can trust is crucial to the success of your entry. Choose carefully and make sure you understand your negotiating position, the negotiation process and that your interests are aligned. Negotiation in China is very indirect and requires a nuanced approach.
5.) Start building your brand NOW.
Whether the results of your brand assessment in China are encouraging or devastating, the sooner you lay a solid foundation the better. A sustainable digital presence through a Chinese version of your website, hosted in China, is crucial. Social media is far more influential and productive in China than in most other markets, so find someone who can establish your identities on key platforms and develop personalities that are reflective of your brand values and heritage (China Luxury Advisors is a good place to start -ed.).
Above all, understand that success in China doesn’t happen overnight — entry is an investment decision, not a sales decision. Whether the investment is made by you or a local partner, someone will be investing significant money, time and resources in your brand in order to build success in China. Operating retail is expensive, and most sales are driven by brand awareness and heritage — neither of which come cheap in China anymore.