E-commerce in China: an opportunity for the Dutch business community?
It may be the other side of the world, but the internet is bringing China closer all the time. Ordering from Ali Express or using a Huawei smartphone isn't unusual in the Netherlands. In 2017, Dutch people spent nearly 250 million euros on Chinese platforms, making those channels serious rivals to their Western equivalents. And, while growth in the number of registered domain names has been hovering at about 2 per cent in Europe for some years, .cn has raced ahead to become the world's biggest country-code domain, with nearly 23 million names.
More internet demand from China
It isn't all one-way traffic, though. In 2017, more than 125 million Chinese consumers made on-line purchases from other countries. And, crucially, there's huge potential for growing the volume of goods and services sold to China via the web. So, is China a land of opportunity for the Dutch e-commerce sector? We put that question to Angela Tabak of Webshop in China, a consultancy that advises Dutch webshop proprietors looking to penetrate China's consumer market.
Almost no chance for individual websites
With the rapid growth in .cn domain names, you might think that, for selling to China, the first step is to create a Chinese website. However, that's an almost impossible task for a non-Chinese business. "You stand very little chance of securing a share of the market with a standalone website. Chinese consumers mostly prefer to shop through platforms such as Ali Baba, because of the financial security. Standalone sites are also vulnerable to blocking by the Chinese government," says Tabak. It's only major global brands such as Nike that can afford to bypass the platforms.
Platforms expensive, but they vary
Platforms such as Ali Baba provide security, but you need to pay a deposit, rent and commission. As well as the big platforms, there are various specialist platforms for particular product groups. Then there's the social media-app WeChat, which offers relatively low start-up costs. That makes it attractive to smaller businesses and niche brands.
Social marketing is a must
Once you've got a channel for selling your products, you need to think about promotion. Social media and influencers are the way to go. "China is a much more collective society than the Netherlands. People share a lot more with each other and distrust individual brands. Against that backdrop, social marketing plays a much bigger role in China than here. And influencer marketing, which has been on the rise in the Netherlands in recent years, is absolutely essential over there. Certainly for a niche brand."
What products sell well in China?
In China, the Netherlands has a trustworthy reputation. That's mainly down to the large-scale import of Dutch milk powder some years back, when there was a contamination issue with local varieties. Otherwise, the Netherlands isn't as well-known to the Chinese public as, say, Germany. Product groups that Tabak expects to perform well on the Chinese market in the period ahead include fashion, personal care, design, home furnishings, sporting goods, confectionery and organic produce. With the one child policy having ended, the outlook is also good for mother-and-baby products.
Brand history is key to success
"When Chinese consumers discover something, it takes off like a rocket," Tabak continues. "So, where you had real opportunities three years ago, the market may be saturated today. And the Chinese are very brand-critical. They want to know your brand's whole backstory. What's the brand's history? How does it perform in its home market? What's its reputation? If you imagine that a brand with no profile in the Netherlands can succeed in China, you're in for disappointment."
What the Netherlands can learn from China
Finally, what lessons can the Netherlands learn from China's e-commerce sector? "In the Netherlands, every brand has its own app and website, with its own log-in system," says Tabak. In China, a WeChat login is normally all you need. Doing away with all those shop-specific log-ins would make the customer journey much easier for Dutch internet shoppers too. It would help e-commerce start-ups as well, by substantially reducing the threshold to buying a new product from a new supplier."
Opportunity abounds in China for the Dutch e-commerce sector, but it's a very different world with its own ground rules. "In order to do well in China, you've got to be patient," explains Tabak. "Things sometimes take off quickly, but you may have to wait several years to turn a good profit."