The pavilion is designed to reduce logistics costs, shorten delivery times, and give Chinese consumers peace of mind that they are buying quality, genuine Canadian products.
The question is: are Canadian businesses ready, especially for smaller businesses that have yet to explore opportunities beyond our border.
According to a recent report from Aimia, 63 per cent of Canadian small businesses are unsure of what is needed to bring their company to another market, while 50 per cent do not know when, and 24 per cent do not know where to start. The study also showed that 90 per cent of the companies already doing business in international markets, reported performing extremely well.
In talking to our small business customers who are successfully selling abroad, we have identified four areas that might help companies that plan to take advantage of this new opportunity. The discussion here focuses on selling on Alibaba’s Tmall Canadian Pavilion, however, the principles apply to other markets.
Which market segment are you targeting?
China has more than 1.3 billion people with diverse regional cultures, incomes, and demands. According to a report from the Boston Consulting Group, the nature of consumption is changing dramatically. Greater affluence, a new generation of consumers, and the widely adopted mobile commerce culture are driving companies to constantly fine tune their marketing strategy by re-positioning their products, widening distribution channels, and targeting new or different segments by age, gender, or geography. The product that is well received by a particular customer segment through a particular channel in Canada might not be appropriate for the same segment or channel in China. Selecting the right products for the right segment and understanding why Tmall is the best channel would be a necessary first step.
Once you have identified the customer segment you are targeting, it is critical to know what current options they have and what additional advantage you are providing. For example, you should research how items are priced and whether you are competing with other, cheaper foreign brands. American boxed milk is less popular and doesn’t sell as well in China due to stiff competition from less expensive and more widely available Australian or New Zealand boxed milk.
What do you want to be known for among customers?
Chinese consumers are highly brand driven. North American and European brands enjoy a high level of equity in select categories such as food and fashion because Chinese consumers perceive them as superior to local options. This intrinsic advantage alone, however, is not enough. International brands from P&G to LVMH have invested significantly in China to make their brands relevant to local customers.
The Tmall set up is likely to provide smaller businesses an advantage to help Chinese consumers quickly identify products as Canadian made. However, more work will still need to be done to set up your online presence and to interact meaningfully with local customers, in their language, to establish your brand. Peer reviews and virtual word-of-mouth are crucial to any brand’s success in China, given the complex dynamics between the mainstream media and the public. Research how some of the international brands have set up their online presence and campaigns for best practices.
Niche Brands are rising in China
As Chinese consumers become more sophisticated in their tastes, importers can succeed by bringing in niche brands. Chinese consumers are looking for ways to express their individuality and favour brands with a unique story. They want to understand the brand’s heritage, story, and craftsmanship. Therefore products that have a unique story to tell are more attractive to Chinese elite and aspirational shoppers. Canadian small, artisanal businesses have an advantage here because these business builders typically have unique, passionate stories to tell that appeal to Chinese customers’ desire for brand knowledge.
In addition to marketing, small businesses should also thoroughly understand the requirements needed to operate on Alibaba’s Tmall Global and how they will manage their inventory, cash flow, and adjust their business using data from accounting and Tmall.
Alibaba’s Tmall presents a great opportunity for Canadian businesses to expand their business globally. The next step is for small businesses to get ready and join the world stage.
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