Insights on E-Commerce in China

The fourth and last session of the “Entering China through Digital” series focused on the E-Commerce platforms, different marketplaces and the peculiarities of e-commerce in China was moderated once again by Andrea Fenn, co-CEO Adiacent China.

As was already stated in previous sessions, e-commerce in China is the biggest in the world. Although Covid-19 has significantly accelerated the transition to digital in most countries, Chinese consumers were already extremely receptive to digital platforms and their use in almost every aspect of life, from transportation to shopping, retail and services.

So what does e-commerce look like in China and how should companies approach it in 2022?

Vanessa Cai, Vice President of D1M, started the discussion with a deep dive into e-commerce platforms; the most popular at the moment are TMall, JD.com, Wechat and Douyin, along with Taobao, Red and Dewu. Each has its own uniqueness and can be used to cater to different demographics and types of potential consumers.

For those unfamiliar with these platforms, Taobao and TMall are the Chinese equivalents of Amazon, focused on sales and shopping. WeChat is a fusion of Whatsapp and Facebook, an app that presents shopping in a store-like setting while at the same time retaining the social aspects of a chatting app. Newcoming platforms include Douyin (known as TikTok in the west) which focuses on content in the form of short videos and live streaming and is an excellent window for displaying products in detail and the Instagram equivalents Red and Dewu. Wechat, Douyin and Dewu, in particular, have been especially successful in the past years, having doubled their ecommerce performance following the start of the pandemic. Companies planning to enter the Chinese market in 2022 definitely can’t afford to ignore these platforms.

Stephy Lan Shen, Head of EC&CRM at Apac Golden Goose, shared her company’s experience in launching an operating e-commerce in China. E-commerce is developing very fast and might seem scary to newcomers. That’s why, as a first step, it’s very important for companies to know what makes them competitive: understand their strengths and weaknesses and what is their purpose of doing ecommerce business in China, choose strong partners with useful expertise and identify the competitors.

Golden Goose first opened stores on TMall, which they operated on their own, and JD in 2020, with plenty of stock of their iconic products; since the brand was already quite known in China this easily led to quick results, and they entered Wechat only one year later. Newcomers, on the other hand, will first have to build their presence and plan their operation and communication strategies. Understanding how the traffic on each platform works is a very important step in successful ecommerce; for example, taking part in the major e-commerce campaigns throughout the year is a great way to increase traffic.

Lastly Fabio Giacopello, Managing Partner at HFG Law & Intellectual Property, stated that before even thinking of launching in China, foreign companies need to have all legal aspects clear. A very important topic that was discussed in this regard is the protection of trademarks. Companies should apply for a national trademark if they seek to only protect the trademark in China, or choose an International trademark if they plan to expand sales to Korea, Japan, Australia etc. Considering that China currently has 37 million registered trademarks, it is quite difficult to for all companies to register new trademarks, so don’t get discouraged if the application is preliminarily rejected.

Another important topic is the trademark class. E-commerce platforms will ask for a class 35 trademark when partnering up with companies: class 35 identifies e-commerce retail. Many foreign companies are unaware of this and fail to indicate the proper class when registering their trademark. Platforms will also ask for an authorization letter, a unilateral declaration that the company is authorized to use a certain trademark, for a certain time, location and type of usage. This is essential to distributors. There are also many laws and regulation to consider when selling in China, especially in regards to contract, advertising and consumers protection. In addition to that, companies must also be aware of each platform’s own rules.

Companies should also pay attention to the design grace period: when launching a product in Europe there’s a 12-months grace period to file a design patent, but in China there’s no grace period at all. So the suggestion for companies planning to sell in China is to get the design patent immediately.

The China-Italy Chamber of Commerce (CICC) Quality Council (QC), would like to thank you for taking part of the webinars series “Entering China through Digital”.