Retail Opportunities in China in a Post-Pandemic World

Retail Opportunities in China in a Post-Pandemic World
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    Business is uncertain right now. 

    Consumers in most countries aren’t spending on anything but essentials. Retailers all over the US and Europe are trying to figure out how to avoid permanent closings.

    With business coming to a grinding halt, it might be worth exploring what other opportunities lie ahead.

    China, being the first to be hit, is now the first country to return to normalcy. With businesses opening back up, shoppers are returning to stores. A Hermès Boutique in China made $2.7 Million in one day after it reopened this week. 

    Should you be looking at China in the post-pandemic world?

    Despite the economic slowdown, the retail industry in China is booming. China currently accounts for 21% of the global retail market and is set to overtake the US to become the largest retail market in the world by 2021.

    China is also already a leader in terms of e-commerce sales. In 2019, it was estimated to amount to 1.9 trillion U.S. dollars.

    Retail Ecommerce Sales in China 2018-2023 by eMarketer
    Source: eMarketer

    Post-corona, this number is set to increase even more. Consumers in China are a lot more optimistic about the current situation and expected to increase their spend over the next 6 months. 

    BCG Covid 19 consumer sentiment survey
    Source: BCG COVID-19 Consumer Sentiment Survey

    They are looking for ways to buy goods with minimal human contact. We are also observing a surge of first-time online shoppers via channels like WeChat. Drone deliveries are becoming more common.

    GfK China Consumer Sentiment Study

    Unlike the US, where e-commerce is fragmented, in China a couple of big players rule the market like the Alibaba Group and JD.com. And these giants have launched several initiatives to support brands that sell through them. Flash sales, live-streamed fashion shows and coupons to help sales get back to normal as quickly as possible.

    This surge of interest in Retail in China has done wonders for early movers.

    Let’s explore two examples of companies adjusting to seize this opportunity fast.

    The first is a supplement company that creates protein and creatine powder for people who work out and go to the gym. This company has recently increased efforts in China after a period of low sales during the lockdowns.

    In the aftermath of coronavirus, many people have become more conscious when it comes to taking their health seriously. With gyms starting to reopen in China, this company has found a solution that lets them keep selling despite underperforming home markets and traditional foreign markets.

    The crazy part about this is that they’re selling a physical product, through a physical supply chain, for a physical activity. Doesn’t that seem like the worst combination imaginable right now?

    A keen eye for the way the markets were shifting is allowing retailers to adjust their distribution and continue selling during this window of opportunity but in a different market.

    On a related theme, a company that sells activewear into Norway, Sweden, Denmark, and Germany, were perfectly happy sticking to their home markets. While they threw around the idea of China loosely, they hadn’t pulled the trigger. They were content with the European market and didn’t have aspirations of expansion and domination.

    They had also planned for a massive winter season in Europe — stocking up on inventory. Sadly, that never eventuated, and they were left holding massive inventory.

    Feeling the sting of a sharp decline in sales in their home markets, they have now adjusted and are launching into China. 

    With retail being one of the hardest-hit sectors in the US, the China market is providing the much-needed push to help retailers survive the current situation.

    So how easy is it to get started in China, you ask?

    Entering a foreign market like China can seem intimidating. There’s a language barrier, it’s hard to understand the legal and logistical requirements and most foreign retailers don’t really know what works. 

    From that perspective, the barrier is high.

    Many retailers don’t realize that other barriers to enter China are quite low. Cross-border e-commerce is encouraged and you don’t need a Chinese business entity to get started. Another issue that a lot of retailers worry about is logistics. But if your website loads in China, you can start selling right away.

    It’s also quick and easy to do a point-of-sale setup. If you have issues with stock not moving and sales plummeting in your home market, China might offer a way out of it.

    For more details on how to get started with retailing in China, request a demo with the AdChina.io sales team

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