Selling goods and services to companies and consumers in China is not an easy task for foreign firms. Here are some mistakes to avoid.
Based on an interview with Frank Lavin, CEO of Export Now, a company that assists Western businesses that enter the Chinese market, Darren Dahl (writing for American Express Open Forum), describes six mistakes that foreign companies should not make:
- Doing Nothing New — “The most common mistake companies make when entering international markets is that they don’t do anything new, says Lavin. ‘They think that whatever works domestically will also work internationally,’ he says. ‘They don’t look at pricing or brand positioning or the competitive map. There will be gaps and you need to do some analysis to close them.'”
- Not Embracing E-Commerce — “Lavin says that while the U.S. has a mature brick-and-mortar merchandising system that’s been around for two hundred years, Chinese customers primarily shop online. ‘E-commerce is often the icing on the cake in the U.S.,’ says Lavin. ‘But in China, e-commerce is the cake.'”
- Failing to Market Differently — “Lavin says getting your products there is only the first step. ‘What we like to say is that distribution ain’t marketing,’ he says. ‘You’ve reached the starting line, not the finish line. Companies must realize that when they’re entering a new market like China, they are essentially starting over when it comes to building up brand awareness and goodwill among potential customers.”
- Trying to Do It All Yourself — “If you’ve made the decision to sell in China, then you should also be willing to partner with other businesses to make that move a success.”
- Obsessing Over Currency Fluctuations — “One thing you don’t have to worry too much about when selling in China is the fluctuation of global currencies. Lavin says that if you’re selling less than $3,000 worth of goods a day or less, you can simply make minor price adjustments to your products as needed without worrying about any kind of currency hedge strategy. Then again, if you are selling upwards of $50 million worth of goods a year, you might want to think about putting such a plan in place.”
- Starting Too Fast — “Lavin suggests that every company start with what he calls a soft launch, where you begin selling a fraction of the products you might otherwise be doing in the U.S. as a way to work the kinks out of everything from the warehouse.”
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