When taking those first steps, planning export of products into China, I often receive lots of questions from western businesses about the multitude of import rules and regulations, how they vary across different product categories and sometimes, how to get around certain requirements.
These questions often boil down to, "which import channel is best for me to start generating sales in China?"
There are two main channels to consider when trading in China:
1. Traditional trade
Importing your product and utilising domestic distributors to fulfill to your end customer. It's important to understand here that an import license, held by a local company in China is required to do this.
2. Cross-Border E-Commerce
A sales channel that allows an individual in China order direct from an online store (e.g Tmall, Amazon).
Depending on which model you choose, there are differences in the volume that can be supplied, value and your Chinese compliant label requirements (read more about local labelling here)
|Category||Value Limitation||Chinese Label & other certifications|
|Cross Border E-Commerce||
What other requirements would I need to consider?
Other than the differences highlighted above, depending on your trading model selected, there may be other requirements to fulfill, these can also differ based on the types of product you're importing, so it's always best to check with a trusted, local agent before proceeding.
One example of selling food and beverages in China can provide a good understanding of the fundamental differences between the two models.
|Traditional Trade||Cross Border E-commerce|
This all starts to make Cross-Border E-commerce sound like the best solution to selling in China, removing a lot of the red tape often associated with imports. And for the short term it may well be...
So, which option is best?
Sadly, there's no single 'best' solution. There are pro's and cons for each, which need to be approached by carefully assessing your product and sales strategy, choosing the most approprate model to grow your business in China.
Even with that in mind, we often see Cross Border E-commerce as a great solution to start selling small in China, allowing you to:
- Test the market with reduced capital expenditure
- Get local customer feedback
- Refine your product proposition and local marketing
However, some of the drawbacks can be:
- Limits of volume and quantity sold - if sales rapidly grow, particularly with FMCG's, you could find yourself hitting a revenue ceiling in China
- Online sales only - you could be missing out on local, physical sales and the opportunity to build your brand directly with consumers. Unless you're already a well known brand, this could be the difference between China driving your revenue growth, or remaining a sideshow.
If you decide to explore Cross-Border E-commerce and are serious about growing a sizable business in China, use this as your golden opportunity to learn more about your customers and products locally.
Migrating to a local import and distribution model
If you do this in conjunction with setting up your supply chain for a more integrated operation, you'll be armed with the knowledge and capability to capitalise on the huge opportunities China provides.
By partnering with a local agent, you can even set this up without the need to form a local subsidiary, or even employee dedicated staff, it can be a lot easier than than you think.
If youre unsure of the approach you need to take, why not reach out to us?
Importing and selling onine in China are topics we've covered extensively accross our blog. Now you understand the fundamentals, build your knowledge with these additional articles: