Misconceptions of Western Brands Entering China

Misconceptions of Western Brands Entering China

Top Challenges for Companies Trying to Navigate China Business

We’ve heard the saying, “the great things don’t come easy”. This will resonate with companies who try to establish a presence in China – the largest market in the world.

While China is viewed as a golden egg of opportunity, many Western companies are deterred from entering the market due to unique challenges. Witnessing failures of big corporations in China such as Google, M&S, Tesco and Amazon, discourages further. Sinowei offers services to break down these barriers and de-risk the route to market.

What are some of the key challenges?

Language Barriers

Unlike in Europe where companies are more likely to find common languages to communicate in, most people in China speak Mandarin. Western companies expecting to get anything done without the language or consistent translators will find navigating business almost impossible.

The added danger of not having accurate translation services at hand can result in translated brand names that are interpreted different to what they intend – or worse, could cause offense to Chinese consumers, customs or authorities.

Lack of Deep Understanding of the Market

The perception of China as an unsophisticated market has resulted in many failed strategies which showed little to no adaptation to needs of consumers. The frenzy of trying to enter China’s increasingly consumer-powered economy, created a vacuum of misplaced distribution and marketing of products that lacked functional value for the population.

Chinese Accreditations and Regulator Applications

Foreign companies often complain about China’s lengthy administrative customs system to legally be imported into the country and sold to Chinese consumers. GACC, AQSIQ, CIQ, SAMR, Trademarking, Back Label Registration – all to be approved by Chinese authorities.

Travel Restrictions

The impact of Covid-19 has been felt around the world – but it created even more restraints on those wishing to do business in China. China’s zero-covid policy made it virtually impossible for most people to enter the country without doing at least a week of strict quarantine since 2020.

Building relationships (guanxi) and networking in China is essential for a successful business venture – but the shift to almost entirely virtual communication makes this difficult. While restrictions were eased in January 2023, many companies will struggle to restart these relationships without sufficient time and financial investment.

Additional Challenges for Companies Trying to Enter China

  • Currency Exchange
  • Brand / IP Protection
  • Contrasting Business Structures
  • Lack of Offline Touch Points
  • Unfamiliarity with China’s unique social media ecosystem
  • Ignorance of Chinese Symbolism and Beliefs

Without a physical presence in the country, companies are advised to find a reliable partner for China who understands the language, culture and can help navigate business opportunities.

Sinowei is an international trading company based in Shanghai China, with offices across the UK and EU. Our team have spent several years working on solutions which de-risk China importing and exporting, accessible to business across the UK and Europe. Explore your business opportunities with China by booking a free consultation with a member of the Sinowei team. 




China Consumption Trends for 2023: Rebalancing The Economy

China Consumption Trends for 2023: Rebalancing The Economy

It is vital for companies not to underestimate the strength of domestic brands”

While businesses are bracing themselves for a choppy start to 2023, there is also a sense of a light at the end of the tunnel. Inflation, the War in Ukraine and China’s reopening after three years of strict Covid-restrictions, are set to have the largest impact on global trade.

China is set to experience extensive levels of Covid-19 cases in the following weeks, with the peaks expected during Chinese New Year and after the return to work following the festive period. [Airfinity] Yet, investment analysts say China lifting restrictions will help rebalance economies sooner than anticipated.

Having opened our Shanghai Import Pavilion in Nov 2019, Sinowei teams throughout China, UK and EU have had first-hand experience of the challenges presented across international trade during a pandemic. We’ve observed the quick pace at which things can change in China and how opportunity can arise. The annual McKinsey China Consumer Report released in December, projected several consumer trends pinned for companies to watch in 2023.

  1. “The Middle-Class Continues to Rise”
    Not only is China experiencing the highest growth of middle-class households every year; China is also “expected to add another 71 million upper-middle and high-income households.”
  1. Premiumization Maintains Momentum”
    Consumers still “trade up” to premium over mass, “despite rising anxiety over the economy and their personal incomes”.
  1. “Smarter Choices, but not Trading Down”
    Consumers becoming increasingly creative in how they’re getting the brands they want for less – whether it’s through Community Group Buying Platforms, Taobao or livestreaming offers.
  1. “It’s all about product”
    With a world of information at our fingertips, savvy consumers can quickly “educate themselves about the technical specifications of their favourite products on social media” and the likes of Baidu.
  1. “Local Companies are Winning”
    While foreign brands could once persuade consumers to pay premium based on country of origin, “Chinese companies today offer excellent products that are competitive or sometimes even superior to their foreign peers. … Today domestic companies are reacting faster to trends, are closer to the consumer and making bolder investments.”


Our Thoughts

“The resurgence of the world’s most important source of international travellers has already created a positive impact for neighbouring economies.”

China’s growing spending power presents greater opportunity in 2023, due to the easing of China’s zero-Covid restrictions. Not only do we expect to see uptake in bar and restaurant visits – but the resurgence of the world’s most important source of international travellers has already created a positive impact for neighbouring economies.

Consumer Behaviours 

The key consumer demographic, set to influence consumption trends over the next decades, are those in their 20’s and 30’s. This category generally has better education, aren’t too concerned with savings and will spend more on entertainment. Most importantly, they are more concerned with quality and value over low price.

Understanding the omnichannel experience for Chinese shoppers can seem overwhelming to Western companies, who are used to more straightforward touch points. Having spent several years establishing our B2C distribution through these online channels, what we found most interesting were the community group buying platforms.

This refers to several small house-hold orders combined into one larger community order. It’s in often favoured in Tier 3,4,5 areas where there’s lower-income as these platforms offer better group price offers. Also in these areas: community values are stronger and neighbours more familiar with one another. [Dauxe Consulting]

Covid-lockdowns forced the shift in online commerce in first and second tier cities, as logistics and delivery workforce were impacted. Community group buying models are increasingly showing high-conversion and retention capabilities. We see this as an excellent channel for Western companies to reach consumers beyond the traditional market points for imports.

Domestic Adaptability and Innovation

While foreign companies were once held in esteem of having higher-quality goods, mainly in food, drink, clothing and cosmetic products – this was largely because of their newness and unfamiliarity to China. Fast forward two decades and Chinese manufacturers have quickly adapted to consumer demands while offering further innovation than imported counterparts.

It is vital for companies not to underestimate the strength of domestic brands. They should demonstrate understanding of China’s consumer culture and cater their offering accordingly.

RCEP Shangdong Import Expo 2022 – Complete

RCEP Shangdong Import Expo 2022 – Complete

One good thing about Summer drawing to an end – is the return to business as usual! Sinowei Shanghai have just wrapped up their first show in months. Having endured months of strict Covid lockdowns and restrictions, Hunter and Rayna did an amazing job representing our client brands in Linyi City!

Located in the southeast of Shandong, Linyi City is one of the two “free-trade zones” in the province. As a result, RCEP hosted 400+ exhibitors and over 30,000 trade fair visitors.

To launch your brand into the world’s largest consumer market, visit our website to discover our trade fairs throughout Mainland China.

Why is Chinese New Year celebrated in Jan/Feb? Lunar vs Solas Calendars?

Why is Chinese New Year celebrated in Jan/Feb? Lunar vs Solas Calendars?

A cool thing about the Chinese, is they’re great travellers and seekers of adventure. As a result, we’ve seen waves of Chinese emigration throughout history and their influence can be seen all over the world. An example of this is the fact that twenty countries and regions recognise Chinese New Year as a designated day. In the run up to Chinese New Year 2022, we want to help build a better understanding of this festival and answer your questions!

Why does Chinese New Year fall in Jan/Feb?

As one of the top questions we were asked – it would be a good one to start with.
First, we must recognise that time is man-made. No, we’re not playing God – but the hourly, daily, monthly and annual segmentation beyond “night and day” was created over the history of mankind.

According to a recent estimate, there are about forty calendars used in the world today – so it’s no wonder we see several time conflicts. The main roots of human time-keeping are derived from Lunar and Solas Calendars. What’s the difference? In short – the celestial body used to measure the passage of time: moon or sun.

Solas calendars are based on the position of the sun in relation to the stars behind it. One year equals the time required for the earth to rotate around the sun. Seasons and time are measured between the vernal equinoxes. We see 365 days in the Solas year with the exception of leap year which helps synchronise the additional 0.25 days it takes for full earth-sun rotation.

Lunar calendars are based on cycles of the moon phases. A month is measured from one new-moon to the other. We see 354 days in the Lunar year, give or take. Lunar Calendars are still in wide use, particularly in Asia to keep track of religious festivities.

This is why Chinese New Year is nearly a month after Western countries. Since ancient times, China has followed the lunar calendar to plan the cultivation and harvesting of crops, which has also evolved into the 24 solar terms.

Some of the oldest calendars known in history were Lunar. Past societies emphasised the genuine connection between human behaviour and the moon.

Ultimately, we are controlled by both cycles in different ways. Let’s hope this New Moon of 2022 brings a joyful and prosperous year for us all! Gong Xi Fa Cai! 

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