China - Selling Factors and TechniquesChina - Selling Factors

Industrial and commercial sales in China tend to be driven by initial price.  More corporate and government buyers are realizing the value of quality and the importance of considering the lifecycle cost of products, but U.S. firms with premium offerings still face pressure to lower prices to meet those of lower-quality local offerings.  The dynamic in the consumer market is very different, with Chinese consumers willing to dole out substantial funds on brands with a perceived or actual quality advantage. Sales channels tend to be complex and divided by region and/or end-user.

Proper marketing and advertising are critical in both the consumer and industrial markets.  China’s advertising market is large and sophisticated.  Personal relationships (guanxi in Chinese) in business continue to be important.  Counterparts prefer to know who they are dealing with before getting involved too deeply.  Chinese colleagues and partners are often looking for common ground to build a team that can be trusted.  These relationships take time to develop.  To be successful, American businesses should understand this aspect of the business culture and embrace a patient approach.

While it remains important for exporters, importers, and investors to establish and maintain close relationships with their Chinese counterparts and relevant government agencies, the market dynamic in China has shifted.  Chinese businesspeople have become more sophisticated and are experienced dealing in the global marketplace.  They have adopted modern methods to selling products and services through online platforms and are utilizing new technologies to get products to consumer faster and more efficiently.  However, this should not prevent U.S. companies from working with business partners that specialize in selling specific produces and/or whose coverage is region specific.

U.S. companies must develop product brochures and materials in Chinese to sell their products in China.  While an increasing number of Chinese are speaking English, the numbers are still relatively low, particularly in second and third tier cities.  

Localization

Though Chinese customers welcome U.S.-made products in general, they still prefer localized customer support from a manufacturer, such as on-site training, service centers in China, local representatives, and catalogues and manuals in Chinese.  While a growing percentage of the management work-force in first-tier cities speak English, U.S. exporters should understand the limits of English language proficiency in China and do their utmost to see that all materials are professionally translated into Chinese.  Being able to communicate in the native language will enhance the relationship between the parties and helps to clarify technical issues, planning issues, logistical issues, and contractual issues.

Logistics

Logistics in China have become less arduous in recent years with increased transportation options and continued improvement to highway, air, railway, and port infrastructure.  Most domestic goods travel by truck (more than 80% according to data compiled by Armstrong & Associates Inc) but increasing air travel and a relatively new aircraft fleet mean that domestic air transport is an increasingly viable option for higher-value goods.  Most major international logistics companies are now operating in China, although they face regulatory barriers that limit their ability to provide domestic services. Logistics costs in China tend to be high – the most recent estimate of China’s National Development Reform Commission is that logistics costs are 14.9% of China’s GDP, far above the 8%-9% of advanced economies.  China ranked 26^th in the World Bank’s 2018 Logistics Performance Index, with a particularly low score in customs clearance.