The Chinese Market: an Introduction
Mainland China is a huge and diverse market. Identifying the best local markets to focus your efforts on is vital. This enables companies to know where to sell in China, to whom, and the ideal type of distributor or importer to work with given their target markets and end-consumers.
Answering the Important Questions
China is a large market, so we recommend starting to sell in one or two local markets first. This is an important question and requires us to answer several small questions first. Where can customers afford to buy my product? Who is my ideal customer? What kind of distributor or importer should I work with so I can achieve my goals? Each of these questions and more can be answered by carrying out a target market analysis, which should be part of any company’s due diligence before they start looking for distributors and selling in the market.
Where Can Customers Afford to Buy My Product (the Best Local Market in China)?
Income levels in China vary widely from place to place. For example, average incomes in Beijing are over twice those in Gansu province. In order to determine the best local market, companies need to know how affordable their products are locally, the number of potential buyers, and the market size as a percentage of all local consumers. Knowing how affordable your product is to the average income in each local market will make it clear which local markets you should focus on selling in first and which will be better for later expansion.
Who is My Ideal Customer?
Every company needs to know who their ideal customers are. Who are they? Where do they buy wine, beer, or liquor? What impacts how they make purchasing decisions? Companies should have a clear profile of their ideal costumers with regards to their location, age range, gender breakdown and shopping habits/qualities. It is also necessary to determine their socio-economic level, purchase level and purchase source. In China, the younger generation is an emerging force driving the market and the one that holds the most potential.
For example, if you are selling craft beer, your ideal customer is likely to be among China’s young, emerging middle class who have more disposable income, are more aware of foreign brands and flavors, and crave something different from the generic lagers older generations drink.
What Kind of Distributor or Importer Should I Work with?
Finding the right distributor or importer to work with is important. It also isn’t easy, particularly in a complex emerging market like China. Knowing the type of distributors and importers you should be considering will depend on both which local markets you want to sell in first and who your target customer is. You want to work with distributors and importers who are knowledgeable and well established in those markets, have experience selling your product type, and use in the places your ideal customers are likely to buy your wine, beer, or liquor.
Once you have found a promising distributor or importer, you need to confirm their track record, capabilities, and trustworthiness by carrying out full due diligence. They will be your sales partner in China for years to come, so you want to know they’re the right one for you. This is more important in China than in most markets because of the large number of distributors and the difficulty of confirming their authenticity without the assistance of a local expert.
Parting Thoughts on the Best Local Market in China
In big cities like Beijing, the income level and population density are extraordinarily high. The markets also offer efficient distribution networks. This often makes such markets ideal for initial import and sales in China. In contrast, smaller cities, such as Dalian in northeastern China, and interior provinces, such as Yunnan in the southwest, have lower population density, incomes, and less developed logistics and distribution networks, making them better for secondary or tertiary expansion.
When preparing to start importing and selling wine, beer, or liquor in China, carry out a thorough target market analysis and due diligence to identify the best local markets for your product, know who your ideal customer is, and find the right distributors or importers who can help you meet your goals in the market.