The Chinese market is one of the most appealing for brands looking to expand into new territories. And it’s clear why — the ecommerce market in China is $2.7 trillion , four times the size of the US ( $843 billion ), and is growing twice as fast. What’s even more exciting is that the share of ecommerce sales to total retail is expected to be at about 52.1% in 2021, growing from 44.8% just a year before.

While this is promising, I’ve found that there’s a widespread delusion among many executives that since there are 1.4 billion people in China, they’ll definitely be able to sell something due to the market’s sheer size.

But that’s not necessarily true, and we know many examples of a brand that failed to do so. Companies ranging from Tesco and Uber to eBay and Google have been on that path and had to exit or rebuild their strategy entirely.

So let’s dive into what’s the right way to approach the opportunities the Chinese market has to offer.

It’s all about ecommerce

Since ecommerce sales are about half of the total retail in China and even more than that in particular categories, I’d advise any brand interested in this market to focus on a digital-first strategy.

If a brand is used to offline distribution, its management and owners will repeat their usual strategy when entering China.

They think the following way: “Hell, we entered the USA, Brazil, and Japan. We know how distribution works, how advertising works, how to build relationships. We will enter major local retail chains just like we entered Walmart, Carrefour, and others. Each store will provide us with an expected monthly sales volume (100-200 kilograms or 200-500 packages on the shelf). That’s it”.

But if you want to export to China, the biggest mistake is repeating your strategy from other regions, even if it works outstandingly. In China, things are different.

Beware retail

In China, retail chains are overloaded with demand from all kinds of suppliers. You will have to pay for the shelf space, for a listing, promotion, and generally be offered pretty terrible terms. This means you will pay a lot, and you’ll get a wildly unpredictable result. Put simply, the market is saturated, and you’re new here.

Even if you’re large enough, you will be working through distributors with no control over your sales. And unless Chinese consumers already know about you, the retail chains have a minimal incentive to let your products on their shelves.

Ecommerce is different. Online marketplaces have infinite shelf space. Anyone with a bit of reason can put a product there. Compared to the time, effort, and cost of offline distribution, ecommerce is quick, effective, and scalable.

So the first question is to assess whether you’re ready to go online as your market entry strategy. If so, your team needs to understand how the ecommerce market works in China. Unlike ordinary retail, it’s pretty much unique regarding customer behaviors, habits, and the local ecosystem.

The local ecosystem helps you

In China, selling online is much more efficient because of the uniquely powerful marketplaces and supplier/vendor ecosystem. We do have bloggers and influencers in the US and Europe, but they’re more than just influencers in China. They are the media, and they control consumer trends.

We may have Instagram Live, but brands market their products through endless live streams performed by popular influencers, bringing their audiences to you. On platforms like Taobao or Douyin, they take the products they’re interested in and help you convert their audience into your customers. You instantly get connected to them, communicate with them, follow up, and market your products even further.

You might think that it’d be hard to top Amazon in terms of network power. But in fact, Amazon is just 5.8% of the US retail sales ($234 billion versus $4.04 trillion). And while it’s generally pretty good for consumers, suppliers have had significant and constant issues selling their products through Amazon, including some that have led to antitrust lawsuits . Unlike Amazon, Chinese ecommerce platforms help businesses grow.

Most importantly, platforms like Taobao and Alibaba provide us with data on sales for each product category and for each merchant — something you’d be surprised to see on Amazon. That allows anyone to adjust their product offering and adjust their listings for improved results.

The cost of customer acquisition through the Taobao live streaming or Douyin is much smaller than the investment required for offline retail. And most importantly, the ROI on the amount of money and efforts invested is significantly higher. Online sales are comparable in volume to offline in China, and for some products, even more significant.

Almost any brand, small or large, can start selling on Chinese online platforms, and for the following two to four years, you won’t even have to think about offline retail at all. And then, when the audience has already had a taste of your products — when you have proven there’s a demand for them — and have a few years of performance data, you could go to retail chains, show it to them, and get placements with more ease.

Essentially, you’ll de-risk your products for the Chinese brick and mortar retail outlets, and who’s not interested in profits with minimal risks?

Get local help

To market your products effectively, you will need to find a TP — a trading partner handling marketplace operations and managing live streaming platforms and blogger relations. Finding the right partner is a big part of your success. There are several agencies whose entire job is to help you find the right contractors. But you can’t just outsource these responsibilities straight away.

You need to have people explicitly focused on Chinese markets, talking to your trading partner, providing messaging points, basic marketing materials, and other details. Nobody knows your product better than you, and nobody will do that job for you.

A good trading partner always asks many questions and demands data to run successful campaigns, helping you flourish within the Chinese market.

Some of the companies that tried to enter China and failed believe there was something wrong with their brand. They pity themselves and explain to all others they just were too different and unique for this market, and there was nothing they could do about it.

The problem is not that your brand is unsuitable for selling in China or that you do not have enough money. The problem is neither in legal questions nor logistics. It’s about your competencies, experience, and psychology.

Success in China depends on whether you have people in your team who have experience working with the unique challenges of the region or at least are willing to learn and adapt because they understand it’s a different beast.

To successfully sell products in China, you need to look at companies that have operated there successfully for many years. Or, even better, at the ones that failed and rebuilt their operations. If Pizza Hut can make its product appealing to Chinese consumers, you can do that as well.

What my biggest fuck-up as a developer taught me about taking ownership

3 biggest reasons why a company’s digital transformation fails

Watching technology spread throughout almost every industry has been one of the most fascinating things I’ve watched over the course of my career. Companies, who 15 years ago thought setting up internal storage, firewalls, and VPNs were as technical as they’d ever get, now have entire engineering teams devoted to building apps and services.

Whether it’s a shoe company using apps to supercharge e-commerce , department stores building tech to boost in-store and online sales , or heavy equipment makers building tech services and autonomous tractors , I’ve watched so many old-guard companies undertake huge digital transformation so they can survive and compete.

Change is hard, though – especially the massive systemic changes required by digital transformation. In my 20 years in tech, I’ve worked with several companies where the initiative for change was there to start, but the end results were lackluster.

It’s rarely a complete failure – pockets of success usually exist within teams or departments – but when big projects stall, I have almost always seen a common set of patterns emerge. Here are three that throw up the biggest roadblocks and how to get around them.

Teams don’t buy into the plan

Managing any big, structural change has to come from the bottom up, rather than simply mandated from the top. The first thing leaders in any organization focus on before starting structural change – whether it’s installing a new email system or security tool, or reorganizing an entire business unit around DevOps – is how they can pull everyone along in those efforts.

If there’s a cadre of cynical employees who think an important project is just the next fad, I assure you, it will be.

It’s essential that leaders realize that these projects require cultural change along with procedural change. Do employees understand how the role they perform changes and evolves in the new world they’re entering? Do they want to be a part of it?

A good strategy to combat these problems is to make sure that each organization involved in any big change has internal champions people can rally around.

Champions can’t simply be appointed, though. The key is look for someone who truly understands why a project is important and is motivated and inspired to get it done. An employee who understands how and why a project will make things better for their jobs as well as for the people around them, will.

Part of owning or running large projects is knowing what motivates the people delivering on that project. I’ve seen a few times where a company will make launching a new project into a huge production, then someone will get up and attempt to rally the employees by telling them how much it will affect earnings per share.

Well, I may not have a ton of stock, so that doesn’t matter to me, so how does that make me fired up to get this done? Think of simple ways to incentivize great work. Maybe the team that has the best results gets a vacation, or more budget for another project.

Companies fail to standardize

I once worked at a place that used five different operating systems in distributed environments. It didn’t start off that way, but the culture was such that if a group of people decided that they wanted to use a new OS, they would do so and it would eventually become part of how we did things.

This burden was minimal for application teams, as to them, they had one standard way of running that specific application.

To the systems teams, however, there were n+1 ways to do things. Each process that involved operations systems now had another branch. This meant audits, security controls, monitoring, backups, and provisioning now have another branch in the process – another if statement. Each “if” statement adds complexity. There are two paths to verify. Over time, you realize you’re creating drag on the organization, and with a new language that’s more or less in perpetuity.

This created huge costs – not just in money spent, but also in huge amounts of time and energy wasted – and opened up a huge window for other problems.

Ultimately, it took nine years for that company to go from five major operating systems to two. This cemented the importance of standardization for me, because in the end, the people that made the operating systems selection for their application didn’t get to see the pain of their decision through.

Change moves faster when variation in tools, practices, or processes are reduced. For large enterprises, implementing new standards is a monumental effort that can take years. It usually means that somebody will have to give up things that matter, and it will hurt, but it also means fewer things to evolve and move forward as change happens.

Hard choices always happen here, but there are no shortcuts. If they don’t, a variability drag will follow the project in perpetuity, throwing up roadblocks in the worst places. Standards need to be about global optimization, and everybody needs to understand that at times a global optimization is a local suboptimization. That doesn’t mean it’s wrong.

Standards act as a tool to reduce variation. Less variation needs fewer adaptations, fewer true-ups and less hassle, because there are fewer “if” statements.

No willingness to change

I’ve seen this one a lot. I’ve worked with so many companies that want to be better but are unwilling to change anything.

Once, I was in a meeting with several executives from a large bank one time, discussing engineering strategies and I kept hearing people say, “They won’t let us do that.” I heard that a few times and then finally asked, “Who are they? I thought you were they!”

There’s no rate limit on how fast an organization can move, only on how willing they are to upend the norm. To be fair, that’s not easy – people don’t like to upend their work. They know the tools and strategies that help them succeed, and generally are averse to changing that. Transformative change, however, usually requires that they do.

Change is a constant, and leaders need to both understand it and always be aware of it.

Conclusion

When I see a stalled project, I start by looking for one of these three flaws and dig in to see how it can be fixed. I also try to amplify successes to show the rollout is merely stalled and isn’t being given up on. Every project hits rough patches and if a team sees how they can move forward, however so slightly, they’ll get some inspiration from that.

Lastly – and very importantly – note that, in nearly all cases, everything I’ve talked about is more cultural than technical.

In any technical organization, a manager’s main job will be to manage their team’s motivation and morale. It’s not always second nature for technical minds to think strategically about how to tug on people’s intrinsic motivations, but it’s an essential skill to learn.

Change is never easy, and not getting buy in from teams, failing to standardize, and uneasiness with change are the most common roadblocks that keep it from happening that I see. If companies put in the necessary time, energy and willpower it takes to overcome them, it will always pay off in the end.