In an interview on The China Ecommerce Podcast, Elena Gatti, managing director of Europe for Azoya, a Shenzhen-based e-commerce enabler, says while enquiries from international brands have skyrocketed recently, challenges remain as many businesses have not done their homework well when it comes to China’s shopping culture.
KCB: The unprecedented coronavirus crisis is driving more and more people to shop online in China, and overseas brands are seeking this very market too. Your workload must have increased tremendously.
ELENA GATTI: Yes, the inquiries coming from international brands are increasing quite a lot, and, here’s why — China is the first country now getting out of the crisis, and the second point is a long lockdown of Chinese consumers. They had even more time to get engaged with brands and find out for themselves, which brands do I like, and also make a deepened search on international brands. So yes, our work has increased quite a lot, which is actually very good for us.
KCB: Where is the traffic coming from mostly?
EG: China is a great consumption market so we are talking about Japan, South Korea, Germany, Australia, France, and also UK, let’s say the countries who are mostly looking to sell into China cross border e-commerce. All the countries supply something different, different focus, they don’t want to export the same category.
KCB: Even on Pinduoduo, with Europe entering recession, there has been an increase in European brands wanting to list themselves. We’ve had an Italian multi-brand distributor selling known brands like Swarovski and Givenchy, as well as not-so-known brands because, like you said, the Chinese are clearly exploring more to know what’s out there, other than what’s evident to them.
EG: Yes, and if you look at the different countries, for example from Germany and Netherlands, it’s a lot about mom and baby and other products. We talked about Italy and France — it’s about fashion, luxury and kind of higher-end brands. Then Australia, which was more about mom and baby, and UK, they are more on fashion. So it’s every country has its own DNA, which makes our job even more exciting.
KCB: With the coronavirus pandemic situation, what kind of change have you personally seen in terms of the inquiries that are coming in?
EG: It’s a higher amount of inquiries. So, two or three years ago I was busy educating brands and international retailers about China as a consumer market, and not only as an import market but also in export market. We would talk about two categories like beauty and fast moving consumer goods, and about cars, which is another story. But at that time, we used to do a lot of education. Now, I feel, the perspective has moved from young to be more mature. So the brands look like they know more about China, the media are talking more about China as a consumer country of cross border e-commerce with different platforms, different market possibilities. So clearly companies have become more knowledgeable and they’re reading so much more.
KCB: In the backdrop of repercussions, whether it’s from the US Chinese trade war or the pandemic, China has received a boost in online social buying, and e-commerce platforms are trying to boost domestic consumption by educating offline companies to come online. What sort of challenges do you face when people inquire about China?
EG: You mentioned Pinduoduo which I find a totally exciting and interesting concept. About brands wanting to enter China and the challenges — So, on one side, they know more but that be counterproductive because they think they know already a lot. I think one of the most challenging thing about international brands is that they are brands which are successful in their home country. They believe they can do exactly the same for China. So they update their road map for let’s say Europe, and they want to do the same kind of road map, just change channels for China. It doesn’t work at all.
And also, getting to know the customers. I mean, if we look at fast fashion. For example, companies like SuperDry, which came out yesterday saying they’ll exit China. Or Forever 21 or even Marks and Spencer or Macy’s, they have many challenges with China, but why? Because they were taking the same products, same products SKU and without really localizing it or fitting it to the Chinese fashion style, they just produce it for China without thinking about the sizes. I mean Chinese ladies are actually quite thinner than the UK ladies. That’s why one of the category which is really struggling is this fast fashion, because they just replicated what they have done overseas, thinking it would work for China, but China is just a different world in itself. I would say China is more advanced in maybe the interaction they have with the brands, also in using different platform and different technology. China also does a lot of experiments on retail — virtual reality and magic mirror — so I would say China is definitely a step advanced than in Europe.
KCB: Speaking of advanced, even livestreaming has taken up the entire e-commerce industry with storm right? We’ve have had so many live streamers, from farmers to merchants to the commercial council at the Danish embassy recently in Shanghai on Pinduoduo, and he was talking to more than 300,000 attendees about products such as Pandora and Danish butter cookies. What has also come to the fore are people selling directly to consumers, cutting out middlemen. When foreign brands want to enter China, do they understand that?
EG: Yeah, that’s amazing so this livestreaming trend in China is just amazing. But also it’s understandable because digital marketing and the personalization of automatic marketing activities is not so sophisticated as in the west. China is so different — parts of China that are hot, and parts that are cold, it’s a huge country. They want to have somebody they trust — I want somebody I trust, and I want somebody to tell me the what, why, and because also, I mean, all the world wants to go to China and it’s overwhelmed with products. International brands also know about livestreaming and are using it, for example Dior livestreamed their Autumn fashion show and used TikTok as a new channel to launch new products. So there are brands which are doing it really good, but if you are a domestic brand it’s easier as you’re born there and it’s your DNA. So for a foreign brands especially if we’re talking about smaller regional brands, it’s a huge step — first to understand why it’s necessary; and second, to implement it; and third, to find the right Chinese partner.
KCB: What do you feel overseas brands can learn from China?
EG: Well, what I think they learn is just to try, just do it. Yes, this is a really obvious Chinese thing. Do some new experiment, maybe they won’t all work, maybe there will be mistakes and you’ll do it better. But try and just do it. There’s new technology, new ways to interact with the customers, new gaming, new entertainment possibilities online and offline. You just keep trying, and this in the Western world is still not there.