Doing Business in China For Dummies®

Selling to Consumers

You can sell to consumers in China in a number of ways. Consumers are getting more sophisticated, and they’re looking for more than just hypermarkets and convenience stores.

Retail stores

If you’re going to set up retail stores in China, you should expect that Chinese shoppers are as sophisticated as customers anywhere else in the world. Therefore, you should bring your latest store concept to China.

Don’t fall into the trap of making assumptions based on cheap labor. If you think margins will be higher in China, think again. High rent eats up a lot of cost savings. Also, don’t rely on cheap labor instead of using sophisticated inventory tracking systems. This tracking is particularly important in China, where you may encounter supply bottlenecks.

The following sections discuss a bit about your retail options.

Making concessions: Renting space from department stores

One retail option in China is the department store concession. Unlike in the West, Chinese department stores usually don’t buy inventory themselves. Instead, they rent out parts of their store to individual retailers. In most cases, concessionaires rent out a concession to sell just one brand. The result is confusing to many Western consumers because in Chinese department stores, products are usually grouped by brand rather than by type. This setup makes complete sense to the Chinese, though. ...