The Russian company SPLAT exports its products to more than 60 countries, including Germany, Great Britain, Spain and Switzerland. However, previously the company representatives have mentioned that they place “particularly bright hopes” on China. How would you explain it? Why did the company make the decision to export to China?

China is the second largest market for oral cavity care products in the world. Besides, it’s one of the most dynamically developing ones. Our product is represented in the so-called «above-average» segment; cheap toothpastes are not competition to us. The key characteristic of China is that the local upper-middle class is supposed to grow 2,5 times in the next 5 years, and in second- and third-tier cities it will grow 10 times. It is obvious that the Chinese consumers with increased welfare will need products that will respond to their capabilities.

Tell us, please, about the particularities of promoting products in China.

The most significant feature is the importance of online sales. Online market in China is three times bigger than that of the US. If for the majority of the companies in the world online sales represent around 2-5%, in China they reach 50%. Because of the lack of commercial areas, the government and business invest a lot in delivery infrastructure that is perfectly organized and runs like a clock. It goes like this: you place an order on an online platform where you can also track its status. Then you receive a message on your mobile phone notifying you of the delivery and providing you a code for an automatic locker situated by the entrance to your house where you can pick up your order. It works so well that people order fresh fish and vegetables this way.

In addition, good performance in the online space can help with the offline promotion. Many of the retail chains chose our product based precisely on this principle: they saw us among the popular brands on Tmall, the biggest online platform, and ordered from us.

One more distinctive feature of the Chinese market: almost all of the world’s major retail chains work here - Walmart, Carrefour, Auchan, Tesco, as well as leading Japanese, Thai, and Hong Kong players. Meanwhile the variety of products on the shelves is very wide. In China, there are more brands of toothpaste than anywhere else in the world.

How do SPLAT products manage not to get lost among such great diversity of toothpastes?

The answer lies in the unique positioning. China is quite isolated from the outside world; here people have their proper values and preferences. We have conducted studies and identified what factors are important for our audience, and then tailored our positioning in China accordingly, taking into account cultural characteristics.

I will give you an example. We produce a toothpaste called Organic that was specifically created for pregnant women. Among its components there is calcium obtained from crab shell - and the Chinese love crabs. We thought this toothpaste would become a sales driver for us. However, when we began to register and certify it, translate its contents, the translators drew back in horror and declared that the product could not be sold. As it turned out, according to the local beliefs, there is a list of products that cannot be consumed by pregnant women - and crabs are on that list.

What marketing channels do you use in China?

On the one hand, the traditional channels, because China developed according to the western model of distribution. On the other hand, there are certain specific features – particularly for our product. For example, in China toothpaste is not sold at drug stores, so this channel doesn’t work. Meanwhile, there are others, that don’t exist anywhere else in the world – for example, the network of 90 thousand so-called mother and baby stores: these are considered the right place to buy goods for children. It is a very important channel for us, because we have a broad range of toothpastes for children.

How do you look for distributors?

When nobody knows you yet, you have to look yourself, of course. The best solution is to hire commercial managers that are well familiar with the region and category of goods you are interested in, as well as buyers and distributors.

What are the ways of fighting forgery?

One of the most important recommendations in relation to this – after registering your trademark, also register the way your brand sounds in Chinese. Because someone may create a Chinese brand that would sound very similar to yours. To avoid this, you have to offer several types of pronunciation to the authorities, and then the state will take care not to register any name that is too similar to yours.

What advice would you give to the entrepreneurs that plan to enter the Chinese market?

It is necessary to take the choice of the entry point very seriously; you have to realistically estimate your capabilities, decide what should be done first and where. I would recommend to choose a local import and export company as a partner: in addition to the knowledge of the technical side of the process, they will help you with useful connections, including the ones in the government bodies. It also makes sense to work with local recruitment agencies, but do not make a point of hiring English-speaking employees. People who speak English well are not always professional at what they do, although they often ask for unreasonably high salaries.

Carefully analyze the delivery routes of your product: it may turn out cheaper to deliver by air than by sea. Keep in mind that this isn't about the size; the biggest mistake when analyzing the Chinese market, is when people look at the population of 1,5 billion people and say: «If everyone buys one toothpaste, it will be a lot». Unfortunately, it doesn’t work like that.

And remember: China is the future. A lot of what is happening today in China from the point of view of retail and online trade is what tomorrow will be in the US, and the day after that – in Europe.

Previous Issues