Selling in China - Finding the Right Entry Strategy
You Cannot Ignore the Vast China Market
Despite the evolving global trade dynamics and market uncertainty, China remains one of the world’s largest and most promising consumer markets. Demand for high-quality imported goods, particularly premium food and beverages like South African wine, continues to grow.
Why does this matter: China is the world’s largest importer of agricultural products (11% in 2024), while its total imports last year was worth US $2.59 trillion (Statista), second only to the USA. Consumer goods are a top three import category, and growing year on year - this includes clothing (+5.6%), fruit (+8.6%), and wine (+38.8%). — China’s middle class is expanding, it’s consumer market is flourishing, and consumers are willing to spend more on trusted international brands. However, market entry is not straightforward - it is a highly fragmented market with many variations in consumer tastes and buying behavior. A one-size fits’ all approach is unlikely to resonate the same across each Chinese city and companies must adapt to local preferences, competition, and regulations. Thus, it is crucial to have market insight and knowledge when planning your strategy.
Example: South African wine exports is gaining traction, but Chinese consumers tend to favor white wines over red wines due to cultural perceptions and food pairings. Some wineries have adjusted their product lines to meet this demand.
Proceed with Caution – Get Expert Help
While the vast Chinese market is lucrative, it’s complex and highly regulated. There’s a long list of businesses that have rushed in without proper preparation or an understanding of the market challenges and faced unexpected costs, compliance issues, ineffective distribution models, lack of sales, and a failure to understand the Chinese market.
Some key challenges to consider:
Regulatory barriers: Import permits, product labeling, and shifting trade policies.
Market nuances: Chinese consumers prefer localized branding and storytelling.
Finding the right partners: Distributors, logistics providers, and digital platforms all play a role in success.
Example/s: There are many examples of foreign brands that have faced trademark issues when they expanded to China, as their brand names had already been registered by local entities. Legal and trade experts could have helped navigate this early on. In the same vein, localization is key - While a brand like Starbucks is well known, few Chinese consumers know the English name.
Two Smart Ways to Sell in China
There are different paths to entering the Chinese market. Here are two relevant strategies for smaller companies, SME’s and entrepreneurs:
Option 1: Setting Up a Wholly Foreign-Owned Enterprise (WFOE)
A WFOE allows a foreign company to operate independently in China without needing a local partner. In other words, a limited liability company, fully owned by foreigners. This structure is ideal for businesses wanting full control over branding, pricing, and distribution. (If you have WFOE questions, contact us!)
✅ Advantages:
Direct control over operations, finances, and hiring.
No need to share profits with a local distributor.
Ability to build a strong brand presence in China.
❌ Challenges:
Setup costs involved and there are some administrative complexity.
A strong market entry strategy is needed—simply setting up a WFOE doesn’t guarantee success.
Expert advise is needed to comply with China’s evolving legal and tax policies.
Example: Some international wineries set up WFOEs in Shanghai Free Trade Zones to streamline import processes and directly distribute their wines to restaurants, retail, and consumers.
Option 2: Selling Through Cross-Border E-Commerce (CBEC)
E-commerce is a powerful and cost-effective way to reach Chinese consumers without the need for a local entity. Platforms like Tmall Global, JD Worldwide, Alibaba, Taoboa, and WeChat mini-programs allow international brands to sell directly to Chinese customers.
✅ Advantages:
No physical presence required—great for testing the market.
Faster and easier to launch than setting up a WFOE.
Leverages China’s booming online retail sector—especially for consumer goods like wine.
❌ Challenges:
Requires strong digital marketing—WeChat, live-streaming, and influencer partnerships are key.
High competition—standing out requires investment in branding and promotions.
Logistics & fulfillment must be handled efficiently to ensure fast delivery and customer satisfaction.
Example: Some wine brands use WeChat mini-program stores combined with live-streaming events to directly sell wines while educating consumers about their unique flavors and heritage. E-commerce wine sales has seen significant growth recently, leading online sales in the alcohol category. Online alcohol sales is expected to reach US$100 billion by 2027.
Should You Consider Exporting to China?
Beyond WFOEs and e-commerce, traditional export models (working with Chinese importers and distributors) remain an option. However, this approach comes with trade-offs - You lose control over branding, pricing, and customer experience. Your distributor’s success is directly tied to how well they market your product. It is therefore crucial to find the right import partner—these distributors often manage multiple brands and focus on the 1-2 that offer the best incentive. Thus, many businesses struggle with partners who lack the expertise or motivation to push their brand.
Final Thoughts:
Selling in China requires careful planning, local expertise, and a tailored strategy. Whether setting up a WFOE for direct control or leveraging e-commerce for a faster market entry, businesses need to be prepared for cultural, legal, and logistical challenges.
If you're considering entering the Chinese market, what’s your biggest concern? Contact us and let’s discuss!
