Reaching the Next Billion Buyers for Your Brand

Reaching the next billion buyers for your brand: Overcoming the challenges of expanding into Asia-Pacific

Dimitri Onistsuk & Nate Gilmore

Shipwire, Inc.

1-888-SHIPWIRE

www.shipwire.com

1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306

Table of ContentsA billion new buyers in reach: opportunities in Asia-Pacific

China

Australia

Japan

South Korea

The Hong Kong warehouse: the key to Asia-Pac

Case study: How ToyFoundry conquered Asia-Pac with Fruit Ninja

Your Hong Kong go-to-market strategy in five steps

Identify your customers

Register your business in China

Understand customs and import details

Establish sales channels

Ship to Hong Kong

Gaining access to Asia-Pac buyers: staging in Hong Kong

Product tips for Asia-Pac: internationalizing for your market

About Shipwire

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The growth of the Asia-Pacific (Asia-Pac) region continues to supercharge the global economy and with it, countless brands savvy enough to effectively capture the benefits of this market.

The most successful brands can be either small or large, but what they have in common is that they use the right tools to help them grow. One of the most important tools in the new global brand’s arsenal is the ability to locate its products closer to its customers. Unlike merchants who use a traditional logistics network, brands looking to open Asia-Pac sales channels can enter the market in an efficient and scalable way by building a relationship with a third-party logistics partner in Hong Kong.

With the world’s busiest cargo airport and the largest container port in South China, Hong Kong is a cost-effective fulfillment option for this part of the world. In addition, Hong Kong is duty-free for most products and maintains a pro-business climate in its taxation.

Staging in Hong Kong will save time and money because your company often can avoid trans-Pacific shipping costs and respond nimbly to B2B and B2C demands in the Asia-Pac market.

However, there are three important challenges to entering expanding into Asia-Pac:

This white paper will address these challenges, and help demystify your brand’s expansion into Asia-Pac markets.

$356 billionThe projected e-commerce spend for Chinese consumers in 2016

Getting your products to Hong Kong while keeping costs low

Using Hong Kong as a staging point for Asia-Pac customers

Localizing your products to make them sellable in Asia-Pac markets

Introduction


Here’s a familiar image: eager consumers standing in queues, waiting for a store to open so they can buy the latest “Harry Potter” book or the new generation iPod.

Each day, thousands of consumers in the Asia-Pacific region are subscribing to Internet or mobile service, and they want products they can’t get in their homeland, especially luxury goods.

Having an easily implemented logistics strategy that delivers merchandise to businesses and consumers faster and more economically than ever before means brands can now reach customers in markets that were traditionally out of reach.

Namely, growing brands now have the means to reach a $16 trillion GDP Asia-Pac market eager for the best and the latest in channels ranging from fashion to automobiles.

Chief among these markets is China, with a burgeoning middle class eagerly embracing the concepts of a market economy.

Experts predict that China, already known as the world’s factory, will become the world’s second-largest consumer market and the leading luxury market by 2015.

No matter where in the world your brand is headquartered, part of a growth strategy for the next decade - and perhaps beyond - should be creating a presence in Asia-Pacific.

Here’s a snapshot of some of the economies you can reach:

“Nothing is more important in the world today than changes in China that shape its future”

~ Kenneth Lieberthal Director, John L. Thornton China Center

China

Residents of China want the brands they can’t get at home: apparel, the latest in entertainment and especially luxury goods, such as designer names in cosmetics, fashion and jewelry.

Reaching them through e-commerce channels is especially attractive because the nation has more than 400 million Internet users – outdistancing the United States and Japan, combined.

That number is expected to reach 650 million in a few short years as the government’s telecommunications improvements reach into the more rural provinces.

The payoff: Chinese consumers will spend about $356 billion online by 2016. The growing middle class, a mostly urban population that will have an

Market opportunities in Asia-Pac


average disposable income of about $3,000, will drive most of the spending. Other projections have average disposal income reaching $8,000 within a decade.

The Boston Consulting Group calls China the “E-commerce superpower” of the next decade, and perhaps beyond.

Purchasing habits, online payment options and reliance on opinions by other consumers are some of the notable differences in the Chinese market.

Online shopping portal Taobao.com sells everything from appliances to rail tickets and has heavily shaped Chinese digital buying habits. It accounted for about 80 percent of Chinese e-commerce volume in 2010. The web site is part of the Alibaba Group, which includes B2B giant Alibaba.com and the nation’s largest online payment processor, AliPay.

Because Taobao does not allow search engines to index its products, consumers are less likely to use search in the typical sense and more often go directly to Taobao.

But if you are going to look at China, the Alibaba Group should be a touchstone, whether you are considering B2B or B2C.

Amazon, which can be a more familiar first step in e-commerce, is also a force in China’s digital purchasing world. It entered the market by acquiring Joyo.com and relaunching it as Amazon China.

Top e-commerce marketplaces in China:

Tmall.com

360buy.com

Suning.com

Amazon.cn

Yihaodian

Australia

Probably the most familiar country for North American exporters and e-commerce enterprises because of its United Kingdom-influenced culture, Australia has a dynamic economy.

Comparable to major North American and western European economies, Australia lags in Internet use and digital purchases, but is catching up, and that’s good news for startups and established SMBs looking to get a foothold in Asia-Pac. Australians are accustomed to ordering imports and paying for shipping. They’re even patient about waiting for delivery.

“[China’s] consumer market has the potential to account for a disproportionate and significant share of growth for the world’s leading consumer-oriented companies in the coming years.” ~Deloitte Research


In 2010, Australian consumers spent about $12 billion online, and consulting firm Frost & Sullivan says 40 percent of it was offshore.

PriceWaterhouseCoopers projects online spending to nearly double, to $22 billion, by 2015 and says one of the key reasons is supply chain improvements that result in more cost-effective and timely delivery.

Although it may seem surprising, Australia remains a less mature market, and although it is catching up, that’s good news for U.S. entrepreneurs looking to expand into the region without having to grapple with market goliaths in Japan, China or Korea.

Top e-commerce marketplaces in Australia:

Graysonline.com

ebay.com.au

Japan

Although still a tradition-laden economy, Japan is beginning to feel the push for change from younger workers more interested in technology and worldwide commerce.

This island nation registered about $45 billion in e-commerce transactions in 2010, with beauty products capturing record market shares.

Japan was the fastest-growing economy of the G-7 nations in 2010, but experienced a setback in 2011 because of a devastating earthquake.

Nevertheless, Japan remains a regional leader in e-commerce sales, and Forrester Research sees online sales growing from $64 billion in 2012 to nearly $98 billion by 2016.

Korea

Like Japan, South Korea is a mature B2C e-commerce economy. South Koreans are online shoppers. The web site ecommercezen.com reports that in 2010, 99 percent of residents with Internet access bought something online. That’s the highest penetration rate in the world.

Slightly more than one in four web users surveyed by Nielsen in 2010 said they spent up to 25 percent of their income on digital purchases.

$98 billionin e-commerce sales to be made by Japanese consumers by 2016

Top e-commerce marketplaces in Japan:

Rakuten.co.jp

Amazon.jp

Nissen.jp


Another encouraging factor for B2B and B2C sales: South Korea is trying to boost imports as it struggles to improve its balance of payments against heavy exports.

Especially attractive to SMBs in the United States is the free trade agreement that took effect in 2012. Clearly, opportunities in B2B and B2C services abound in the Asia-Pac-Oceania region. The key is identifying the best markets for your company and having a logistics base that can serve them in the most cost-efficient way.

Korea’s e-commerce giant, Gmarket, was acquired in 2009 by Ebay and strengthened by its merger with Ebay’s Internet Auction Company.

$16 trillion in gross domestic product in Asia-Pac markets

Top e-commerce marketplaces in Korea:

Ebay

Gmarket

11st.co.kr

Shopping.naver.com

Tesco/Homeplus

E-commerce sales projections (in billions USD)

Compound Annual Growth Rate(CAGR) per year

2012

$16.8 $26.4

+12%SOUTHKOREA

$63.9 $97.6

JAPAN+12%

$23.2 $35.4

AUSTRALIA+11%

2016

$169.4 $356.1

CHINA+25%


Knowing the Asia-Pac market is about $16 trillion (GDP) makes for a strong incentive to expand there. The important question becomes how to reach these buyers.

Shipping directly from your warehouses might be an effective market test. But let’s get beyond tentative solutions and explore strategies that leverage using a key location in the Asia-Pac region to fulfill orders.

Here are a few advantages of having a logistics presence in Hong Kong:

Location

Reach the world’s fastest-growing luxury products market in China

Seven major business hubs in the same time zone, with four others in a different zone by only one hour

Link to China’s largest manufacturing region, the Pearl River Delta, which is just north of Hong Kong and includes the major cities of Shenzhen, Guangzhou and Dongguan

Half the world’s population is within five air hours

Shipping options

More than 100 shipping lines

Third-largest container port in the world

World’s busiest cargo airport

Ship to Europe using next-day air service

Easily accessed roads for moving goods to nearby markets

Streamline supply chain

Works for B2B, B2C or e-commerce

Ship faster and easier throughout Asia-Pac

Substantially improve shipping time to Australia

Use Hong Kong as primary warehouse or as a staging area

Avoid most customs difficulties

Company merchandise is processed quickly and correctly

Your logistics partner coordinates with brokers and shippers

Increase margins

Hong Kong is duty-free for most products

Favorable trade alliances with major manufacturing and importing nations

Advantages of a Hong Kong warehouse

A Hong Kong warehouse means countless options for getting products to your customers

Available for shipping to

international customers

Resupplydistributors

Ship to your warehouse in the US or elsewhere

Quickly transported to a Hong Kong warehouse

Manufactured overseas


Making logistics part of your success

As the manufacturer and distributor for leading digital brands - including Halfbrick Studios, the creator of the massively popular Fruit Ninja game - ToyFoundry needed a reliable shipping and logistics partner to fulfill the demand of its Asia-Pac customers.

When a game developer approaches ToyFoundry, they typically have a large audience playing their game and creating a demand for physical products: t-shirts, stuffed toys, phone cases, and more. ToyFoundry’s team helps these game developers monetize and convert their digital brand into a physical one, and using an outsourced fulfillment partner lets them leverage global distribution that is usually reserved for the largest of firms.

ToyFoundry sets up the necessary business identities in strategic locations to take care of sales taxes and imports, manages enterprise web hosting, and handles 24/7 customer support in multiple languages (nearly one-third of Fruit Ninja’s customers are based in China, making this a necessary ingredient for growth). For shipping and logistics, however, ToyFoundry uses a warehouse and an outsourced order fulfillment partner to ensure that products are located close to their Asian and Australian customers and are readily available when needed.

In order to continue on their growth trajectory, however, ToyFoundry faced several challenges:

1. Reaching buyers globally, especially in Asia-Pac

2. Bringing products to market faster

3. Automating logistics and saving on shipping

Reaching buyers globally

ToyFoundry’s market reach spans the globe, and setting up staging in multiple locations was important to satisfy demand wherever it came from. While it could easily fulfill its European and American orders, shipping to customers in China, Korea, and Australia was more difficult. ToyFoundry, itself based in Hong Kong, knows the value of lower shipping in winning customers: shipping to Australia is often very expensive. This is why ToyFoundry decided on using a facility in Hong Kong. “The Australian customer is used to buying online and expecting higher shipping costs, but Hong Kong is close enough that they receive their products quickly and cheaply,” said Verstege. “The Australian customer is important to us, and so is the Chinese, Korean, and

Case study: How ToyFoundry conquered Asia-Pac with Fruit Ninja


Japanese customer. Now that we stage in Hong Kong we can reach all these markets, as well as our customers in Europe and the Americas.”

Whereas orders sent from the U.S. to Australia can take weeks to arrive, ToyFoundry’s shipments from Hong Kong arrive faster and cost less.

Bringing products to market faster

Another advantage of a flexible supply chain is having a fast time-to-market, which allows testing prototype products and accepting preorders without suffering the holdups that can be typical for a shipment undergoing customs inspection.

“It allows us to accept preorders and know that we’re not going to have any hold ups,” says ToyFoundry’s co-founder Mark Verstege. “One of the issues with customs is that while they do x-ray scans and inspections at port, what you were hoping would take a week can end up taking two or three weeks. Hong Kong as a staging platform means that we can ship product out on the water, but in the meantime we can hold some reserve stock in Hong Kong so that we can start releasing those pre-orders to customers quicker. Ultimately we’re going to still push products to where the customers are to take advantage of cheaper shipping and quicker delivery, but for preorders the delivery time isn’t an issue. What is important is getting it out the door as quickly as possible once manufacturing is complete.”

Automating logistics and saving on shipping

ToyFoundry manages manufacturing and selling for its customers, but uses a partner to handle the shipping, warehousing and logistics of the products. This very vital part of the process is large enough in scope that relying on a partner yields significant benefits. According to Verstege, picking the right partner is vital: “We are always going to need to distribute stock and we need to rely on our partner for this. Having this means ToyFoundry can concentrate on everything else. That’s the biggest benefit: knowing that we can give our partner that problem – shipping and distribution – and we know they’ll get it right.”

Being able to integrate warehouse operations into sales operations is now also possible with application programming interfaces (APIs). This sort of integration allows controlling inventory management and shipping from a software layer, which improves efficiency and provides a level of control that previously did not exist. For ToyFoundry, this means being able to manage inventory in four warehouses on three continents from a single dashboard in a browser. The orders that come in to their customers’ online stores are routed directly to warehouse operations and can be fulfilled with a single click. And when a product refill is needed in one of the warehouses, the orders for that region can be fulfilled from elsewhere so there is never a break in fulfillment.

Learn more about ToyFoundry at www.toyfoundry.com


Getting into Hong Kong quickly and efficiently

Whether your market is B2B or B2C, you need buyers, sales channels, customs and import details, an honest assessment of your market competition, and a marketing strategy for the Asia-Pac region that may differ from North American or European approaches.

While there are many requirements that vary from company to company, here are five indispensible steps to getting your product from manufacturer to warehouse in a cost-effective way:

Identify your customers

With $16 trillion GDP throughout the Asia-Pacific region in 2010, it isn’t possible to reach every buyer at once.

For startups or those new to the Asia-Pac region, targeting B2B or B2C customers in specific countries or areas is probably a more cost-effective approach.

You may know your target buyer in the Americas or Europe, but it is important to do your due diligence on the Asia-Pac buyer and the market subsets. The good news is that although cultures, customs and preferences vary widely, there is a strong chance your brand is already selling internationally.

Examining your order history to find out which international markets already purchase your products can give you insights into where your brand is already validated by consumers.

You’ll collect information with each sale and start to understand potential market peculiarities.

Networking through trade shows where representatives of targeted countries are present and searching the Internet for Asia-Pac companies looking to source products are simple but effective options for startups.

Register your business in China

While Hong Kong is officially part of China, it maintains a degree of independence as one of two Special Administrative Regions. Nearby Macau is the other.

This special status makes Hong Kong a business-friendly environment that welcomes new companies and makes it easy and efficient to register. Bloomberg ranked Hong Kong as the best place to do business because of its free-market policies and low corporate taxes.

Step 1: Identify your customers

(pg.11)

Step 2: Register your business in China

(pg.11)

Step 3: Understand customs and

import details(pg.12)

Step 4:

Establish sales channels (pg.13)

Step 5:

Ship to Hong Kong (pg.13)

Your Hong Kong strategy

Your go-to-market strategy in five steps


In addition, shares of a company registered in Hong Kong can be 100 percent foreign-owned. Registering your business as a Limited Liability Corporation generally is considered an effective option for most companies and can be set up in seven to 10 business days.

LLCs in Hong Kong enjoy preferential trading terms with China and premier access to markets across a wide range of service sectors.

Foreign-owned companies and LLCs must register with the Inland Revenue Department within one month of the incorporation date, regardless of whether the business is operational at that point.

Understand customs and import details

Getting accurate information on taxes and fees for merchandise and having the correct documentation are keys to success.

In order to avoid costly delays, you can start with a few small shipments to make sure you have a good understanding of your target market’s taxes, fees, and the customs processing standards for your product. Sending a master carton via parcel instead of a full container will ensure that if there is a customs issue, it won’t become cripplingly expensive.

Having an understanding of taxes and fees is important for calculating your selling price, and will help you avoid the surprises you would get if you were to focus your business plan only on product price. For example, products manufactured on the mainland and shipped to Hong Kong are duty-free. But products entering China from Hong Kong may encounter tariffs, thus increasing your costs.

It is best to ask an expert, such as a freight forwarder or customs broker, about import taxes and duties; they keep up with the latest changes. You’ll be talking with them anyway about transportation costs.

Categorizing your product is a complex task and a broker can help you be certain your company doesn’t pay more tariff than necessary.

“Hong Kong is a gateway to China. It has competitive tax rates and that makes it one of the natural choices for companies to set up their Asian headquarters.”

~Tomo Kinoshita Deputy head of Asia economics research at Nomura Holdings

Learn more about registration and licensing requirements in Hong Kong: shipwire.com/hongkong

Learn more about shipping in bulk to Hong Kong: shipwire.com/hongkong


Establish sales channels

Whether your merchandise is hard goods, machinery, textiles or luxury items, your company’s growth strategy might include local distributorships, agents or retail outlets for your product, depending on its nature and how sales are closed.

Many companies, whether B2B or B2C, can open sales channels quickly with local-language web sites.

Some of the top marketplaces in Asia-Pac were listed in the first, but those are not the only ways to get your product to customers. There are three important channels you can exploit when staging in Hong Kong: direct-to-consumer shipping in Asia-Pac, sending in bulk to other strategic warehouse locations, and resupplying distributors. These channels are elaborated on in the following chapter.

Fast and efficient delivery will be a prime ingredient of a brand’s success, and shipping from the United States or western Europe will cause unnecessary expense and delays.

Just a word about payment processing: Try to work with recognized processors, especially those within the countries to which you are selling.

Debit cards and account debitors, such as PayPal, are more common than credit cards in much of Asia-Pac, and especially in China. AliPay, an arm of the giant Alibaba Group, handles about 50 percent of the e-commerce transitions in China.

Ship to Hong Kong

Once you have completed the previous steps, you can send your products to Hong Kong by either shipping a smaller batch of merchandise or a larger container, depending on whether you testing your products in a new market or meeting the demand of existing customers. Typically your options include printing a shipping label to stick on your package, requesting a carrier pickup, picking up from port or overseas, or arranging it yourself. Your fulfillment partner will be there to help with this process.

With any of these options, ensuring receiving guidelines are met will get your products ready to be shipped with fewer snags. Generally, first you must define the products you are shipping, which entails sending a list of products one by one, or using a spreadsheet, to your fulfillment partner. You can also include special instructions for breaking down inventory or labeling at this stage. Once your shipping method is confirmed, it is ready to be picked up and sent on its way to its new location in Hong Kong.

Find detailed guidelines for sending products to your warehousesat: shipwire.com/hongkong


Importance of using Hong Kong for staging

Staging in Hong Kong puts you oceans closer to your new markets. You trim delivery expenses, and customers get products faster.

If you are manufacturing in China, the Hong Kong logistics arrangement is equally beneficial because you cut shipping costs on deliveries from your factory partners and have the product at hand to fill Asia-Pac orders.

There are several benefits to using Hong Kong as a staging point for merchandise. For one, it allows you to consolidate your supply chain, making it a lot more flexible. Traditionally, sales had to wait until products have been transported to a port from the manufacturer, sailed across the ocean, put through customs, and finally delivered to a local warehouse. In some cases these products are shipped right back overseas, thereby keeping costs high. With staging in Hong Kong, however, products are available immediately for shipment to customers, retailers, or distributors.

Staging in Hong Kong also shortens your time-to-market. Your merchandise will cost you money while it sits for up to five days in an air cargo container. For sea-going containers, your product could be out of reach for up to 25 days – 20 days at sea from China to Long

Beach, CA, and another three to five days to clear U.S. Customs and be transported to your warehouse. Having inventory in Hong Kong, on the other hand, eliminates lengthy delays and your product is available to ship to buyers in days, not weeks.

By using Hong Kong as your logistics center for shipments from China or as a staging area to fulfill orders from B2B and B2C clients in the Asia-Pac region, you add value by decreasing the time your product is in transit and its associated cost.

Even if it makes sense to transship merchandise to your U.S. or U.K. warehouses, consolidating some of it in Hong Kong should remain an attractive fulfillment option for Asia-Pac customers.

If you are manufacturing in China, as many companies are, it is also easier to get your product to Hong Kong than practically anywhere else in the world.

Taking advantage of Hong Kong tariffs

With its British-influenced economic, financial and legal system, Hong Kong business operations are akin to those in the U.S. and U.K. Bloomberg recently named it the world’s best place to do business. Among the factors used in evaluating Hong Kong’s business climate were the cost of moving goods and taxation.

Learn more about registration and licensing requirements in Hong Kong: shipwire.com/hongkong

“Now that we stage in Hong Kong, we can reach all these markets and sell to our customers in Australia, China, Japan and Korea.”

~Mark Verstege ToyFoundry co-founder and CEO

Staging in Hong Kong: reaching customers in Asia-Pac


Because there is no tax or excise duty on exports, company margins expand. A corporate income tax of 16.5 percent also makes it an attractive hub for a company’s Asia-Pac operations, which likely influences the 3,700 foreign companies that have established offices or regional headquarters there.

Only four product classifications are not tax-free - liquor, tobacco, hydrocarbon oils and methanol - as well as motor vehicles for use on the road, which carry a registration tax.

As you would expect, importers and exporters still must pay declaration fees and file appropriate paperwork. But the Hong Kong administrative system is streamlined, so the process is not expensive or time consuming.

Three effective ways of reaching customers from Hong Kong

From your new staging location in Hong Kong you now have control of your product much sooner than before. This, combined with the ability to break down inventory lots, gives you several options for reaching customers:

1. Direct-to-consumer shipping in Asia-Pac. Send products directly to your customers. Once you have control of the inventory in Hong Kong you can fulfill orders to customers throughout Asia-Pac. Less product movement means lower inventory carrying costs, lower prices and faster delivery times.

You can also fulfill time-sensitive orders in other markets. Having a Hong Kong warehouse that is fully integrated with your e-commerce platform or other sales tool means that if you have a product that is trendy, you can be sure to satisfy demand when it’s peaking.

2. Send in bulk to other warehouse locations and sell while the product is in transit. You can use the warehouse to send a large shipment to other fulfillment locations in the Europe, North America, or even to your own warehouse anywhere in the world. With this you can satisfy the demand of customers in other markets. An added benefit is that your Hong Kong inventory will be validated and available for pre-sale in your e-commerce platform or other marketplace. Once the product arrives at the new location, the sold inventory is turned and shipped.

3. Resupply distributors. You can use your Hong Kong location as a staging point to send products in bulk to retailers or distributors anywhere in the world. With the option to break down inventory, you can send smaller shipments to retailers, or drop ship your product.

Launching your own platform

If you plan to sell through your own web platform, most experts recommend a portal aimed specifically at your target consumers.

That means designing pages that reflect that country’s viewing

preferences and contain content written specifically for the page.

Don’t make the mistake of using a translation program on your American or European pages. Nothing detracts from a portal’s credibility more than syntax errors.

By all means, include social media links and allow for commenting on the pages. Chinese shoppers, for example, “are quite possibly the most social in the world during the shopping process,” according to the Boston Consulting Group.

You should focus on selling a few products at first, with pages designed specifically for your core buyers. This will help validate your product and will let you know of any issues without large capital investments.

Retail environment

If you are looking for a more conventional retail sales channel, partnerships, distributor arrangements or relationships with jobbers are options.

Some countries, such as Japan, require distributor arrangements for certain products, so get a clear understanding of the country’s commerce arrangements before you begin.

For China, trade experts suggest forming relationships with multiple agents due to the country’s size and diversity.

Most experts also suggest visiting China, both to assess opportunities and to meet personally with


potential partners. Chinese companies and entrepreneurs put a high value on personal meetings.

In a B2B environment, it is advisable to have skilled sales people. Even if you are selling a technical product, use experienced sales people, not engineers, for business development. Target CEOs and purchasing managers and keep the engineers in reserve to answer the technical questions as they develop.

Expect to conclude mutually beneficial business arrangements, but don’t look for a higher than average margin.

In some instances, governments of Asia-Pac nations require a distributorship arrangement. For example, Japan requires local distributors for apparel. Think about your margins when establishing relationships with distributors and look at your overall marketing, distribution and logistics strategy to see if you can achieve savings to cover the cost of a distributorship arrangement.

Looking to future channels for Asia-Pac logistics

Staging your products in Hong Kong, for import or export, is an excellent start on your Asia-Pac logistics. But it always is the last mile that impacts margins, and the Asia-Pac region is no different.

While the price of moving goods from one place to another is

relatively high in China - logistics represent about 20 percent of China’s GDP versus only 10 percent in the U.S. and 14 percent in Japan - the steady efforts to improve the situation will benefit brands that are now entering the Asia-Pac market.

The Chinese government is working to better freight transportation in major cities and has designated nine cities as regional logistics centers. It has announced huge investments in air, road and rail logistics as part of its Five Year Plan. It has eased tax burdens on the logistics industry, and experts are hoping the evolution will continue.

It is unlikely that you would want to create your own delivery system, so forging alliances with retailers who will inventory your product or accept shipping for consumer pickup are not only possible options but attractive choices to fulfill consumer demand.

Recognize ultimately that your strategy for moving into Asia-Pac should be based on a clear cultural understanding of your market, sound economics, solid sales projections, thorough reporting on your potential targets and a view toward building relationships.

Once you have used these steps for strategic evaluation, you are more than likely to identify revenue opportunities that you can afford because of the economies you have achieved by using Hong Kong as your logistics base.

“It is a pressing need for the government to adopt new measures to boost the logistics industry.”

~He LimingChairman of China Federation of Logistics and Purchasing


Your logistics are in place. Your marketing and distribution alliances are sound. Now, let’s look at the last steps to entering the Asia-Pac markets.

Your brand more than likely is new to consumers. You’ll achieve traction over time with sound marketing, but you want a product that pays its way from the time it hits web sites and store shelves. Familiarity is your currency in the marketplace.

Look at your in-country competitors: how do they display and package their product; what do the labels look like and what information do they contain? Do your competitors sell on quality or price?

Language and culture

Marketing in a foreign language requires an investment in research and linguistics.

Spend what you must to get the expertise, because all other marketing steps are nothing more than costly errors in the last mile if you don’t have this solid understanding of language and culture.

Think about the General Motors debacle when it introduced the Chevy Nova to Mexico. In Spanish, “No Va” means “You are not.” A success in Mexico, this Chevy was not.

The old admonition “Watch your language” is most appropriate when

marketing in a foreign country.

Hugely important Chinese language symbols used in marketing include “golden”, “hundred”, and “happy.” Don’t get silly or obvious with them, but if you can make any of the ideas fit, it’s worth the effort. Coke altered its Chinese name to include the symbol for happiness.

On the other hand, appliance and electronics retailer Best Buy missed the mark when it started retailing in China through its own Best Buy-named stores.

It used a U.S. approach on the sales floor – lacking the personalized interaction expected by Chinese middle-class consumers -- and chose a store name that translated as “Good bargain after thinking it over.” Not exactly a motivating message and one that was certain to kill impulse buys.

Draw on your own experience with foreign names and products.

Consider times when you have walked past items in the “International Section” of your local and stopped because the brand was familiar – even if the language wasn’t – or the package photo gave you information about the product.

Image and language help create the emotional experiences that drive sales and build consumer loyalty. But

taking your American or European sign or slogan and translating it directly into another language is not always the best idea.

You might look to some of your new local distributors for guidance with the language and culture or turn to local linguistic authorities at colleges or embassies for help in getting the message right. Outsourcing platforms that have skilled cultural linguists also could be a possible option to help you craft the appropriate language and label for your product.

Some companies, such as Lipton, use a combination of language and image to tell their product story.

An icon about product use might be an option, but be certain the icon cannot be misinterpreted.

Global management consultant Accenture polled urban residents to learn about purchase motivators. The company concluded that a brand’s image of community contribution and how it fits with a buyer’s personal values were the strongest purchase incentives – even beyond price.

Legal compliance

Meeting a country’s standards for packaging and labeling guidelines is crucial. Many countries require the country of origin on the label. Failing to meet guidelines could result in

Internationalizing your product for the Asia-Pac marketplace

Learn about how savvy retailers and manufacturers respond to the unique preferences of Chinese consumers: shipwire.com/hongkong


seizure and fines, so make sure your compliance is absolute.

Japan, for example, requires a minimum of 8-point type for all label characters. If the product contains an allergen – designated by the government as wheat, buckwheat, egg, milk, peanuts, shrimp and crab – the label must say even if only a derivative was used in creating the final product.

South Korea requires safety testing on false eyelashes and says that imported alcoholic beverages must list all information in Korean. As of 2012, South Korea has new paperwork requirements for U.S. companies seeking preferential duties under the U.S. - Korea Fair Trade Act.

Australia has mandatory safety standards for everything from baby bath toys and elastic luggage straps to textiles and vehicle jacks. Save time and money by doing the research first.

Packaging and environmental considerations

As you frame a branding and distribution strategy for Asia-Pac nations, it is a good time to think about the packaging, from a size standpoint.

The trend in China and Japan is toward smaller and more convenient packaging. This is especially true with non-food products.

Because Japanese homes are more compact, slimmer packaging is preferred over large or bulky products.

In some cases, pet food products that come in 35 grams at their smallest in France are available in 10-gram packages in Japan. Mary Kay, the cosmetics company, reported having to shrink its packaging in China to meet consumer expectations there.

Another reason for smaller packaging is the disposal costs that can impact your margin. In some countries, such as Japan, manufacturers and importers are responsible for the costs of collecting, sorting, transporting and recycling packaging materials. This makes packaging an important aspect not only of your marketing, but also of your cost-savings strategy.

See a list of resources for legal and packaging compliance for Asia-Pac countries here: shipwire.com/hongkong

In Japan, manufacturers and distributors are responsible for recycling costs


There’s a lot to learn about capitalizing on the growing Asia-Pac economies. Naturally, your expansion strategy will be unique to your products and your branding decisions.

No single company or consulting firm can provide the keys to success for every step in your new venture. It takes collaboration and insight gained only through a deep understanding of compliance requirements, cultural values, consumer preferences, distribution networks and packaging standards.

But nothing is more critical in your first steps than having a reliable logistics company that understands many of the challenges and can help, from trans-Pacific shipping to the last mile.

About Shipwire Shipwire provides cloud-based logistics, shipping software and ecommerce order fulfillment services from warehouses around the world for companies of all sizes. Shipwire’s industry-leading logistics platform helps you grow sales, expand into new markets, and delight customers by eliminating the hassles of shipping and storage. Instantly connect your online store or marketplace with our warehouses in U.S., Canada, UK, or Asia, and let Shipwire optimally pick, pack and ship orders to your customers faster, and for less.

Visit www.shipwire.com/why-shipwire to learn more about order fulfillment

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