This report provides an overview of the most recent trends, requirements, opportunities and challenges of China’s FMCG market after the pandemic, building in particular on two case studies from Danish FMCG companies operating in China.
Specifically, the first and second chapters provide an overview of the market entry approaches and recent trends in China, focusing on both the traditional approach – including physical stores and traditional e-commerce – and the Cross-Border E-Commerce (CBEC) approach. In particular, e-commerce and CBEC occupy now a significant role in the sales and marketing strategies of European FMCG brands; at the same time, CBEC allows for a quicker, easier and less risky entry to the Chinese market. The second chapter also provides an overview of market access requirements for European FMCG exports to China, with particular focus on food & beverage products, cosmetics and pet food, as well as the impact of pandemic on import regulations and logistics.
The third chapter includes two case studies from Danish FMCG companies, based on one-to-one interviews. They provide practical examples of the different approaches that can be taken to enter the Chinese FCMG market. The first case study is from an SMEs that entered China through a traditional approach, but then adjusted its strategy after initially disappointing results; the second case study, although not a SME rather a large multinational corporation, provides an example of how the traditional approach can be successful with a gradual, long-term mind-set. In sum, the two case studies provide an overview of the do’s and don’ts as well as key tips that European FMCG brands can follow when defining their China market strategy.
The last chapter summarises the main opportunities and challenges that European FMCG brands face in China. In particular, the main opportunities originate from China’s internet and e-commerce, the ‘consumption upgrade’ trend strongly pushed by the country’s administration, which in turn contributes to the emergence of new product segments. Furthermore, European FMCG brands are also advised to keep monitoring – and eventually seize – the opportunities offered from the Hainan Free Trade Port, China’s largest free trade area where dozens of FMCG categories can be purchased duty-free. The main challenges related to the negative impact of the COVID-19 pandemic on the image of foreign F&B imports, as well as the ‘guochao’ nostalgia and increasing preference and quality of local competitors.
A list of relevant EU SME Centre resources – including sector-specific reports, guidelines or webinar recordings – will be provided in the last page of the report as well as footnotes for further reading.
Overview of China’s FMCG Market
- Traditional approach
- Cross-Border E-Commerce
Market entry requirements
- Traditional approach
- Cross-border E-commerce
- Impact of COVID-19 on FMCG imports
Case studies of Danish FMCG companies
- Arla Foods
Conclusions: opportunities and challenges