In the past, people thought that Russia and China only had close geographical relations and good government relations. In fact, Russia is a huge consumer market that cannot be ignored for Chinese brands. Russia has a population of 140 million and is the largest European minority language market. Light industrial products are heavily dependent on imports. Consumers do not buy light industrial products out of interest, but have rigid purchasing needs.
The economic transformation of Russia that began at the end of 2014 has brought about structural changes in the retail industry. Various supply chains are being reconstructed and demand is fragmented. GFK’s market research results show that in the past 28 months, compared with other regional brands, the sales of Chinese brands have been improving. The demand for imported goods from China to replace European and American brands is constantly rising. Therefore, this is a very good window period.
The Russian market is a relatively closed market. Less than 15% of Russians know English. The team of Russia’s preferred has more than ten years of experience in B2B platform operation, Sino-Russian trade, and supply chain management. Therefore, we have made model innovations based on market changes, which are specifically divided into three points. We call it “three fits”.
First, choose suitable Chinese products for Russian consumers. Because there are many brands going global, if a brand wants to enter the global market, it is impossible to allocate resources evenly in all markets.
Second, choose suitable channels for Chinese brands. Not all Russian retail channels are suitable for Chinese retail products. We have to admit that the quality standards, design, and brand of Chinese products have not been established in the Russian market like European and American brands. There is still a long way to go. The high cost of localization is not something that all brands can easily bear. Exploring channels is what Russia Youxuan is good at. Russia Youxuan’s local team has rich experience in helping brands and channels match. What kind of channels are suitable for Chinese products? What kind of consumer groups are suitable for Chinese brands? After more than a year of exploration, we have chosen suitable channels for Chinese brands to quickly open up the market.
Third, we use suitable services to enable buyers and sellers to complete transactions. A series of trade supporting services such as local legal affairs, taxation, delivery terms, commodity access, logistics distribution, and payment all affect the speed and volume of transactions. For example, we use local payment in Russia, use Russian overseas warehouses for delivery, integrate Russian on-site distribution to improve the last mile experience, and local customer service undertakes after-sales and customer service. These trade supporting services have greatly improved the transaction rate, customer unit price and profit of Chinese brand products. We have made a lot of “micro-innovations” in this process.
This is my personal understanding of “micro-innovation”. Innovation comes from accumulation, not from imagination. We feel that we have just started in the direction of Sino-Russian export market.
In addition, many people asked me a question. They said, “You have done so many things now, which is equivalent to opening up a new market channel. Now that e-commerce companies like Alibaba are so big and have strong strength, will they be interested in swallowing up your market?” Many people in China know little about Russia, and most of them stay at the level of B2C cognition, such as the largest B2C platform AliExpress. Of course, we know that AliExpress has a strong ability to obtain traffic in Russia, but AliExpress accounts for 0.4% of the Russian retail consumer goods market. Most of Russia’s consumption has not been monopolized by any platform. Moreover, Chinese brand owners need not only cross-border e-commerce channels, but also diversified and complementary channels. Therefore, what we do is very valuable and complementary to online. The above views come from our common customers with Alibaba. Therefore, not only is there no competition between us, but we also have a complementary relationship.