Cross border ecommerce in China: the basics of TP
If an international brand wants to establish online business in China, Tmall is the marketplace it can almost never avoid. To make things easier, brands can work with Tmall Provides (TPs). These agencies offer help from A to Z: establishing a Tmall store, sorting out legal issues, protecting your IP and strategizing your marketing campaign…Below are the basics that you should know if having a Tmall store is in your plan.
What exactly is TP?
TPs are agencies certified by Tmall to help sellers with their marketing, logistics, IP protection, IT development and more. In fact, Tmall global accept foreign merchants ONLY if they work with a TP. Such agencies were selected by multiple criteria, including: # of years of experience working with cross-border ecommerce in China, bonded warehousing options and multilingual skills of staff etc. Besides basic store setup, TPs could assist with almost everything. Below is a chart listing out what TPs can do for merchants:
Why should I work with TPs?
Besides the mandatory part, one of the biggest reason for collaborating with TPs is that they speak the local language. They are able to assist international brands with quick responses to consumer demands. They are the expert of the local market – knowing exactly how Chinese consumers are like. Finally, they have rich experience working with foreign brands – being able to bridge the gap between your brand image abroad and domestic.
How does it work?
In general, TPs charge brands in 3 ways: 1) fixed monthly service fee; 2) commission based on sales; or 3) mix of 1) and 2). Working with TPs could be pricy. Typically, a resourceful TP charges anywhere between 20,000 to 100,000 RMB per month (fixed fee); or a 5% – 10% of revenue share. Note that this cost is only going for TPs, excluding platform fees and commissions.
Is there any risk working with TPs?
Yes, there is. Despite that TP could be a great help for new comers in China, it can also bring additional challenges. First off, cross-border ecommerce is still a relatively new business in China. Hence, there are some TPs operating without extensive track record. Secondly, being certified does not guarantee quality. Companies themselves know best about their brand story and heritage. Therefore, close monitoring is required when working with TPs – so that your brand image in China doesn’t deviate from the origin.
What should I look out for when working with TPs?
- Select on service expertise
TPs usually offer one-stop solution, even though they may have limited experience in some regards. Determine what specialties are most important to you, and make the selection accordingly.
- Select on product category
Tmall often classify TPs by product category, so as to better assist its vendors. For instance, TPs dealing with food & beverage would have different expertise than those handling baby care products.
- Select on geographic location
Apart from national regulations, cross-border ecommerce pilot zones may have their specific procedures. Therefore, selecting the right location may give you easier access to online business in China.
(Resources from ‘China Cross-border E-commerce Guidebook’ published by the Consulate General of the Netherlands in Shanghai)
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