Why Chinese Sellers Dominate Amazon – Part 2

Culture – If you missed it, make sure to read Part 1 of this series where I talk about the difference in Market Approach that gives Chinese sellers an advantage on Amazon.

Much of what I talked about in the previous article is actually very much tied to the cultural differences in China versus the West.The cultural differences will also play a big part in Part 3 of this series.

First, let’s take a look at the massive socioeconomicchanges that have happened in the country that creates the environment for the culture we’ll be discussing.

Approximately 20 million people per year in China transitionfrom a rural to an urban environment and this has been happening for at least the last decade. The current urban population of China is about 51%, an increase from 13% in 1950. In this environment, opportunity is abundant and Chinese sellers are aware of this. The insane growth and upward mobility insuch a short amount of time has created a very driven mindset amongst the population to grab onto these opportunities before they pass.

It’s this mindset that permeates throughout Chinese businesses and entrepreneurs.

Company Culture – Chinese companies rely on speed and quick adaptation to survive. It’s a very top-down style of management and doing a company restructure in 24 hours would be completely normal. In comparison, US companies, whether due to culture or law, need totiptoe around major changes, hindering their ability to adapt quickly.

The ability to make quick HR changes without the red tape and bureaucracy gives Chinese companies the advantage in tackling issues quickly.

Companies are also fast paced due to the high turnover rate in China. Much of this is due to the ambition of workers, the entrepreneurial attitude, as well as the opportunities available to people with minimal experience. Chinese culture has been forced to adapt to a very quick change and because of this, workers leave their companies with minimal experience and have much more opportunities to strike out on their own.

Entrepreneurship - Also very different is the employee mindset in a company. In the US, the workforceis more focused on stability and survival. Is it not a common sentiment that the average person in the US hates their job?

According to the Bureau of Labor Statistics in the US, there were 2,042,342 new businesses established in 2017. Compare this to China, the first half of 2017 saw about 8,870,000 new businesses, more than four times the US and within half the time.

This fast paced environment combined with a very entrepreneurial mindset has created a very hypercompetitive market in Chinathat forces a survival of the fittest. Existing companies and new entrepreneurs must constantly learn new strategies or tactics that can improve their chancesof success.

Gray/Black Hat –I’ve spoken previously about some of the less scrupulous methodologies that have become prevalent amongst Chinese sellers. Not all Chinese sellers par take, but culturally, it isn’t necessarily seen as wrong to do so. Some see it as adisadvantage to not use these strategies if everybody else is going to use them anyway.

Regardless of whether the strategy is or isn’t gray or black, the fact of the matter is that Chinese sellers want to learn. It’s not atypical for a Black hat seminar to cost upwards of 20,000 CNY (~$3000 USD) per seat.

The lengths that the average seller will go to in order to gain an advantage over their competition is very much driven

by the hyper-competitive market that exists in China.

Growth/Money –Unlike much of the West, Chinese culture doesn’t do much towards beating around the bush with social interactions. If you’re like me, an American-Born-Chinese person, it was pretty common growing up and meeting relatives after some time and they say that you’ve gotten fat, or you’re not as cute as you were when you were a kid.

This is much of the same when it comes to money. The most popular online dating app in China, BaiHe, lists your salary to potential mates. You can also list whether you own a flat and/or car. The fact is that financial stability is very important in Chinese culture.

In turn, making more money as an individual is also very important. Money is at the forefront of a person’s objectives in China. In the West, we like to make money, but many people also settle with what they can get.

How common is the sentiment to work for a year, wait for a raise or maybe look for different employment? From my experience, in the West, it may seem like money is at the forefront of a person’s objectives, but in reality what they strive for is stability.

In China, taking a risk to make more money is the primary objective. In recent years, they’ve watched as other new Amazon sellers have skyrocketed to the top. Chinese sellers now blanket the Amazon market places around the world.

This surge of money has in turn brought in not only new investments, but much riskier strategies for success. Part three of this discussion will elaborate on the money in this environment that is giving Chinese sellers an advantage over their Western counterparts.

This article was written by the Professor of Amazon who has been writing about Amazon since 2009. This is an alias used to protect the author from any unwanted complaints or inquiries. Please be aware that much of the existing and future information can be construed by many in the industry as an attack on their business models.As such, the Professor of Amazon has chosen to protect himself from any action.