German drugstores are increasingly vying for the wallets of Chinese shoppers, eager to get hold of safe and reliable products.
Whether on high streets in Europe or Chinese online marketplaces, Rossmann and dm, Germany's twin drugstore giants, are branding their goods to appeal to buyers from China.
From toiletries to milk powder, Chinese buyers are increasingly looking to Germany's providers for goods whose quality they can count on and are impressed by the level of protection German companies offer customers.
German sellers are scrambling to spruce up their online offerings in China. They start at TMall, owned by Alibaba and China’s leading online marketplace for domestic and international brands to reach shoppers directly.
German drugstore dm opened its own TMall online shop last December, and sales soared after it ran an online campaign to make its brand better known in China. That was bad news for Rossmann, which had so far enjoyed a monopoly on the Chinese German toiletries market.
Rossmann’s parent company Hutchinson Whampoa Ltd already owns popular Chinese high street drugstore Watson, so the German chain is unlikely to build stores in China. Instead, Rossmann wants to beef up its TMall shop and deliver German goods to Chinese customers using a local company. Rossmann also aims to reach more consumers in China by offering discounts and prizes through popular Asian messaging app WeChat but has only made €5 million through TMall so far.
Dm is also known in China ever since the 2008 scandal when Chinese milk powder was found to be contaminated with melamine which can cause kidney damage. Ever since, Chinese consumers have headed online to buy dairy goods from German sellers instead. Private sellers have even posted photos of products on the shelves of dm to prove they really are German.
Besides milk powder, Rossmann sees high demand for food supplements and specialist cosmetics as buyers have come to look to German products for quality and customer protection.
Rossmann is now bolstering its brand at home as well as in China to become instantly recognizable and accessible to Chinese tourists. The chain will soon allow customers to pay at their check-outs with Alipay, China’s most popular online payment platform.
Wooing the globetrotting Chinese could pay off: according to a study by the Bavarian trade association (HBE), Chinese tourists visiting Munich spend an average of €513 a day.
Diapers are the most popular drugstore product Chinese shoppers buy online, mostly from windeln.de, a German baby-supply store similar to Mothercare. Some 46 percent of the company’s total revenue, €195 million, comes from China.
But while these markets are promising, they come with risk, starting with a lack of clarity concerning customs regulations. Windeln.de’s stock, worth €15.75 two years ago, has plummeted to around the €3-mark today.
Christoph Kapalschinski covers consumer goods, textiles and food for Handelsblatt. To contact the author: [email protected]